After ‘terrific failure,’ tech entrepreneur finds new life in second venture

Imeem co-founder Dalton Caldwell is launching a new photo sharing social media application. (Photo: Solly Mirell)

Before a recent talk to budding entrepreneurs at his alma mater, Stanford University, imeem founder Dalton Caldwell proudly emerged onto the stage, arms held high, as his now-defunct social media service was introduced as a terrific failure.

“I know half of you probably saw me on the program and asked ‘Who’s this guy? Didn’t his company just blow up about nine months ago?’ Yes, that is me.”

Rather than focus on the last days of imeem, Caldwell launched into a lecture about the pitfalls awaiting potential music startups. “Every time a founder does a music startup,” he said, “a likely more successful startup dies.”

Caldwell is 30 but admits feeling considerably older, joking that the up-and-down life of an entrepreneur is measured in dog years. Yet during his stint as founder and CEO of imeem, Caldwell achieved corporate milestones that would make any Web startup jealous — all the more impressive given that he formed the company when he was 23, immediately after graduating from Stanford.

At its peak – before things went downhill — imeem had achieved a coveted Alexa ranking as the 75th most trafficked site on the Internet. The site’s popular music widget, used to share playlists with friends among various social networks, attracted 108 million unique monthly views, amounting to almost 10 percent of Internet users at the time. The company also generated $24 million in yearly revenue while becoming the first startup to broker licensing agreements with all four major music labels: Universal Music Group, Sony Music Entertainment, Warner Music Group and EMI.

“We got the thing to really generate cash,” Caldwell said. “It wasn’t like we never made a dollar. Revenue per employee was a super high number and I was really proud of that.”

While imeem’s early success with social media sharing made Caldwell a recognizable name within the startup industry, he never considered himself a music entrepreneur. Even when he was named one of Billboard magazine’s “Top 30 Under 30” music industry power players, Caldwell felt uneasy with the honor. He considered himself to be first and foremost a social media guy.

“It felt really weird because I didn’t realize I was in the music industry,” he admitted. “I’m not sure if I still am. Do I get a card or something?”

Born in El Paso, Texas, Caldwell demonstrated an interest in the tech industry from an early age, reading Wired magazine cover to cover. Then in 1995 his hometown was chosen as a test city for broadband Internet. He became inseparable from Netscape and began building websites in high school.
Frustrated with being from a “relatively small town in the middle of nowhere” and spurred by the desire to “do something big”, Caldwell set his sights on the Silicon Valley.

Upon arriving at Stanford, Caldwell immediately immersed himself in programming courses, taking everything from basic Java to advanced operating systems. But his interests extended beyond computing to include linguistics, philosophy, psychology, artificial intelligence and natural language processing. He eventually found a strong mentor in Terry Winograd, a computer science professor and adviser to Google founder Larry Page, settling on bachelor’s degrees in Symbolic Systems and Psychology.

Looking back on his college years, Caldwell remains resolute that given the chance to do it over again, he would have chosen the same path.

“I loved reading Decartes. To think that he was writing all this stuff by candlelight with a quill somewhere and that it’s still relevant today is, I think, incredible,” he said.

“And I would have never known about fundamental attribution error if I didn’t double major in psych. It helps me all the time. Helps me not get angry at people and see things from differing perspectives.”

Propelled by a desire to build something unique, which he attributes to his time living in self-sustaining cooperative housing, Caldwell wrote the code to imeem’s instant messaging application while still an employee at VA Software in Mountain View. Along with co-founder Jan Jannink, a former Napster employee, he raised money from investors and launched the company in 2003.

At the beginning, imeem was a basic desktop application for chatting, blogging and sharing media files.

“We had an app, no one really cared, it wasn’t inherently viral and it took too much to get people to install applications,” Caldwell acknowledged.

Progress remained slow until the company began allowing users the opportunity to upload their songs online and share music playlists. One of the main tools enabling such functionality was the Web integration of SNOCAP, a program built by former Napster employees, including Napster co-founder Shawn Fanning, with ties to Jannink. The program would analyze all tracks being uploaded and cross-reference them with a registry that indicated who owned the rights to the song, along with where and how the content could be shared.

“My grand vision was being able to track everything like a piracy site, but have it be legal and licensed and compensating people, monetizing what accounts for billion of people pirating music all the time. It was a very real solution to the problem of privacy.” Caldwell explained.

For about 10 months, imeem’s site growth rivaled that of YouTube. But an onslaught of copyright lawsuits (mostly from independent artists and labels) and increasing operating costs began to cripple the company. Facing a resource-consuming lawsuit from Orchard Enterprises and unable to muster an additional round of funding, imeem, a $50 million investment, was sold to MySpace in 2009 for a mere $1 million.

Caldwell returned to his entrepreneurial roots shortly after the demise of imeem. He started a new company, picplz, a photo sharing social media application for the Android and iPhone platforms.

A technology voyeur of sorts, Caldwell began crafting the idea after witnessing people’s interactions with mobile devices in public, on trains and in planes. He views the service as a way for users to post real-time, geo-tagged photo galleries that can instantly be shared among a variety of social networks.

“Having done this before, the best thing to do is build a simple product that works and delights people, then go from that and work toward a bigger vision,” Caldwell said. “But I think I’ll monetize it earlier this time around because that’s half of the reason I think I’m useful to the startup world.”

Caldwell said he looks forward to focusing more on the product’s functionality and and spending additional time with his wife and 2-year-old son.

“I’m just excited to keep doing this stuff,” he said.

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