Kiwi music software company Serato has another global smash on its hands

Serato chief executive Young Ly. Photo / Dean Purcell.

"When you say you work for Serato, everyone thinks you work for a cafe - because it's an unknown brand in New Zealand," says the company's chief executive Young Ly.

I did know that Serato makes software for DJs, and that has had a broad degree of success since it was founded in 1998.

But I had images of a handful of staff working out of a villa in Grey Lynn.

In fact, the Auckland company occupies four floors of an office tower in the Auckland CBD.

Its 150 staff are divided between algorithm-crunching maths nerds and trendy music and marketing types.

They're all in high gear following the recent release of Serato Studio, sold by subscription for US$14.99 a month (or the equivalent of US$9.99 a month if you sign up for a year).

Ly says after a few years on the turntables (or, these, days, more likely a mixer or controller attached to a laptop), DJs often want to create their own music - but they find the incumbent software a bit user-hostile and overly-complicated.

Serato Studio is designed to be more accessible. And a subscription also includes beats and samples that are distributed monthly. Ly notes it's the way of the world that most Top 40 hits are now produced rather than created by bands using traditional instruments.

The Serato boss says tens of thousands have downloaded Studio during its first month on the market, and a number in "the single-digit thousands" have taken a paid plan.

He says that's ahead of budget, and that Serato is aiming for Studio to be as big as its DJ software - which is to say very big. It's been used by 2 million people over the past year, and 500,000 over the past month.

Serato has gained something of a lock on the DJ software market. Its users span from everyday club DJs to the likes of Beastie Boys alumnus Mixmaster Mike and American rapper ASAP Rocky, currently making global headlines for his incarceration in Sweden.

The likes of Kayne West and Eminem have name-checked Serato in their lyrics, helping to enshrine its position as an industry mainstay.

Fatboy Slim popularised another product, Serato Video, which lets a DJ add visuals, then automatically syncs them to the music.

And DJ Jazzy Jeff adopted one of the company's first products Scratch Live (released in 2004) which allowed CD or MP3-wielding DJs to re-create the "scratch" effect of moving vinyl records backwards and forwards on turntables.

Jazzy Jeff also became an evangelist for Serato overall, which he said allowed him to dispense with his previous three road cases of 80 records each, which had cost him around US$3500 in extra baggage charges.

And for amateurs, Serato makes Pyro - a party playlist app born out Bertenshaw's frustration with iTunes.

Today, music hardware from dozens of manufacturers is spread about Serato's office, including the likes of Pioneer, Roland, Denon and Rane. Ly says Serato software can now be used with more than 100 bits of kit, and that it proved attractive to customers who did not want to be locked in to proprietary software, or at least software locked to a single brand. He says it's analogous to the way Google's Android software powers multiple brands of tablet and smartphone.

The privately-held company has a mix of free-trial and paid products.

Ly is not about to share any detailed financials, but he says revenue this year will be between "$20 million and $30 million."

And while he won't comment on profit, he notes that Serato has never taken a cent of venture capital money. All of its shares are still owned by co-founders AJ Bertenshaw and Steve West and their family interests.

Serato co-founder AJ Bertenshaw. Photo / File

The company had its genesis when varsity student West wanted to play along to recorded music to help him learn bass guitar. He wanted to slow down songs to make it easier to find his feet as a beginner, but discovered there was no software to change the speed of a track - at least, not without inadvertently shifting the pitch.

He teamed with fellow maths and computer science student Bertenshaw to create a DIY solution.

The result, Pitch 'N Time, became Serato's first product and, helped by a signature endorsement by director David Lynch, was adopted as an industry-standard product by film studios. It remains a Hollywood mainstay.

Pitch 'N Time continues to monopolise its Hollywood niche even as Serato went to release the DJ software that gave it broader success.

Ly is a music nut, but also has button-down corporate smarts from his time managing Air New Zealand's Innovation and Ventures unit, whose hits included Grabaseat.

Serato's floor-to-ceiling brag wall includes Hollywood endorsements. The Auckland company's initial product, Pitch 'N Time, has become an audio engineering mainstay in the film industry.

He's been running shop for the past three years, which has allowed Serato's founders to spread their wings.

Bertenshaw is an investor and advisor for Ticket Fairy, a ticketing and event management startup aiming to dethrone the likes of Ticketek, Ticketmaster and EventBrite.

And West is CEO and a shareholder in Charge Net, as startup that's building an EV charging network around New Zealand.

Serato, meanwhile, seems to be humming along just fine. Its bean-bag and graffiti wall culture has just invaded yet another wall of its office building. It also has 15 sales staff offshore, mostly in New York (the US is its largest market), LA and London.

It does not have the feel of a company that has to count paper clips. When the Herald visits, staff are having an actual lunch break. Two are playing ping pong. Another is having "creative time" on a drum kit - part of the benefit of having a whole floor dedicated to non-work activities.

Successful software companies are synonymous with IPOs. But in this instance, there's zero interest, Ly says. A listing could add short-term reporting pressure, while family and founder ownership allows for a freer hand with long term planning.

And it's working Ly is leading one of our most successful tech companies - even if most think he works at a cafe.