SoundHound, which for years chased Shazam as consumers’ go-to music recognition app, is looking to a big-company finance professional to help it leap to the forefront as voice commands grow into the dominant way people engage with technology.
“There’s clearly an inflection going on,” says Nitesh Sharan, who started this month as SoundHound’s first CFO. “I really think voice artificial intelligence (AI) is changing how humans interact with technology.”
Sharan came up through the ranks at Hewlett-Packard and Nike and is positioned to help balance out SoundHound’s entrepreneurial C-suite. The company was launched 15 years ago by a team whose goal wasn’t to help people identify songs they hear on the radio, although it was successful at doing that, with some 300 million downloads of its app. It was to make talking to technology as natural as talking to another person.
“They’re people who are trying to do great things,” Sharan told CFO Dive.
Sharan launched his career in the early 2000s as an Accenture analyst and then moved up the ranks at HP, where he helped the company navigate the 2008 financial crisis
“We had just done a pretty sizable acquisition,” he said. “The day we were looking to get funding was the day Lehman Bros. collapsed, so having to secure the liquidity that was needed and get more permanent debt on the books was a daunting exercise. The world was learning a new language about what the financial markets were looking like.”
One of his last major jobs at HP, in 2014, was helping the company manage its split into two — HP Inc., for selling printers and PCs, and Hewlett Packard Enterprise, for selling servers and enterprise services.
“My role was leading the financing for the separation of the two and establishing capital structures,” he said.
At Nike, where he started as vice president of investor relations and treasury in 2016, he learned how to navigate inside a company with a globally recognized brand and a board that included powerful investors.
“I had to build my own credibility with those institutional investors who, frankly, had been with the company a long time,” he said. “It was about transparency and where we were going directionally.”
He finished up at the company as its CFO of global operations, which brought him face-to-face with the supply-chain problem that companies continue to wrestle with because of the pandemic. “That fell within the role I was in,” he said.
SoundHound doesn’t have the global brand recognition of HP or Nike. But, in Sharan’s view, it has the kind of technology that could make the company a game-changer.
“I’m part of the group that will help bring voice AI to the world,” he said. “The brand can expand. I’m optimistic about what it’ll grow into. There is a different level of challenge [compared to HP and Nike], from scale of operations, but in terms of the vision and opportunity, I don’t see any difference.”
SoundHound’s technology is already in use in many products, although it’s mostly invisible. The company has contracts with Mercedes Benz, Hyundai and Kia that run its technology as part of their onboard computer systems.
“Imagine if you’re driving and you’re saying, ‘I’m hungry,’’’ the system brings up “restaurants around here with the dimensions you ask for,” he said.
The company has multiple tiers for making money. Mercedes and the other car companies pay licensing and royalty fees, which go up and down based on usage. Its app users pay on a subscription basis. That includes the company’s original music recognition app, which costs $6.99 a month for the premium version.
The company is also looking at a monetization model that would link recommendations of, say, area restaurants to consumer requests.
“You can see revenue sharing models,” he said. “This is a burgeoning area, so there are a lot of models and a lot of monetizations for companies.”
Sharan oversees all of the company’s finance and accounting functions, and is looking to bring his perspective as the company plots its strategic growth plan.
“I envision strategic planning will be a core part of what we as a function need to bring — market intelligence, understanding the competitive landscape, who’s doing what,” he said. “It’s a rapidly growing field. SoundHound has a distinctive position in the market. But the world is moving fast, so understanding what’s out there will be value accretive.”
Top of mind will be how the company finances its growth. Since its founding in 2006, it’s raised hundreds of millions of dollars in capital, including most recently $300 million in a 2020 capital raise.
The company could go in any number of directions in terms of capital formation. Investors valued the company at $1 billion three years ago, an amount that’s likely risen since then. That would put it in a good position to go public should it decide to go that route.
“As you scale and grow, you see a market opportunity and at times you need to raise capital to help support that,” he said. “That will continue to be part of this transformative opportunity. I think that means being a business partner, a strategic partner, with the leadership team. Where we want to invest capital and where we want to fuel growth — that type of insight will be super important. ... I look at my mandate across all of those areas.”