Five Strategies Daniel Ek Used to Grow Spotify into the World’s Largest Streaming Service
Daniel Ek has been working on what he calls “the problem” of streaming since 2002, when peer-to-peer music service Napster shut down and another illegal site, Kazaa, took over. Realizing that piracy was here to stay, the Swedish engineer and IT innovator decided that he had to come up with something better.
In 2006, Ek and entrepreneur Martin Lorentzon incorporated Spotify AB. Twelve years later, the Swedish duo they took their company public. Spotify now boasts over 205 million subscriptions and is worth an estimated $28.49 billion.
Here are five of the lessons that Daniel Ek learned while growing Spotify into the world’s premiere streaming service.
1. “Don’t sell. But even more importantly, don’t sell early.”
There were times that Ek and Lorentzon could have sold their start-up. But they stuck to their vision, partly out of personal ambition but also to show other Europreneurs how it’s done. In Ek’s statement at the 2018 Slush Music event, he expressed frustration at colleagues who give up on their ambition “by selling very early in the process to big, non-European companies…. Spotify wouldn’t be where we are today, the global leader in audio, if we had listened to the many people who said that we should sell.”
2. “I’m just pretty ruthless in prioritizing.”
Ek keeps to strict time management rules, which can sometimes rub people the wrong way. For instance, he won’t be coming out for after-work beers. “I don’t do social calls. For so many people, you’re beholden to this social thing, if I don’t show up, someone is going to be sad. What I tell my friends is, I like to be invited, but I probably won’t come.” It’s not personal; he just feels compelled to stay focused on whatever problem or goal that is in front of him. He also keeps “daily, weekly, monthly goals,” and reviews his progress each night. “People think that creativity is this free spirit that has no boundaries,” he told Fast Company in 2018. “No, actually the most creative people in the world schedule their creativity.”
3. “We can’t rest on our laurels.”
In 2015, Spotify created a video hub. When that failed to catch on, Ek decided to pivot towards podcasts, investing over $1b and writing big checks to high-profile hires like Joe Rogan. “We believe our market that we’re going after is audio, and that’s going to be at least a billion, probably two or three billion people around the world that [will] want to consume some form of content like that on a daily or weekly basis,” he told the podcast Invest Like the Best. And if we’re going to win that market, I think we have to [own] at least a third of that market.” Although the investment has yet to pay off, Ek is optimistic. In prepared notes prior to Spotify’s Investor Day in 2022, Ek noted that Spotify’s podcast vertical was “still largely in investment mode and not yet profitable,” but that he believed the market has a “40-50 percent gross margin potential.”
4. “A great product without great communication falls flat on its face.”
Many disruptive consumer tech companies, such as Uber and AirBnB, struggle with controversy, both for the way in which they challenge the status quo and with ongoing, often unforeseen problems. What will win out in the end, Ek says, is smart and relatable core messaging. Spotify’s end vision, to enable one million artists to make a living off of their art, is one that can fortify the company against short-term slings and arrows.
5. “You lead the company in a very different way as it gets bigger.”
In Spotify’s early days, Ek was accessible. He would walk around the office and anyone who wanted to, could talk to him. As the company went on what he calls a “hyper growth journey,” growing its workforce by 30 and 40 percent a year, he realized he had to scale up his management style. This included holding company-wide meetings, but it also meant getting into the right headspace to be the leader he wanted to be. “I’m an introvert. So it was a real battle with myself. Did I even want to do that part?… I don’t get energy from meeting other people. So I need to get that energy from somewhere else, and I need to have the stamina to do that.”
