Summary
Highlights
Don Katz recounts Audible's public offering in late 1999, followed by the dot-com bubble's burst in early 2000. The company's stock price plummeted from $29 to just four cents, highlighting the massive decimation of internet companies during that period. This early crisis tested the company's resilience.
In the mid-1990s, journalist Don Katz, an avid listener of books on tape, grew frustrated with the inconvenience of cassette players and flipping tapes during his jogs. Recognizing the potential of MP3 technology, he envisioned a digital audio catalog and a dedicated device, despite the technology being far ahead of its time. At 42, he left his writing career to pursue this ambitious tech venture.
Katz shares insights into his upbringing in Chicago, his admiration for his father—a war hero and musical instrument manufacturer—and the profound impact of his father's early death. He discusses his education at NYU, where he was mentored by Ralph Ellison, and his unconventional entry into journalism with Rolling Stone magazine, where he honed his storytelling skills and took on risky assignments.
While working as a successful journalist and author, Katz began to research the burgeoning tech industry. His discussions with his computer genius college roommate, Ed Lao, sparked the idea of delivering audio over phone lines. This concept, born from his personal frustration with audio cassettes, evolved into a detailed business plan for 'Audible Words'—a company that would sell digital audio content and a solid-state device to play it.
Katz faced the challenge of raising capital and assembling a team. With initial seed money from Tim Mott of Electronic Arts, he brought on Guy Story from Bell Labs as his technology partner. They developed the first downloadable, protected audio system and a physical device to play it. This device, though clunky and expensive, was unveiled in 1997 with the first download being the self-help book 'Men Are from Mars, Women Are from Venus'.
After going public and initially raising significant capital, Audible was hit hard by the dot-com crash, with its stock plummeting. Katz describes the era of decimation for internet companies. During this difficult period, Audible strategically shifted from being 'technology agnostic' to developing the 'Audible Ready platform,' integrating their audio formats into emerging MP3 players. This move, unseen by many, positioned them well for future growth once the market recovered.
Audible faced challenges with expensive devices and content rights. To make their service more accessible, they introduced a subscription model, offering a monthly audiobook and eventually giving away their own 'Otis' MP3 player with a yearly subscription. A pivotal moment came in 2001 when Steve Jobs called Katz, expressing interest in Audible's technology for the new iPod. This partnership with Apple, allowing direct downloads to iPods, marked a significant turning point, eventually leading Audible to exit the hardware business.
By 2005, a decade after its founding, Audible finally turned a profit. Katz describes the strategic pivot towards audiobooks, working to secure more rights and developing cost-effective production methods. Audible also made a conscious decision to move its headquarters to Newark, New Jersey, contributing to the city's revitalization by focusing on local hiring and encouraging employees to become 'urban pioneers'.
In 2008, Amazon acquired Audible for $300 million. Katz explains his decision to sell, citing his moral crossroads as a NASDAQ CEO and the potential to leverage Amazon's vast customer base. He reflects on his entrepreneurial journey, acknowledging the blend of purposeful decisions and significant luck that contributed to Audible's success, highlighting the enduring legacy he created.