Spotify CEO Daniel Ek

**Ben Gilbert** (0:00)
It is impossible to flawlessly execute a podcast of this style, and that's the beauty of it. You come up with a bunch of stuff you want to talk about, and then you end up having a real organic conversation, and then it turns into a product, and that product is totally different than what you envisioned in your head, but can still be great.

**Daniel Ek** (0:17)
But I think the amazing thing is, unlike you talking to a journalist, etc., it's truly a conversation one. And the second part is, there's enough time to actually elaborate on the thought and the idea. Whereas you have to be so succinct in how you express your idea, and truly get it across in 30 seconds, or like you lose the moment and the journalist want to move on. Brian Chesky is an example. He's like the master on it, and he just switches it on, and he's like so good. For some reason, he and I always ends up getting on the same panels, and I'm like, it's game over even before it started. You're going to have all the great stuff.

**Ben Gilbert** (1:10)
Welcome to this episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert.

**David Rosenthal** (1:17)
I'm David Rosenthal.

**Ben Gilbert** (1:18)
And we are your hosts. This episode, we sit down with Daniel Ek, the man who saved the music industry after Napster and the piracy era killed the CD business. Some of the stats are mind-boggling. Spotify has paid $40 billion to artists over their lifetime. They are now the single largest source of revenue for the entire music industry.

**David Rosenthal** (1:40)
That's crazy. Spotify also has over 500 million monthly active listeners, over 200 million of which are paid subscribers. Both of those numbers are bonkers.

**Ben Gilbert** (1:52)
And in today's conversation, we're talking about, one, how Spotify managed to get to this 500 million number by stacking all these different expansion strategies on top of each other over the years. And two, we're going to dive into the current moment that Spotify is in. They've entered podcasting in a huge way that has not only changed the experience for consumers, but Spotify's business and their future as a company, which is of course very interesting to David and I as Acquired's growth has really exploded on Spotify.

**David Rosenthal** (2:22)
Totally, as I think we reference early on in our conversation with Daniel, over 60% of Acquired's audience is now on Spotify, which is up from basically zero four years ago.

**Ben Gilbert** (2:32)
It's wild. In fact, we were so interested in having this conversation that when Spotify asked if we wanted to fly to Stockholm and record in person with Daniel in the Spotify studio, we jumped at the chance. Daniel also foreshadowed some of what's to come with the cousin of podcasting, Audiobooks. We can't wait to hear what you think. Come discuss it after you listen to this episode in the Acquired Slack, acquired.fm slash slack. You should subscribe to our interview show, our second show, ACQ2. You can find it in any podcast player and we've had some killer back-to-back discussions with the CEOs of Retool and AngelList, both about AI. Now, without further ado, this show is not investment advice. David, myself, and our guest may have investments or many shares in the companies that we discuss, and this show is for informational and entertainment purposes only. Now on to our conversation with Daniel Ek.

**David Rosenthal** (3:23)
We wanted to start with like something kind of incredible has happened in podcasting.

**Ben Gilbert** (3:28)
If you look at January 1st, 2019, we had less than a thousand listeners on Spotify.

**David Rosenthal** (3:31)
Yeah, crazy. And now it's by far the majority of our listeners.

**Ben Gilbert** (3:37)
And unless you're us and you're looking at the data all the time, or other podcasters, I think it's easy to underestimate how seismic of a shift has happened in the podcasting ecosystem since you guys dove in. And I just wanted to sort of acquired style, go to a moment in time and say, how did that happen? And how did you guys decide to become an audio company instead of a music company?

**Daniel Ek** (4:00)
I like to say that there was probably this genius insight at some point in moment, but that's certainly not in the case of Spotify, true. It is often quite serendipitous. For a long time, I was kind of finding the urge on this, but we were oftentimes trying to not think of ourselves as the users and customers, because once you got to kind of 100 million users, you're kind of like, well, obviously I shouldn't be the target demo, I need to kind of listen to what the actual users are telling me. There's some part that's true with that, but then more and more what I realized is also that actually internally, we probably have the best sounding board of a quite representative Spotify user and what they might like. And so one of my favorite topics is how often people game our platform. For instance, in Germany, unbeknownst to us, but one of the sort of crazy things that ended up happening was just people started uploading audiobooks because it turns out that these music labels actually own a bunch of audiobook rights. And so as the platform was taking off, they realized, what else can we put on this platform that gives us a leg up and creates more revenue for us? And they realized that they have this catalog of audiobooks sitting on there. So I think that was kind of one realization where we kind of realized, hey, this platform, it doesn't seem to matter all that much what we're putting on it. People just like consuming content. And then I and others at Spotify, we were big podcast listeners ourselves. And we love that, but we hate the fact that we had to switch app from our normal one. We hate the fact that we couldn't get the recommendations working. We hate the fact that we couldn't get this to work on my car speaker or my home speaker and all these things that we spent literally a decade building for the music industry. So it kind of dawned upon us that podcasters have sort of the same problems that the music creators have, and we should be able to play a pretty big role. And all the primitives that we built for music should work really well in terms of discoverability, in terms of ubiquity that we call, which is sort of our ability to play on any device. And of course, our freemium model, where the ad support and eventually paid models as well should be able to all work together. And so the craziest thing in the beginning was probably when we started talking about it as building it in the same app. That was what the biggest resistance was.