How three Australians took Twitter into music

How three Australians took Twitter into music



Richard Slatter, Michael Doherty, Stephen Phillips, who sold their business to Twitter in November. Photo: Mark Medeo


The three unknown Australians behind the biggest digital product launch of the year had an unusual induction to Twitter. Having quietly signed a dream deal with the microblogging site in November – a deal that has made the trio from Brisbane and their backers a small fortune – they were secreted away to a nondescript office block in downtown San Francisco. It was just 10 minutes away from Twitter’s Market Street headquarters. But there would be no yoga room, free cafeteria, roof-top garden and colourful couches for Richard Slatter, Stephen Phillips and Michael Doherty. No casual contact with the mothership was allowed until the deal was announced four months later. Their new colleagues were to be kept completely in the dark.

It was an unlikely welcome to Silicon Valley, the technology hub that heaves on networking events and where introductions are like oxygen. But the Australians were happy to be working under the radar. The amount Twitter paid for their start-up, We Are Hunted, has not been disclosed but the price tag is likely to be in the tens of millions of dollars. Even for a technology company as big as Twitter – with its more than 200 million active users and 500 million registered accounts – it was a big bite. The new employees understood the need for secrecy as they worked away to meet the deadline for a highly orchestrated launch.TWITTER BRANCHES OUT INTO MUSIC

By April, Slatter, Phillips and Doherty were ready to announce to the world their new product, Twitter #Music. Nothing was left to chance.

At first Twitter #Music was seeded to influential celebrities such as musician Moby and TV personality Ryan Seacrest who tweeted praise of the new app to their many millions of followers. After just enough intrigue was created, the app was opened up for use by the general public just over a week ago.

The announcement was a big deal for Twitter. It represents the first time the company has branched out into music. Artists and their fans represent a very active and crucial category for Twitter. Eight of the 10 most followed Twitter users, and half of the top 100, are musicians. In the world of Twitter, names like Justin Bieber and Lady Gaga rank ahead of US President Barack Obama.

For the three Australians it represented the deal of a lifetime. Most budding technology entrepreneurs can only imagine the influence that the trio will enjoy now they are under the umbrella of the $1 billion venture capital-backed Twitter.

For many, being bought out by a hot Silicon Valley company is the ultimate dream. In an exclusive interview with The Australian Financial Review, the first after the launch of Twitter #Music, Slatter says the reality is that the journey has been a hard slog, punctuated by difficult decisions and false starts.


The story of how three Brisbane blokes in their forties wowed the US tech and music establishment, really started in web design shop f5 in 1999. All three had studied at the University of Queensland in the early 90s, but only Phillips and Doherty met on campus. Phillips had worked in technology, first at Suncorp, then at a market research firm, Marketshare, under the guidance of John Lyons, who would later be a We Are Hunted director and shareholder.

“Stephen was such a visionary,” Lyons says of the IT manager he’d hired in 1997. But it was not until shop f5 at the end of the decade that they really came together. There they built websites for large companies and coded for a couple of “quasi start-ups.”

After the dotcom crash, they parted ways. Slatter moved to Sydney and worked as a consultant at Deloitte while Phillips did programming work until they reconnected in 2007.

During their time apart, Phillips had become interested in bots, which are programs used by search engines to trawl the web and identify the content on pages.

He wanted to create software that could use that information to sort news and aggregate content into topics, such as a company or a person, and alert users when new information became available.

The pair also had a friend that worked at online travel group Wotif. Through their mate they learned the company’s chief executive, Graeme Wood, was about to step down and was looking for new internet investments.

Wood was one of Australia’s internet pioneers in the 90s. He has since used his wealth, estimated at $265 million by BRW, in a number of media start-ups including news website The Global Mail and the Australian offshoot of British newspaper The Guardian, as well as political and charitable donations.


Slatter was enjoying his Sydney life, but felt the pull of a new, risky opportunity. He quit his job at Deloitte and moved back to Brisbane.

“It felt like we’d built so many good things during the dotcom days but never got an opportunity to do it ourselves,” he says.

In September 2008 Wood took a 50 per cent stake for an undisclosed amount in their start-up Plugger, which was rebranded Wotnews. Documents lodged with ASIC last year show that the total amount invested by Wood over the life of the start-up was just under $3 million.

“It was a vastly different idea to where we are now,” Wood says. “[But my belief that] sooner or later that something would turn up, was due to my confidence in those guys. I thought they were very bright, very hardworking and they were committed. That’s a fairly rare combination of personal attributes. I was backing them as individuals.”

Wotnews could sort and index content and identify news trends. Although the team had started with news, they knew that their entity detection software could work on other categories. They might have first expanded into other verticals like food or sport, if it wasn’t for some plucky digital natives in their early 20s who caught their attention and bent their ear about music.

It came about when Phillips agreed to speak on a panel at an event organised by technology entrepreneurs, at Brisbane pub the GPO, one night in late 2008. A young consultant called Nick Crocker had asked to be on the same panel.

Crocker and his mate Ben Johnston had made a name for themselves helping music labels with their social and internet strategies, via their agency Native Digital. After a drink that night with the Wotnews guys, they all met for a coffee in Brisbane the next day. Slatter remembers they talked for an hour and half.


Their younger counterparts wanted to disrupt the music industry. Disruption is the jargon du jour among ambitious young start-up founders. It’s about being nimble and adapting to changing technology at a pace that large companies are unable to match. Many businesses have been irrevocably changed by new technologies including print media and retail. But few have had as rough a ride as the music industry.

The advent of online players like Last FM and MySpace, as well as pirate downloads through services like Limewire, made buying music passé for many consumers. The rise of downloadable music through iTunes has given artists a second chance.

But it wasn’t the recording side of the business that Crocker and Johnston wanted to disrupt. They believed that the humble music chart used to rank hit songs and albums was broken.

Charts like Billboard and ARIA were based on sales. But it can be argued they do not represent the most popular songs anymore. More and more people are streaming music online and then talking to their friends about it on social media. The key weakness of an old-fashioned chart is it cannot measure such buzz.

That conversation at the GPO was the genesis of We Are Hunted, although Crocker and Johnston are no longer involved in the company. (Johnston now runs Brisbane web design agency Josephmark, which recently redesigned MySpace and Crocker co-founded health start-up Sessions).

Using the same technology that Wotnews used to sort news, We Are Hunted would eventually trawl through blogs, social media and forums picking up signals about artists and tracks to create a chart based on sentiment expressed over the internet. Bots chased keywords linked to music and then artificial intelligence software decided if the sentiment surrounding those discussions was positive or negative.

Slatter says that in hindsight music was an obvious choice, not just because it’s sexy, but because it was a challenge. Tracking sport would have been easy, because there is a clear structure of leagues and teams and players, but in music data is “far more unstructured and that’s what our technology was built to handle”.

Although keywords like “track” or “song’”are easy enough for a bot to identify, new singles, album names and bands spring up all the time. The software had to be sufficiently savvy to scrape through music-focused websites – like SoundCloud or MySpace – to continually add new keywords or strings of phrases, which represent new artists or songs, to its evolving dictionary. It could even figure out genre, based on listening habits of similar songs and artists.

There’s a commercial imperative to this. “When you’re in a start-up you don’t know how that’s going to transpire to business success, but you know if you can solve something difficult then there’s a strong likelihood you will be able to commercialise it just by the very nature of the fact that few people can do it,” Slatter says.


After six weeks of development on the sidelines at the Wotnews office in Fortitude Valley, We Are Hunted was launched on a Thursday evening in April 2009. It created an immediate buzz of its own.

It was by no means a perfect product. They wanted to get a basic version out, watch how the early visitors played around and tweak the site from there.

The trio launched the site in the afternoon and went to their Brisbane homes. At 10pm, driving home from the servo for some long since forgotten groceries, Phillips called Slatter to say that they’d been “picked up by Wired”.

A blog from influential writer Eliot van Buskirk set off a chain reaction. In the 10 minutes that Slatter and Phillips were on the phone, more blogs had been posted on Mashable, TechNation and TechCrunch. A quarter of a million visitors came on the first day, causing server chaos, but also excitement.

“It still to this day is one of the most exciting evenings I think any of us has ever experienced,” Slatter says. “You know that that’s something you’re not going to see very often in your career.”

The trio weren’t to know that they would have the feeling again almost three years to the day. But at that point their success was slightly problematic.

“We were stuck with this problem of wow, this went a lot better, more quickly than we expected,” Slatter explains. “We’d done [We Are Hunted] as a kind of skunkworks thing on the side. We had to turn up to this board meeting and say we did this thing and it went pretty well. What should we do?”

The board was the three founders of Wotnews plus Graeme Wood and John Lyons. They called a special meeting the following Monday. The founders explained their surprise success. Slatter says Wood “didn’t necessarily understand music” but told the trio to decide whether or not it had potential.

“We said, ‘well our gut feel is yes, this is something we need to invest in’,” Slatter says.


They’d spent 18 months developing Wotnews but by that point it still wasn’t delivering sustainable revenue. They made the decision to proceed with both businesses. (Wotnews was eventually closed in June 2012, although Slatter said with hindsight, that decision could have been made sooner.)

Lyons remembers those meetings differently. “We were probably a little bit sceptical that we could be going down a gully that we didn’t understand.”

“I always remember Stephen saying at the time . . . and he wasn’t an angry person, he was very reasonable, ‘you fellows don’t perhaps realise how famous we are in America!’” he says, laughing.

Wood is quick to point out there was not too much ego getting in the way. “They’re very low key. They’re humble people,” he says.

Regardless of any doubts, it was decided that We Are Hunted had potential. Wotnews was rebranded Hunted Media, with the two products run simultaneously.

The new music chart was an immediate hit with music industry types who wanted access. We Are Hunted could give consumer insight and analytics to executives from companies like EMI Music and MTV who were struggling to understand their new marketplace. Despite its success, the digital chart didn’t have a clear revenue model and the start-up began doing service work for the industry. From Fortitude Valley in Brisbane, Slatter was conducting 2am conference calls with Los Angeles and New York. “It was kind of getting a bit ridiculous.”

“You have a certain amount of funding from investors and you try to conserve it,” Slatter says. “At some point you get to the point where you’re faced with the ugly decision of do we take on some services work and in so doing distract ourselves, but get to stay a live a bit longer.”


Phillips made a trip to New York in July 2011 to meet with clients. The welcome he received at MTV was akin to being a celebrity. A group of people lined up in reception to meet “the guy from We Are Hunted”.

This was nothing like the team had experienced in Australia when Wotnews was released “even though users loved it,” Slatter says.

“The experience with Wotnews was we would have incumbents approaching us saying ‘I’m not sure about the way that you’re handling our content, could you come and have a meeting with us, we’ve got a few lawyers’. You go where things are feeling positive and upbeat and people are welcoming you and want to know more.

In January 2012, Phillips and Slatter packed up their wives – and six kids between them – and moved to New York. Doherty stayed in Brisbane with the rest of the team.

“It was a much bigger deal for them than they imagined,” Wood says. “I was aware of the personal difficulties they were going through.”

But their long distance relationships with the industry over the previous two years stood them in good stead. Doors for possible capital raisings were beginning to open. Lyons says a collection of music industry types backed by hedge funds were prepared to invest, but won’t go into detail because the decision to go with Twitter instead was “sensitive”.

In March 2012, Phillips and Slatter were invited by Twitter to collaborate with other music start-ups like Rdio and Hype Machine in an exhibition at influential technology conference South by Southwest in Austin, Texas. “Maybe that put us on their radar a little bit,” Slatter says.

Twitter business development guru Kevin Thau flew to New York last summer to meet Slatter and Phillips. “Our approach was always to be really open and not secretive,” Slatter said. “We were happy to talk to people about what we were doing if they took an interest.”

At a follow up meeting, the pair had a materially different conversation with Thau, to the ones they’d been having with bankers and deal makers they were meeting in New York.

“He basically said ‘well what if We Are Hunted was a Twitter thing, what would that look like, what would you do?’”

“At that point I suppose we got a little bit excited because forgetting business deals and all that stuff, if you’ve worked hard in tech for 15 years it’s an acknowledgement that you’re on the right track if somebody from a well established, clearly successful play like Twitter asks you a question like that.”


Slatter and Phillips met Thau again some weeks later in San Francisco. Also present at the meeting were Twitter chief executive and chief operating officers Dick Costolo and Ali Rowghani.

A negotiation period began. A crucial part of the deal included relocating most of the We Are Hunted team, including Doherty, who had stayed in Australia, to San Francisco to become Twitter employees.

The team had to repurpose their technology. Instead of trawling the web for sentiment, the technology now reads tweets. Users can now see the most popular track on Twitter at any point in time, based on chatter on the social platform.

In a possible future revenue earner for Twitter, users can also click through to buy singles from iTunes.

“There’s lots of discovery services built into established players or streamlining services, but nobody has Twitter’s data. It is special because it’s social and it’s real and it’s musicians talking to fans,” says Slatter. “We’re allowing people to listen to it for the first time although it’s always been there.”

The exact terms of the deal are undisclosed, but cash and Twitter shares were exchanged.

In October 2012 Twitter bought video-sharing start-up Vine in a deal thought to be worth $US30 million. Given Vine had never had a public launch, it’s not unreasonable to think the deal is worth more than this. Twitter also bought a similar sentiment analytics company Bluefin Labs, which focused on television, in a deal rumoured to be worth $70 million.

Wood, who owned 64 per cent of We Are Hunted at the time of the deal, says it was a financial success for him. He is now “lining up to have another crack” at other early stage investments.

The three founders owned 15 per cent of We Are Hunted. Lyons owned 10 per cent and the rest was shared among early employees.

Twitter is still a private company, but should it make a public listing there will be some very pleased Australian shareholders.

Slatter says life as a Twitter employee won’t change the Brisbane blokes.

“Our product is only just started and we’ve got so many ideas for how we’re going to improve it.“We had a couple of glasses of champagne when we launched Twitter music last week and then basically ­everybody was back to their desk.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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