Lessons from Pandora's IPO: Building Community and Value in Business

Pandora Media Inc. offered public shares on the New York Stock Exchange for the first time on Wednesday. The IPO drew a large opening surge before settling back down later in the day. All in all, $3 billion were plunged into a company that has failed to post a profit, with assurances from the company brass that profit is not in the near term horizon, either. Hmm.

If you're a small business owner reading news about Pandora or other wobbly tech companies, you hardly could be blamed for shaking your head at the somewhat inverted business path they often plow. Still, closer inspection of any phenomenon will offer something instructive, and Internet sensations are no exception.

Though rarely initially profitable, popular Internet services draw interest in the stock market for an obvious reason: they're popular. An enormous customer base is a great start toward profitability, and Pandora boasts 94 million registrations and 34 million regular users. The lesson here is that providing a quality service in an innovative or fun way draws attention and money. If you succeed in separating yourself from your competition, your customer base just might overpay for offerings, too. Though that business model doesn't work for everyone, there could be a way to integrate a bit of that along with the rest of your plan.

The word community is used to describe associations across the web. For small business, community is everything. In both cases, a happy community bolsters the profit outlook for a company. Within your community, there are opportunities to contribute in ways large and small. Charity events and fundraisers are chances to cast your business in the best light, and your efforts are sure to make an impression on the others involved.

Suddenly, your business has a personality, and (more importantly) community value. People learn that their communities are better places because of your companyâEURTMs involvement and will be more likely to support you, especially with other factors being equal. This is an edge on the competition that benefits everyone.