Three head-nodding moments from a recent interview with Spotify CEO, Daniel Ek
I love listening to the Acquired podcast. The opposite of the reduction glaze that most business stories are boiled to, the Acquired folks take whatever time it takes to properly tell the story of a consequential business venture.
I found the recent episode with co-founder and CEO of Spotify, Daniel Ek, a low-key masterclass in business strategy. Give a listen to the whole thing but in case you don’t have an hour and forty to spare, here are three main points that caught me. (Catch the whole episode on any platform or here.)
Sometimes the biggest obstacles turn out to be master strokes of luck.
According to Ek, Spotify would not exist today if they had been allowed to scale as fast as they wanted. That’s right… being slowed down helped them. In what felt like a huge and painful step back at the time, Spotify was unable to expand its growing music streaming service to the largest music market in the world —the US— due to prolonged music label negotiations. Initially thought to be a 3 month delay, it turned into a painful 3 year delay. Paradoxically, that very constraint allowed them to saturate Sweden and the UK markets, stabilizing and maturing their product and their company along the way. Which stood them in good stead when they finally were able to expand into the US and as the world simultaneously embraced streaming as a macro trend. They were ready.
Takeaways:
1) Sometimes constraints can provide valuable time to deepen rather than widen.
2) Product market fit is everything. Nail your product market fit before you attempt to scale or you can trip yourself up.>> Listen to the interview excerpt here: https://www.youtube.com/watch?v=5iLbbuEecJU&t=2102s
Every major business venture (and, let’s face it — life venture) will have times where major failure feels eminent.
Daniel Ek: “I think every successful entrepreneur has had at least three near-death experiences with their company where you feel I'm not sure we're going to be alive tomorrow.” This is a great reminder of a brutally inconvenient truth: When you're trying to build something that matters (a company, a relationship, a skillset) there will be times when you are too far out from the shore to turn back but you simultaneously have no idea how to make it to your destination. As Caesar maybe said, ‘the die is cast.’ You have got to keep going but don’t know how. This is both the hardest place and the birthplace of your Next Big Thing (continuing the analogy… Day 3). And, it is a sure sign you are doing something difficult enough and large scale enough to matter.
Takeaways:
1) There are worse things that trying what matters and not succeeding. Seriously. Way worse things.
2) There is always a messy middle. Nothing ever goes from idea to success without an uncomfortable middle. Middle is not fun. It’s tedious. It’s scary. It’s inevitable. It’s no joke. You might indeed fail. But while every failed venture is caught here, so is every successful one. Plan on needing “Day 2” resilience reservoirs and keep paddling. And know you’re in good company with the rest of humanity… Day 1, Day 2 and Day 3 is basically the epic story arc and no story is worth telling without juicy Day 2 tension.*
3. Company culture must be unique, intentional and utterly genuine. And will take time to form.
When asked what Ek attributes Spotify success to, he started talking culture; specifically, finding a genuine culture for the company. “What I see with younger entrepreneurs is that they are unintentional about the type of culture they are building so they flip-flop between them.” Many years ago he got enamored with Google 20% time (as many did) but Ek points out that 20% time was just a cultural expression and adopting that practice would not make them like Google.
Ek said the most important thing is to be diligent and intentional about the culture you create and not just a copy of others. “We were a little like a Frankenstein monster… we had some [culture] stuff from everyone and some of the bad stuff from everyone too.”
Spotify eventually found their genuine culture and part of their identity is releasing new things before they are crisp and perfect. “Audiobooks on Spotify are not great right now… but we will make it great.” That’s a culture that values learning over perfection, saving higher degrees of focus/scrutiny/perfection on higher-risk areas like AI.
More importantly, any kind of cultural clarity is what allows true strategy to form. Think ‘even-over’ statements that allow a company’s core principles to writ themselves large (e.g. “we value learning and experimentation even over perfect execution.”) These kinds of know-thyself trade offs are born from crisp cultural clarity and save tremendous time and labor in the daily life of the company.
Ek’s interview was a great one for your next drive or walk and will have you pondering as well.
>>https://www.acquired.fm/episodes/spotify-ceo-daniel-ek
* Upon “Day 2” — There is enough here to write a whole post about it. There are so many great thinkers about the messy middle (Brene Brown’s "there is always a Day 2" https://brenebrown.com/podcast/brene-on-day-2/ ), Pema Chodron (I am badly paraphrasing from memory: ‘there is freedom that comes from things falling apart and if you do not identify too much with your own labels of success OR failure, it will keep you fresh for what is true right now’, and in a different channel… prime athletes and hitting "the wall" is much like Day 2: https://www.muscleandfitness.com/workouts/workout-tips/hitting-wall-when-training-holy-sh-moment/. So many more examples of the sucky but necessary middle that, like Spotify’s story tells, gives birth to the resolution of “Day 3.”
