Last.fm a five-year-old online music site based in London, uses software to collect, mine, and then categorize the digital tunes people are listening to, in an effort to help us all find more of the music we already know like, and other stuff that we might discover anew. The company describes itself thses days as a “social music site,” and in a sense Last.fm is using its proprietary technology in the music vertical in an attempt to address one of the largest business problems in our data-driven age: “How do you find something that you don’t know anything about?,” as founder Martin Stiksel decribes it.

Turns out trying to solve this problem makes for pretty good business. In May of this year, Last.fm was acquired by CBS Interctive for £140m ($280 million). But this successful exit followed years of hardship.

“There were many bleak moments in the history of Last.fm,” Mr. Stiksel told the BBC last week”:http://news.bbc.co.uk/2/hi/technology/6979941.stm. For starters, in the year Last.fm was founded, 2002 — post dotcom crash — a time when few poeple were interested in investing in online anything, least of all Napster-tainted music sites. The first five years of the business were lean. They couldn’t always pay their employees.

In his interview with the BBC, Mr. Stiksel talked about how he and his two cofounders crested their (very steep) learning curve to get through the hard times. Below are the highlights, including his advice to entrepreneurs “starting-up” now:

1) You must believe: “We’ve got a good team, a very diverse team, that just never lost the faith in the product,” he said. This will become even more important when the patience of family and friends runs out. “[That’s when] it is very difficult to still carry on.”

2) Dedication makes all the difference. Last.fm founders made sure their employees had it, and hired what Stiksel has called a “music-obsessed team” that “refused to be sidetracked.” He means, they refused to be sidetracked by things like the company not having any money! “We were cooking our programmers lunch and letting them camp on our roof terrace. It’s all we could do because we could not pay them.” guess what, Last.fm’s “dedicated” “music-obsessed team” went for it.

3) Focus on the core: “It is very confusing the different things you can do [in terms of strategy]…“so it’s important that you stay focused on your core products and core strengths … stick with them and never really veer from that path.”

4) Other people’s money: “Money was one of the biggest problems going through this whole process for [us].” Cash is key, but Stiksel counsels, make it easier on yourself by “try[ing] to raise some finance, don’t spend your own money, spend someone else’s.”

5) Follow through: “A lot of people have good ideas at the right time but they don’t continue, they don’t pull it all the way through… that was the recipe for success with Last.fm. We just never gave up.”

Thesedays Last.fm has plenty of cash to reward its “obsessed staff”, but with success come only more (albeit different) management hurdes. Like, how much to spend on what? Or, as Om reported on June 1:

Last.fm faces many challengers, and other risks such as the rapidly transforming Internet streaming royalty structure.

Or as Liz explained ten days later, the hurdle of managing its precious community, now 17 million users large. This may not be as easy with CBS as its corporate parent:

Community building is serendipitous and often unexplainable. When it works, it works in the ridiculously viral way that all web companies live for. But impressive registered user counts don’t pay the bills; so nine times out of ten you’ve got to sell out to a big awkward parent. And that’s unlikely to make your members happy…

…“In the end [the community] is what we are buying. I think we want to do some minor grafts with the start-ups we acquire, help enhance their business without coming in their way,” CBS Interactive President Quincy Smith told us when his company bought Last.fm for $280 million.

We’ll stay tuned to Last.fm, in hopes of sharing more with you from Stiksel and his partners as this founding trio’s learning curve continues to unfold.