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What If You Became A Big Company, But No One Noticed?

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This article is more than 9 years old.

Is there a value in staying under the radar? Recently Apple acquired the music service Beats for approximately $3 billion, yet there’s another music service quietly growing its user base and creeping up the charts of the most used services. Most surprisingly of all, you might not have ever heard of it before, even though approximately seven million people are using it to listen to great music each month.

An Under-the-Radar Company

The service is called 8tracks, and it’s been around since 2008 and profitable since 2012. Surprisingly enough, 8tracks is playing in the big leagues without big league money. According to comScore , 8tracks is the fifth most popular Internet music service for those in the 18 to 24 age range. It’s also the third most popular Internet radio service on iOS, after Pandora and Clear Channel’s iHeartRadio.

What’s most striking about the popularity of 8tracks is the grassroots nature of it. Pandora had $864 million in funding and Last.fm was acquired by CBS in 2007 for $280 million, but 8tracks has gained traction with only $1.5 million in funding. This makes the service a true underdog success story in a market dominated by high entry costs in the form of royalties and big barriers to success.

How did they do it, and what lessons can be learned by other businesses without huge bankrolls? I talked with 8tracks founder and CEO David Porter to find out:

How 8tracks Quietly Amassed a Huge Following

The first step towards 8tracks dominance in the online music scene was just good luck. In 2008 when 8tracks came to life, the music service Muxtape had just gone under. This left a gap for consumers, and an opportunity for 8tracks to provide their online mixtape-making service to those looking for an alternative.

The second big step forward happened thanks to the sharable nature of the service, and the wondrous world of social media. Shortly after the service opened its doors, a few mixtapes began blowing up on the curation service StumbleUpon. It was 2009 and one of the playlists was called “Songs That Make You Feel Better,” which was certainly needed after the recent economic collapse. Social media began quietly spreading the service around, and soon it accumulated a dedicated following.

“Our competitors didn’t really focus on playlisting, instead focusing on personalized radio and on-demand services,” Porter said. “Our service was more communal in nature, while others were more personally tailored. Yet the mixtape still really resonates with people; it’s about loving the music and wanting to share it with others.”

Thanks to the emerging prominence of social channels, 8tracks built up a reputation without huge seed rounds or millions in marketing. “It’s primarily a social product,” Porter explains. “People create a playlist and want to share it. Our biggest drivers have always been word-of-mouth, amplified by social media.”

The process of human curation was also important to them Porter explained. Much like Beats touts its expert and celebrity-driven music channels, 8tracks also has human curation baked into their business model. On 8tracks, the most passionate music fans painstakingly curate playlists to share with listeners, and tag these lists with genres and even moods. While not everyone who uses 8tracks is a playlist creator, every user can take advantage of the musical passion and expertise of those willing to share their favorite music. This allows users to take a step away from algorithm-heavy services and recapture that human touch.

The Benefits of Being a Big Little Company

Being a little company can be a challenge, but it can also be a blessing in disguise. Unlike overly hyped services like Turntable.fm, which burned bright and faded fast, 8tracks has been steadily building its service and user base for years. For the first five years of life, the company didn’t even have any employees.

In second half of 2011, the company raised cash, achieved profitability, and finally hired staff. The ability to hire employees who could work 40 hours a week was a huge step in the right direction. Hiring the right people was key, including recently being able to bring on a community manager, which is allowing 8tracks to scale even further.

Without a huge marketing budget, the company needed to rely on having a great product their users would love. This meant the company focused on building up the product, and had to be very strategic about how they used money. “Staying lean isn’t easy, but it does help you prioritize the most important facets of your product,” Porter said.

The company didn’t tinker around with their product forever to ensure it was perfect, but they did get to market quickly and listened to audience feedback. Instead of being laser focused on a specific vision, the company listened to the feedback of users to make the service the best it could be to fit the needs of its prime audience.

“Feedback helped to inform our decision making,” Porter said. “Because we didn’t have as much to spend early on, we didn’t waste money going down the wrong rabbit hole. Since we didn’t have the funds to keep developing bells and whistles, we had to double-down on our value proposition. We knew the most important thing was to build something that people care about.”

Keeping lean is easier said than done, but the lean lifestyle has allowed 8tracks to grow right under the nose of better-funded competition. By flying under the radar and becoming a big “little” company, 8tracks has built a product their audience feels passionate about. For entrepreneurs and business leaders looking at 8tracks as an example, it’s obvious genuine passion, a human touch, and truly listening can help your small company continue to grow.

What do you think? How has your company grown despite staying lean? Share in the comments!

Image courtesy of Chiot’s Run, Flickr