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29-Year-Old Gets $15-Million to Decipher Song Lyrics

Power Pitch

Brooklyn-based start-up Rap Genius is betting the world’s obsession with song lyrics will help it build an empire. The site’s co-founder, Ilan Zechory told CNBC, "We started this thing as a hobby, but now we really think we're going to be the biggest website in the world—bigger than Facebook, bigger than Google, even bigger than Yahoo and CNBC."

CNBC asked him to explain exactly how he'd pull that off in just 60 seconds, and he gave it a try in this video clip.

Rap Genius is a site filled with the lyrics to more than 1 million songs. How it works is pretty simple: Users click on a word or line of their favorite song and a box pops up with an explanation. Those explanations, or annotations as they're called on the site, can include text, links, photos and even videos posted on the site by other users, and sometimes even the artists themselves.

Zechory told CNBC, "We're changing the way people consume music." That may sound like an exaggeration, but one of Silicon Valley's biggest investors is betting he's right and lots of big artists and millions of fans are on board.

What started as a "hip-hop Wikipedia" in 2009 now boasts 25 million unique visitors a month and has exploded into all genres of music and beyond. When it launched, the site focused exclusively on rap music, but now along with T.I., Nas, Nicki Minaj and Kanye West, users can also search and annotate Justin Timberlake, One Direction, Lady Gaga and Justin Bieber lyrics.

"If there's a person you love, you want to be with them in an active way. Same thing with music, you want to be with it in an active way," Zechory said.

We did some clicking around the site and found the annotated lyrics to Macklemore & Ryan Lewis' Thrift Shop have been viewed over 2.9 million times, for comparison Bieber's As Long as You Love Me lyrics have over 1 million views.

Some 50 Cent songs include lyrics explained in short videos by 50 himself.

How does it work? Search the classic Eagles hit “Hotel California” and click this line:

“On a dark desert highway, cool wind in my hair, warm smell of colitas, rising up through the air.”

Rap Genius reveals a box that reads:

“Colita” is literally a ‘little tail’ in Spanish. But in this context, it means sweet, sweet marijuana.”

Led Zeppelin's “Stairway to Heaven” includes annotations with references to the Bible, Shakespeare and “Lord of the Rings.”

But it’s not just music fans annotating their favorite songs, it's also users like the ACLU adding historical context to lyrics in Kanye West's single “New Slaves.” And not just music being annotated, users are now focusing on books like “The Great Gatsby,” the Bible, poetry, news stories (They've even annotated this article) and even Apple's iTunes terms of service agreement (we're not kidding).

Facebook's COO Sheryl Sandberg is a Rap Genius user listed as a "verified artist." She's annotated the introduction to her best-selling book “Lean In.”

Silicon Valley venture capitalist and Internet millionaire Marc Andreessen is on Rap Genius too. He's annotated a memo from Yahoo (YHOO) CEO Marissa Mayer, letters to shareholders from Warren Buffett (BRK-B) as well as the resignation letter from the former CEO of Groupon (GRPN), Andrew Mason.

It's no coincidence Andreessen also happens to be a very big investor in the site. His VC Firm, Andreessen Horowitz, invested $15 million in the company. It’s an impressive investment by a firm with a solid record of bets that pay off big time. Andreessen Horowitz held a 2 percent stake in Skype, which later sold to Microsoft in 2011 for $8.5 billion, and it was an early investor in Facebook. Some of its current holdings include Twitter, Pinterest and Fab, which Reuters recently reported had a valuation of $1 billion.

"We have a big investment which is allowing us to build a big website and a big cultural phenomenon in advance of pursuing monetization," Zechory said.

In addition to the investment by Andreessen Horowitz, Rap Genius also raised $1.9 million from seed stage investors Lerer Ventures, WordPress founder Matt Mullenweg, Rapper Nas, and Lady Gaga manager Troy Carter.

Rap Genius is free to use and 100 percent free of ads—in other words the site generates no revenue. CNBC learned that talking monetization with Zechory can prove to be awkward and sometimes quite funny as seen in the video clip above.

When asked about generating revenue, Zechory pressed back, "Look, you're asking me to give you answers about stuff that's just in its infancy. It's like ... 'Where are you having your bar mitzvah?’ It's like I'm 1 month old … we're trying not to overinvest in monetization too early in the way MySpace did versus a Facebook ... the product is in its infancy.'"

But Power Pitch panelist Greg Selkoe, founder of Karmaloop.com, one of the world’s largest streetwear retailers, didn't let Zechory off the hook so easy. "You can't say ‘hey we're going to hang out for a while and see what happens’ and then ‘yeah we got a lot of people, let’s make some money.’ That's very broad,” Selkoe said.

Another must see moment in the video, when CNBC anchor Mandy Drury asked the Rap Genius co-founder, "How do you make money?" Drury is visibly caught off guard when Zechory offered the deadpan response, "I’m sorry I don't understand the question" punctuated by an enormous grin.

Zechory gets a laugh and when you watch it you can’t help but wonder if someday soon he'll be laughing all the way to the bank.

Power Pitch Panelists for @RapGenius include CNBC host Mandy Drury @MandyCNBC, Karmaloop CEO and Kanye West Foundation director Greg Selkoe @Selkoe and CNBC's media and entertainment reporter Julia Boorstin @JBoorstin.

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