After Maxing Out A Dozen Credit Cards, Is Pandora Headed For An IPO?

Tim Westergren, the founder of online radio network Pandora, wouldn’t discuss his company’s plans for a potential $100 million IPO, which Reuters reported last month is imminent, but he offered plenty of lessons for startups that are struggling to make a go of it.

“Do what it takes, get people to work for free, and go in debt if you believe in your company,” said Westergren, who delivered this message while giving a keynote speech at Vator Splash at Cafe du Nord in San Francisco last night.

Westergren, a onetime record producer and composer, started Pandora Media Inc. more than a decade ago, then known as Savage Beast, to complete against new radio broadcasters Sirius and XM.

Early on, he was working on creating a subscription-based model. The business plan didn’t go that well. Westergren talked about the struggles of deferring payment for more than two years (totaling $1.5 million in salaries) to his employees, which today number more than 200. At one point, he jokingly said he thought about going to Reno to win some money from gambling. Instead, he said he ate a lot of Ramen noodles and maxed out a dozen credit cards.

The story has a happy ending. Westergren said that the company successfully embraced change and pivoted to an ad-based model for consumers to play music on their desktops, mobile phones and even their refrigerators and automobiles. (Here’s a Q&A did with Westergren before the event last night).

Through several rounds, the company has now raised about $64 million from Crosslink Capital, DBL Investors, Hearst Corp., Greylock, Allen & Co., GGV Capital, Labrador Ventures, Selby Venture Partners and WaldenVC. And Westergren was able to pay back his employees, with some checks written for $100,000.

During his introductory remarks last night, Jim Feuille, a Pandora board member and general partner of Crosslink Capital, noted that early on, the firm didn’t think Pandora’s model was viable, based on focus groups insisting that they would never pay for it. Feuille then played the theme song “Who ya gonna call?” from “Ghostbusters,” and his answer–which he got the audience to say–was Tim.

In his closing remarks, Westergren recalled how not too long ago, he was in a hotel suite in Las Vegas, enjoying a glass of red wine in one hand and an $80 kobe beef burger infused with truffles in the other hand. He said he thought, “What the f__k am I doing here? At midnight the clock is going to strike and this is going to become a Coke and a Big Mac, and I’m going to be in a corner sweating over my bills.”

Pandora is apparently not sweating the bills anymore, and Westergren might start dreaming about his IPO success in 2011.