Summary
Highlights
Don Katz recounts Audible's rocky start, going public in 1999 just before the dot-com bubble burst. The stock price plummeted to four cents a share, a challenging period during which many internet companies failed.
Katz, a former journalist, was inspired to create Audible out of personal frustration with cassette audiobooks during his daily jogs. At 42, he transitioned from a successful writing career to founding a tech company aimed at digital audio, despite widespread skepticism. He was influenced by his entrepreneurial father, a guitar manufacturer who challenged the status quo.
After graduating from NYU, where he was mentored by Ralph Ellison, Katz pursued a career as a writer. While in London, he landed his first significant writing gig for Rolling Stone, covering international politics. He traveled extensively and wrote a critically acclaimed book about Sears, gaining an MBA in real-time through the experience.
Inspired by conversations with his college roommate, Ed Lau, about signal compression, Katz envisioned a digital audio platform. He developed a business plan for Audible Words, aiming to deliver audio content like books and news through phone lines to a dedicated digital device. He patented a downloadable system and sought funding, overcoming initial dismissiveness from others.
Katz's wife supported his career change, calling it a 'non-toxic midlife crisis.' He enlisted Bell Labs engineer Guy Story, who took a significant pay cut to join as a science partner, focusing on overcoming technological and execution risks. With initial seed funding, Audible developed its first proprietary digital audio player, the Audible MobilePlayer, which launched in 1997.
The Audible MobilePlayer was ahead of its time, expensive to produce, and offered clunky user experience with poor audio quality due to bandwidth limitations. The product was not a commercial success, highlighting the difficulties of being too early to market with advanced technology.
In 1999, Audible went public, raising $40 million. However, the unexpected death of Audible's CEO, Andy Huffman, from a brain aneurysm created a profound crisis. This tragedy fostered a 'survivor mentality' within the remaining team, strengthening their resolve.
Following the dot-com crash, Audible's stock plummeted. Katz strategically moved away from being 'technology agnostic' and developed the 'Audible Ready platform,' integrating their audio technology into emerging MP3 players. This allowed Audible to be embedded in new devices, gaining market penetration without building proprietary hardware.
Audible faced significant challenges in acquiring digital rights from a reluctant publishing industry. They innovated by offering a subscription model and providing free MP3 players (like the 'Otis' mini-player), which significantly boosted subscriber numbers. Their alliance with Apple, allowing Audible content to be downloaded to iPods, was crucial.
A call from Steve Jobs in 2001 marked a turning point. Jobs, a fan of audiobooks, supported Audible's integration with the iPod, offering a vital lifeline and market reach. Audible stopped producing its own hardware and eventually shifted its focus to licensing and producing a vast catalog of audiobooks, achieving profitability by 2005.
In 2008, Amazon acquired Audible for $300 million. Katz, initially the sole proponent of the sale, saw it as a way to expand Audible's reach through Amazon's customer base. He remained CEO for as long as he had led the independent company, attributing this to Amazon's model of allowing acquired companies to retain independence. He also championed Audible's move to Newark, New Jersey, fostering local talent and urban revitalization.
Katz reflects on his journey, attributing 50.5% of Audible's success to purposeful good calls and perseverance, and the remainder to luck. He emphasizes that building Audible was about creating a new media category for spoken-word audio, a more significant challenge than merely improving existing services.