Spotify CEO Daniel Ek

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. But I think the amazing thing is, unlike you talking to a journalist, et cetera, 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 you lose the moment and the journalists want to move on. Brian Chesky is an example. He's like the master on it. He just switches it on, and he's so good. For some reason, he and I always end 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. Who got the truth now? Is it you? Is it you? Is it you? Sit me down. Say it straight. Another story on the way. Who got the truth? Welcome to this episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. This episode, we sit down with Daniel Eck, 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're now the single largest source of revenue for the entire music industry. 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. And in today's conversation, we're talking about one, how Spotify managed to get to this 500 million number. 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. Totally. As I think we referenced 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. 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. We wanted to start with, like, something kind of incredible has happened in podcasting. If you look at January 1st, 2019, we had less than 1,000 listeners on Spotify. Yeah, crazy. And now it's by far the majority of our listeners. 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? I'd like to say that there was probably this genius insight at some point in a moment, but that's certainly not in the case of Spotify true. It is often quite serendipitous. And for a long time, you know, 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 through 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. And there's some part that's true with that. But then more and more, what I've 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, people started uploading audio books because it turns out that these music labels actually own a bunch of audio book 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 audio books 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, 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, 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, on any device. And of course our freemium model where the ad supported and eventually paid models as well should be able to all work together. And so the craziest thing in the beginning was probably when, when we started talking about it as building it, in the same app, that was what the biggest resistance was because the common wisdom at the time was obviously, well, podcasting has to be a distinct own thing. I mean, this was like the, you've talked about this before. The constellation of apps was, you know, Oh, the, like all the rage, Facebook's got all these different apps and Apple has all these different apps. And unless I'm a person who already defines myself as into podcasting, I'm never going to click a podcast app to try and get into podcasting. You can't expand. You can't expand. You can't expand the TAM if they're all in separate apps. Which still was a super nerdy thing. Even merchandising podcasting is a very different problem than music. And it's actually one of the things that we're still working on trying to crack the code on, but that was probably the most contrarian both inside and outside. But to us, it was probably the most obvious one because we had already seen the behavior happening in Germany. And once we had tried unloading it for ourselves so that we could play around with the product, it was kind of obvious that this would be a great experience. And it's probably been the most interesting one for me where, and what I often tell other entrepreneurs is like, well, the fact that people doubt you in the beginning, you kind of need to pay attention to that and hear what valid concerns they may have. But a bunch of that is just like, they're not used to the concept and it's going to change. But by the time it changes, it will have already passed over. And not that you were right, but actually, well, of course, this is kind of obvious, right? So my favorite one, obviously streaming music, where when we began doing it, I always got this sort of pushback of like, why would I want to rent my music? I want to own my music. And the phrase streaming did not exist. Yeah. People were not talking about it. And people actually conceptualized more around sort of renting things. And why is that good for me? This is horrible. And, you know, that means that technically what happens if you guys, if you guys don't want to have that song anymore, that song disappears. And people care so much about their music, like it's their identity. Like I want to own this. I want my record collection. Yeah, exactly. And we were fighting against it where it was so obvious to us that, um, because I grew up with piracy that no, actually all you want is access to it. And it was such a hard notion for people to get conceptually, because we've been spending 30 years just getting people into that. And I feel like most of the tech industry, it's spent a decade plus learning about having separate apps. And we kind of said, no, no, no, it's doesn't really matter. Uh, we can put it in the same app and actually people will love it even more because we're solving the same sort of user needs. Where did that insight come from? Was it you as a user? Was it elsewhere in the company? Well, it was really a lot more of a first principles kind of thinking around it. It didn't really make sense if you looked at sort of like, what are we trying to solve for? And was it truly so different in terms of a consumer experience? No, it was the same playing view, a slightly different sort of modalities, but totally possible. And if you thought about it as a discovery, okay, well, that's a similar problem. Ubiquity, being able to play it on all these speakers made a lot of sense of having the same thing. Search, uh, all of these things were basically shared infrastructure that we can utilize. And, um, again, if you're searching for content, why you don't really care all that much about it it on YouTube. And on one end, you're listening to music on one side, you had all these other short form videos and sports and so on. You don't think that those are distinctly different behaviors. So why do you think about it that way? And it's because you really think podcasting is a different format. But actually, it's audio. All right. Go back to the radio days, talk radio and music and sports. They were all on the same device. Yeah. I mean, that's the thing with audio books too, right? Like what's the difference between an audio book and a podcasting? Well, you would say chaptering and some of those stuff. I mean, we think of ourselves as like right on that line between a audio book and a podcast. Actually, we'd love your help trying to solve this for ourselves. So we have recently realized that Acquired is the canonical episode, an NVIDIA episode or TSMC or Taylor Swift. These are more like conversational audio books between David and I. than they are podcasts. Yeah, they're four hours long, they drop infrequently. How does that kind of fit into what you imagine is the job to be done by audio? And is it an audio book? Is it a podcast? My view, I guess, is the boundaries are from a format side is definitely being blurred quite a lot and for right reasons. But the better way to think about audio books and podcasting is it's really around a business model, mostly. So one way to think about it is, you know, the best way to frame it instead would be podcasting is ad-supported audio, and audio books is paid audio. So for you guys, I mean, I also happen to know you spent so much time and effort on the research of that side. You could imagine that in the future, you have the ad-supported side of your podcast, the certain types of episodes and you'd have for your subscribers, the unlock where they get access to the podcast. So that's a great way to frame it instead would be podcasting is ad-supported audio and audio books is paid audio. So for you guys, I mean, I also happen to know you spent so much time You know, these kind of deep dives, etc. And obviously, the subscription thing could be as simple as like, hey, you're part of our other network, and it doesn't cost money, or you could paygate it all the way through. But I think it's more of a business model. That's the big format differentiation. Because as we said, like the quality, the mics we're using relative to an audio book, there's no difference here. You're using like high quality camera equipment. Also very similar to audio books. So I think it's a great way to frame it instead would be podcasting more professional style than sort of do it yourself kind of equipment. Editing all these things. It's getting more and more blur. Yeah, which is so interesting, like, to us, like we've lived this over the past eight years, like what podcasting is unlocked. And now with Spotify, bringing so many more people to the medium that weren't consuming before, is like a mass audience for niche products. Like if we were authors, and we wrote a book, and we get pitched all the time on writing a book, like, the business model for us does not make sense anymore. Sure. Given the audience size that we have in a particular type of audience. Yeah. We monetize so much better with the ad supported content. But like to make that unlock happen, it needed to become a mass medium. Yep. It's interesting to think about would that change if audio books can access a mass audience in the same way? Yeah. And obviously, our view is we eventually think audio books should be much, much larger than what it is today. hundreds of millions of people who are actually listening to audiobooks because the content is great rather than today what's tens of millions of people is that the market size today of yeah we believe it's like tens of millions it's one of the fastest growing categories uh which makes it interesting but um it's it's again uh fundamentally it's both a business model problem it's um you know again a discovery problem and all those uh other you either got to pay a lot of money for a one-off purchase yep or you need to have a pretty expensive subscription to a service that you may or may not use that and get value out of it reminds me of music in 2008 exactly you guys are exactly right and and there probably needs to exist a different business model for all these things but you could even in your case i mean you guys have probably right now um a pretty defined audience i would guess and and probably a very high value audience which makes um you know a lot of people are going to be like oh my god i'm not going to be able to do this um and i'm not going to be able to do this um and i'm not going to be able to do this ad supported monetization probably better than the average creator for you guys just given type of audience that people want to want to get to but you could even contemplate like some of your deep dives like i've i've heard uh like actual hedge fund investors literally have that as the sole input to their entire process which is terrifying yeah well not investment advice yeah exactly but i mean you know it is one of the areas that i'm i'm kind of um the most intrigued about i think ben thompson had this piece very recently i think he called it like the unified content business model piece i don't necessarily agree with everything he said but but i think his main takeaway is obviously that all media models ought to move to freemium it's as someone who's been saying that for for 15 years uh i obviously agree with him there but i think that's true in all formats right like as i said i think you know what's the difference between audiobooks and podcasting there are definitely differences but but the formats are blurring but the main one is is the business model as i said so it's just it's talk audio but with a paid or an ad supported business model and i guess my advice to you guys would just be i think you should kind of like explore both and see to an extent what's possible yeah all right listeners now is a great time to tell you about a longtime friend of the show vanta ai has scrambled the whole security picture it used to be that you proved that you were secure once a year on audit or a static pdf then everyone would nod and you're done but in an ai first world that doesn't hold up anymore yep your risk surface changes every week now a vendor turns on an ai feature or someone writes in a new model without telling it and your 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huge fans of vanta over here and literally hundreds of acquired listeners have become vanta customers at their companies over the years so if you're a vanta customer and you're not a vanta customer you're not a vanta customer so you can get a thousand dollars off vanta at vanta.com slash acquired that's vanta.com slash acquired for a thousand dollars off and just tell them that ben and david sent you speaking of the podcasting business model there's the potential for podcasting to be a far better business at scale than music streaming obviously with music streaming you take 30 and you share 70 with the potential for real operating leverage especially if you own the content to build a fantastic ad network or you know however you want to monetize it but you actually can take advantage of the scale of your audience in a way that it's sort of hard to outrun your costs in the music world i'm curious how early in your sort of dreaming about becoming a podcasting platform did you start thinking about that or was it purely product driven well i think it was a bit of both um and you have to to contemplate that if you're making moves like certainly of of our size because many of these investments that we're making are multi-year ones um and pretty substantial from a signaling point of view too and obviously public market investors want to know like well is this ultimately a good business and why do you think that is and for me to have said well we've bought a bunch of companies but i don't really know what kind of business it'll be it's probably not going to be the right um and i think it's probably not going to be the right um and i think it's probably so uh obviously we contemplated that and we we thought about that but the reality is there's a lot of the grass is greener on the other side when when you go too deep in that so obviously on the one hand if you deal with a lot of licensed content and um you know in this case from some major labels and obviously a lot of indies uh as well but still relatively supply constrained from from some big ones the natural tendencies for you to think well this is much better because all the sudden you have this sort of much wider scope of different creators that matters it's great uh you can aggregate a fragmented market yeah you you can do the aggregation theory that's that's all good great we don't really contemplate all that much it's obviously there's other challenges with that business model uh moderation all of a sudden becomes a massive thing um you have to build an actual ad network that probably then scales so in theory yes you're right uh you may have an opportunity to gain um more margin over time uh in the this model but fundamentally you have to do many more steps along the way like we don't have to contemplate content moderation as much when it comes to music we certainly don't have to have these very elaborate systematic processes about what constitutes speech and um you know uh violence and we knew that because i'd seen enough of these obviously uh platforms but but it is important because if you think about it from a pnl so so on the surface of these this these models are great right uh because very high gross margins and and so on and so forth great at scale great expensive at small scale yes uh but even at scale if you think about it is the cost increasing or decreasing and if you think about um you know right now obviously ai will come in and it will be massive but i think at one point in time uh facebook or now meta had over a hundred thousand content moderators actually working for them what a hundred thousand i believe so i don't know an insane amount of people so it's tempting to believe that that's a fixed cost uh and that they're running this like unbelievably high gross margin advertising business and they can outrun those fixed costs no problem but in reality what you're saying is actually they build up a whole bunch of variable costs too that don't fit into this uh platonic form of ideal social media business model yeah for sure and and even today if you think about it so all right uh well maybe that's not a hundred thousand in a minute but i think that's a good idea i think that's a good idea more because they've been able to automate some of that process but it's kind of mouse game as well so the other side is now using quite sophisticated they use open ai too yeah exactly to to uh to do that and that means that your ai models has to be a lot more uh you know sophisticated uh and that still adds cost so i think the best case scenario i was looking at this uh this is very old data but i but i believe at the time of facebook's ipo it was something like the cost for facebook to onboard a user was like a dollar a user or something like that in like hardware cost and all that stuff basically to have lifetime value of a customer and so at that time obviously the monetization wasn't as advanced so that was what was burning cash for quite a while and then eventually their growth rate probably slowed down enough where their monetization started uh kicking in and kind of scaled up enough where where those two effects kind of took out each other and they became uh very profitable but if you look at look at it now i would i don't know what the cost would be but if i would guess uh if i would start a social media company today the cost may be an order of magnitude more right uh because of all the other things you now have to do uh the ad platforms are way more sophisticated they have to build the moderation tools are way more sophisticated now the good news so so you may then come to this and say well was that a mistake then well we knew a lot about that going in and we weren't entirely new it wasn't like we were starting an ad business from the scratch right um so we had already made facebook for a long time yes uh that too so we had we had relatively good idea of what type of problems we would encounter and to give you some credit for listeners i think at the time you probably had maybe 200 million people on the ad platform ad supported tier who weren't in premium when you launch podcasting maybe something like 150 million but you had a gigantic scale advertising business you just didn't have user generated content being the content that it was advertising against yes that's accurate and and the amount of inventory obviously um that we were were uh monetizing it against was relatively small and and one of the big things right now is obviously this is a huge thing perhaps even more so than music for us to offer monetization to a lot of these podcasters that perhaps unlike yourself can't sell ads unless you're in a niche like ours if you're subscale you're never going to be able to access unilever or png or coke you know on your own or nike so i want to ask you about that because um i saw the um episode you guys did with david senra by the way uh oh so so uh david's man and he he's interesting because like in in my opinion he seems to almost dig in more in like what made him successful and like tries to not at all veer to broadening the base so how do you think about that like because you could just go serve your niche even better uh or you could try to like well let's try to include other forms of content like how do you decide what what type of content to go after oh man we are right in the i would rather not have growth and keep our audience who they are i'm not sure i'd go that far but i would rather saturate our niche and then at some point stop growing then expand the niche and then which i think we have three to four x headroom on our current yes we still can expand in our niche but but then we did our taylor swift episode we did the nba we did the nfl and then we did lbmh and lbmh we got 40 000 new subscribers wow and we were like okay so to your point about like some something is hacked here yeah like there's a there's a new phenomenon happening so we we have had to redefine what acquired is basically once a year since we started it used to be technology acquisitions that actually went well and then it was acquisitions we would never be talking if we're still that and then it was you know and and and so at some point um we expanded beyond just tech founders and engineers it became capitalists also and then it became their lps there's a bunch of university endowment folks that listen and now we're realizing as long as we keep making these really deep really long really esoteric stories and analysis you can create smart content for smart people that is not scoped to a particular industry and i think that that's our new sort of definition of the job to be done from acquired yeah i think it's brilliant how um you're able both to satisfy your own curiosity i guess and at the same time sort of it it doesn't seem that far-fetched uh some of the ideas um you're trying uh obviously i would i would probably assume the taylor swift one was more out there than than something else but but the lbmh one actually felt to me super natural um and it's it's funny you know how well talked about it it's been even among like what i would have not assumed would have been your crowd like i had a bunch of like really old school value investors that i honestly didn't even realize listened to podcasts they've been pinging me about it and i have you listened to this one it's like uh which is pretty cool um so so i think there's a way where there's probably some overlap between the audiences but also kind of clearly attracts a new yeah i mean it's kind of like it's a very very different scale and different business but um it's a little bit like the spotify adding podcast to a music but like we have this audience that is like traditionally very tech focused we have this format that we've refined uh and now we're like well okay if we bring something else into it is that going to expand it yeah but i will say unlike spotify which you can by virtue of being a tech platform you can aggregate a bunch of different audiences and then let them choose their own adventure on a really broad platform we choose the adventures we create these serial episodes and so if we go on a bender and do uh like we just did lockheed martin and it hasn't hasn't come out yet as we speak but we could have done eight lockheed martin episodes and we chose two particular stories to tell and we called that the lockheed martin episode yeah if we went on a bender and did eight then like we did this we're underserving a lot of our other niches we did two and a half episodes on nintendo two on nintendo one on sega and we had a blast and people who love video games had a blast but by the time the sega episode came out the people who don't love video games and video game history had stopped listening right right but sort of diving deeper on that um i'm curious then um would it have been that much more effort for you guys to produce the eight or did you have the content but it just didn't make sense from an audience point of view i think we had high level concepts in our head for for eight but it it turns out uh most of the work is the last ten percent yeah yeah it's like that it's like software engineering where like there's the first ninety percent and then there's the second ninety percent yeah and i think so much of the work is the last ten twenty percent yeah there's usually one thing on the cutting room floor though so we're playing with this idea of shorts that what we did for sega if in approximately one hour uh can we take one thing that just we couldn't squeeze it in and and uh um and tell one more story yeah i was just thinking about sort of touching upon where we sort of were a little while ago about sort of paid versus ad supported i bet you that there would be a very small one but there would be an audience that would listen to all eight whether you want to spend all the time um doing the eight is a totally different question it seems to me like the best creators just pursue whatever they're interested in and some of it will work some of it won't work they don't really seem to care all that much obviously they'll learn from from what seems to to be resonating or not, but that's the cool part. Like, we're living in an internet where, on the one hand, everyone talks about this 15-second kind of clips thing, and everyone's sort of getting down in that rabbit hole. But then, at the same time, you can have, like, three, four, five-hour-long conversations in super esoteric, very, very deep topics, and people love that, too. It's funny. Us, Joe Rogan, Lex, at the same time that short form is having a breakout moment, extreme long form is also having a breakout moment. We want your views on this. On our very small scale, like, we're struggling. Like, we haven't acquired TikTok. We're on YouTube Shorts. We post on Twitter. And, like, none of that drives the needle for us. Like, we've had videos on TikTok get a couple million views, and we don't know if it translated to a single new subscriber to the pod. Or in many cases, we do know it translated. It translated to a single new subscriber. A single new subscriber. Welcome, both of you, from TikTok. Yeah. Welcome, both of you. Thank you for staying with us. At the same time, like, you are, at least on the podcasting side, the home of long form content. And you just launched the new, Wall Street all thinks it's the TikTokification of podcasts. It's the new home screen. The new home screen, yes. Yeah, yeah. Both extremes seem to work. I believe one of the biggest problems we have in this new creator economy is the one of attribution. Right? So, you know, many creators like you have or try many of these different platforms, and they use it, but, you know, and they can, they can see on each individual platform how well they're doing, but it's very hard for them to understand what actually drives what. And I actually see both. I see some creators who are, like, under investing in other platforms, and probably too singularly, just because they have success on one, they kind of ignore all the others, which my advice to all of those is that feels kind of dangerous to do, because if there would be an algorithm change or any of the kind, even, you know, unanticipated by the platform, because, you know, they may see that something resonates, watch time resonates better with some other metric. It doesn't have to be skewed as an evil thing. It just could be something that actually benefits the user. But if you built your entire livelihood of that one platform, that could be a big problem for you. So I see them under investing in other platforms. And then the other one also be true, which is they're over-investing in too many and not realizing that, that actually they probably would do better in just focusing more on one or two. And so I think that there's two different problems. I believe that for us and why we care about this, and certainly why we designed the home feed the way we did is because fundamentally how we merchandise content. Has to be very different for music than it is for an audio book or a podcast. Um, and if you think about it, it's kind of logical because, um, in a song, it's a three minute commitment of your time. And you can actually probably tell within the first 10, 15 seconds, whether this is worth investing your time in or not. Unless it's a radio head song. That is true. That is true. But you probably then know the brand and you know how to give it the time and attention. Yeah. To it because you're, you're like, well, love radio edge. I'm going to give this song a chance and maybe not just one chance. I'll, I'll listen to it a few times before I make up my mind. And obviously if you now think about that with podcasting, I mean, if, if I'm listening to you guys and, and even if it's a topic, I don't necessarily know that I'm interested in, I might give it a shot because it's you guys. And I trust you because I built up this rapport with you. It's a much bigger commitment though. It is a much bigger commitment. It's a much bigger commitment for sure. But I may give it 10, 15, 20 minutes, right? Because I have that relationship. But if I've never listened to you guys before, that one hook that gets me in, how many people, you know, in marketing you usually had, and in early Spotify, we had eight people needed to have heard about Spotify before we were able to sign someone up. Oh, interesting. And so we realized that the geographical density in which that happened was actually a key sort of contributor. And a timeline. So much of our early marketing efforts were in college cities in the U.S. Makes sense. You have like consumers who are probably more attuned to music being a big part of their life, small geographical areas. So we kind of bombarded it. We did a bunch of different things that were hugely successful. In retrospect now, God, how long? 15 years later. Was it almost like a benefit that you had to launch geographically specifically because of the label negotiations? Like that you could really saturate Sweden, the U.K. before moving? Oh, yeah, for sure. We all believe that these like sort of internet companies that go global day one, that's like the right approach. I actually think 99.9%, this is just untrue and false. The entrepreneurs have to revise. We all are benefited from constraining ourselves to finding what our first audience is. And it could be geographically niched. It could be that it actually is. You know, again, a subset of a demographic or whatever. But more often than not, it's actually geography helps limiting yourself to a city, to a state, to a country, whatever it might be. And so that was a huge part. I can tell you definitively Spotify would not have been alive today had it not been that we couldn't launch in the U.S. as our first market. Wow. And if you ask me at the time, it was like a huge. It was a huge kind of step back to say, well, I can't launch in the most biggest market in the world. And I'm running an internet company. Like, come on. You've told the stories of you believed and you told investors like, oh, we're going to be live in the U.S. in like three months. Yeah. We're having the conversations. Yeah. And then it was three years later. Oh, yeah. Actually. Yeah. You must have been so stressed. Yeah. Well, I had many, many of those episodes. And it always followed with enormous weight. Gains and hair loss. So that was basically. You literally ripped your hair out. Yeah. Pretty much. Like I started when I started, I had hair. And then like two, three years later, I didn't have hair. When you started Spotify, you had hair? Yeah. Whoa. Yeah. There's like old pictures of me with hair, like from the first year or something. And then it kind of all disappeared. Wow. And I don't know anything. Was it worth it? Was it worth the trade? Well, so obviously. I think it has been. But obviously, I can't recommend. It is an emotional rollercoaster. You guys know this being an entrepreneur. It's not for the faint hearted. And I think every really successful entrepreneur, in my opinion, has had at least three near death experiences with their company, right? Where you just feel like, I'm not sure whether this thing is going to work, not work, whether we're going to be alive tomorrow or not. And I kind of hate how media portrays this. And sometimes how entrepreneurs. We're supposed to be sort of like, we're so big, we're like, we understood everything from day one. It's certainly not been my, my journey. Like my journey was, you know, I, I had a lot of luck. I worked insanely hard to get to, to even half of where we were today. And then it's been a true sort of emotional rollercoaster. And it is true what you say, but like, for me, had you told me how hard this would have been, I would have never done it. I'm happy. I went through it, but I would have never done it. All right. Listeners now is a great time to thank our longtime friend of the show service. Now, if you are running a large enterprise, AI agents are likely spread across every team and deploying them is no longer the hard part. Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making AI security for an enterprise at scale is not. Not a small concern, like the risks are real. Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. 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And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is who's managing them all. So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out servicenow.com/required and tell them that Ben and David sent you. We wanted to ask about, um, I wonder if you consider this one of those. Near death moments, but because we did the T Swift episode, you know, we talked a lot about it on the show, um, the week that 1989 dropped. And Taylor pulled off the platform. Do you consider that one of those moments? This was 2014? 2014. October 2014. Weirdly enough, no. That's the crazy part with it. It was one of those where if you'd asked us externally, it felt like this massive event. But if you were inside of Spotify at that moment, there was no one who thought that that was sort of the defining moment. We certainly worried about, okay, well, is this the beginning of more artists sort of pulling out, et cetera, for a few days. And then I spoke to a lot of artists, but I think there were certainly a lot of skepticism about Spotify at the time. But generally speaking, there had been enough things in Europe where people really saw, like, no, actually, this kind of works. Maybe it doesn't work yet in the U.S. Maybe it's better for her to do this thing. But there was enough people that believed at that time that it was only a matter of time before the U.S. would be majority streaming too. The sort of way it's been portrayed oftentimes with Spotify in particular has been like this sort of dogmatic. It has to be. It has to be all in with me or not. And actually, that's not how I advise artists or creators. I always tell them, like, this kind of, and it's kind of an unusual thing because everyone wants to build their own platform and so on. But my firm view is that truly, I believe in open as the model at its core. And so my view has been, like, there's some artists that at that time, I don't believe it's true anymore, but like the Adele's of the world, that probably benefited from physical scarcity, that probably didn't need to be on streaming, that probably should have done a windowing type model. The number of those artists were going to be very, very small. Yeah. But she was certainly one of them. Was that because of the demographics of her audience? I think so. But also, she, on her own, can basically control the cycle. Like, she can decide that this is a big cultural moment. Taylor Swift. Yes. Yeah. It is remarkable. Not a lot of people in the world can get hundreds of millions of people around the world to wait for a moment. And she did it brilliantly with this album launch, too. I stayed up till midnight. Yeah. A lot of, I don't know if it was hundreds of millions, but certainly tens of millions of people literally waited and sort of, she got them in on the hour. And it was like, each hour was another sort of gift. So she played that to perfection. And she's really remarkable at understanding how to speak to her audience. And she does it authentically. So she can do that. And there's definitely other artists that can do the same. But what's rare is for her to have that kind of zeitgeist and connection with that, deep connection with that audience, the fan base that she has, how vigorous and how intense, they are at that scale. That's the unique thing, right? Was there something that changed between 2014 and when she came back on Spotify, where it may have made sense for her not to be here in 2014, but then in 2017 or whenever that was that she came back that the world had changed enough where it did make sense. And how did the relationship between like, did you actually talk to her? Like, how did that all go down? Yeah, I think the predominant thing that changed, uh, was streaming just became the majority of the industry in a bigger way. So if the option was like, hey, am I on streaming or not on streaming? Do I think she could have reached number one at that point without streaming? Probably not would have been the answer. And she's super smart. So she understood that. And kind of to your point, like even in 2014 in Europe that had already happened, but it hadn't happened in the US. No, it definitely hadn't happened in the US. We were much earlier. I mean, Spotify at that time was like shy of three years in the US. Streaming penetration was relatively low. Radio was like the predominant thing at that time. Physical sales was still very big. You know, I remember I think it was Lil Wayne that sold like 3 million albums in that year on Costco out of all places. No way. Yeah, it's some sort of demographic connection thing was going on. I love that the intersection of like, Charlie Munger and Lil Wayne and Costco sells more chickens than anyone in the US in the world. Actually, Costco just is an unbelievable distribution channel if you can get it. Yeah. And we were talking about it before, but Starbucks and Howard Schultz was actually one of the biggest retailers of CDs in the West. That's actually how I met him the first time. Oh, really? Yeah, because they were becoming a partner of ours. That's right. You did a partnership with Starbucks. Exactly at that moment. And got to know and spend some time with them. So yeah, I mean, the world just looked very different back at that time. And I think that changed. And yeah, I mean, ever since she's been great with the team and she's super smart. That was our big takeaway from the episode. Just like she is really, really smart. David and I were talking before this episode. Are there other artists that you've got an interface with where you walk away and you're like, better business acumen, than any founder I've met any investor I've met? We've kind of become obsessed with like who are people who are top of their game artists and top of their game business people. There's quite a few of them because I actually believe these days if you consider a mega artist of that stature, it's like they're their own enterprise and they're the CEO of that enterprise. There's they certainly have people who help them. But at this level today, there's almost no one of them that's not very active. There's a lot of people who are very active as well on the business side and understand deeply what their audience wants. What's authentic to them by making move X. How does that affect that relationship? And what's super cool to me is that you have everything from the Taylor Swift's of the world and then you have something like BTS which is like insane. And how are they different? Because they're the same. Same order of magnitude scale, right? I don't pretend to know all of Taylor Swift's business sites and who's involved in everything. But from what I would guess is she probably runs with a pretty lean team. That's what we heard when we were researching the episode. Yeah. And that's certainly been our interaction with her. It's like very tight, very lean. And then if you think about something like BTS, but actually quite a lot of the Korean artists, it is like an industry. It's huge. Just on the songwriting side, it's the difference between if in Taylor Swift's camp, it's like two, three, four, maybe at the top. In some Koreans, it's 200 writers involved. And that's like a small part. And then you have like everything from merchandising, there's another few hundred. The talent development too, like the pipeline to go from you enter into the K-pop system to you become a member of XYZ. Yeah. It's like, oh, I'm a member of the K-pop group. Yeah. Well, that could be your next deep dive. Oh, that would be fun. Because honestly, it is fascinating how they do it. And the 360, how they think about it, not just from sort of maximizing their recorded side, but actually thinking about sort of fan development. All the digital platforms, they have their own developers, programmers building specific platforms. It's pretty cool. One thing I'm really curious on that we hadn't thought about before, we came here yesterday. To Stockholm, when we were talking with other folks on the Spotify team. I'm curious in this lens, what the past few years have been with Bad Bunny and Reggaeton. And I've heard you talk about that like you knew from the data on Spotify that this was going to be huge. And now I think it's the largest genre on Spotify. And many of our listeners will not know either of those two terms you just threw out. And I think this is a broader trend, right? Yeah. Yeah. It's a global world when it comes to culture. At the same time, there's still a lot of local nuances, right? So it's this extremity that we talked about. On the one end, you have this super, super niches that exists. But then once every blue moon, one of these niches kind of develop into something that's actually quite sizable, and you kind of start realizing that maybe this has a global appeal on top of it. So in LATAM, as an example. Yeah. So in LATAM, you have this super, super niche that exists. And then you have this super niche that exists. actually in each cluster, it's kind of like starts developing more broadly. And when you really look at it, like it has oftentimes a pretty huge diaspora outside of that sort of near region as well. So I mean, the Hispanic population, the US would be kind of an obvious one, right? And so many years ago, we kind of started seeing them breaking out their natural clusters and becoming a pretty big thing. And it was, for me at that time, it was just pretty obvious that if we invested in that genre on a global basis, we thought that that would have a global appeal. And yeah, because before a platform like that, obviously, like it could happen. And maybe there are examples where it did. But like, that's like, it's just so maybe the acquired audience, not as many people know Bad Bunny or like know the lyrics to his songs, but like a large portion of non-Spanish speaking Americans and like non-Spanish speaking people around the world know all the lyrics in Spanish to Bad Bunny songs. They may not know what the lyrics are about though, right? For better or worse. Yeah, that would be a very different thing. There's a lot of local cultural things that seems like, what is talking about, you know, someone cheating with this one, all these kinds of relationship stuff. That's the sort of local nuances. But yeah, I mean, yeah, that's the fascinating thing, right? But at the same time, you probably wouldn't have imagined MSG being sold out and like 20,000, if not more people singing Korean lyrics that doesn't look Korean, by the way, like know every word to every lyric. And that's the amazing thing, right? Like when things catch on, it's music, it makes people feel there's something about the artist, there's something about how they're communicating that resonates with you as an individual. And it is the foundational storytelling. You've always used music. It is so hard to describe art, right? Like we can objectively describe, oh, there's art, but how you feel, why do you feel a certain way when you're looking at a painting? Why do you feel a certain way when you're listening to a song? It's really hard to describe that. And that's the amazing thing about what we're able to do. And the really cool thing is you're able to take artists that otherwise, you know, perhaps may not even have been able to be professional and now they have a global audience. I don't know how to express it other than that they have some sort of God-given talent. That's the best way I can describe this kind of genius when they're able to express these things in a way that it just resonates with people all over the world. Just instantly, it's like, how do you do that? It's clearly they're tapping something innate to humans, independent of culture, which absent data, if you were to ask me and say, hey, do you think that. that someone is inventing a brand new genre of music today, do you think it's going to appeal to people similar to them or all humans equally in some way? I would probably tell you, like, no, it's more about nurture than nature. Yeah. Yeah. It's like we were talking about on the Nintendo episode. Like, there are always only going to be a handful of Shigeru Miyamoto's in the world. But until recently, and in the gaming industry, it's still pretty much the case. Like, you need to also have the luck of being be in the Venn diagram of a Shigeru Miyamoto who happened to be the arcade cabinet designer at Nintendo in order for, like, the possibility of Mario and Zelda to happen. And, like, in music and podcasting now in this world, like, everybody has the opportunity. Not everybody's a Shigeru Miyamoto. Not everybody's, you know, a bad bunny. Most people aren't. But you have the opportunity to be one. I think that's so interesting. I was talking to Ted Sarandos about this. He's on our board. And, you know, I think that's so interesting. This was a number of months ago. But, like, if you think about filmmaking, it's still, as you said, one of the things about a Nintendo is you have to have the resources to be able to build a game. And that's still not cheap. And it's expensive. And back in the day, maybe you had to build the entire console in order to even have a chance of doing it. But these days, you still, like, a AAA game is a few hundred million dollars. Yeah. Very big productions. Five years. Very big productions, right? And, sure, you can build an indie game and so on and so forth. But it's still a very limited number of people that are able to do that. But even in filmmaking or in TV series, the amount of people that used to be able to be showrunners or, like, producing or directing these things, it was a fairly limited group of people, right? Yeah. Very socially connected. People hanging out in backlots in LA. Part of the studio. And it probably mattered a lot, not just to diminish any of their talents, but it probably mattered who you knew was an integral component and having talent. So, you kind of had two different things. But in the last few years, as the budgets have expanded, and certainly in the Netflix case, it would have been physically impossible to just keep this same set of producers, directors, et cetera, right? Because they're just trying to make so much more content. So, one of the interesting things is the same thing is happening now where there's directors and producers, not just doing sort of local productions, but actually now coming to Hollywood and doing that as well. And I've seen it in my case. There's been a bunch of Swedish writers and producers and actors now that are getting into Hollywood productions. And it's been fun to see. And not just the usual names, but actually some more unknown talent making its way as well. And so, I think it's a really important thing to do. And I think it's a really important There are more people trying, but there are also more opportunities. And then obviously, as you mentioned on the podcasting side, the same is true there, but it's true on both sides. That's the crazy thing. But there's also more competition, which is, I think when people are talking about Spotify and criticizing it, that's the part I think is the biggest misconception. Because they hear so many people who are trying and it doesn't work where they're not making a decision. And so, I think it's important to sort of drawing the conclusion that, hey, there has to be something wrong with the model. This model can't work. But in reality, both things could be true at the same time. Right. There are a lot more people who are failing, but there are also a lot more people who are succeeding. Like the total pool is so much bigger. Yeah. And I think that's, podcasting is like much earlier in its maturity. Yeah. So, we may not hear it. Plus, we don't have this sort of, I'm not sure a podcaster sees it as sort of given that monetization is there and it needs to be there from day one. Whereas I think, obviously, with the professionalization of music, that's a much bigger part of the expectancy. But that's actually a kind of relatively limited part of our human history. It's probably less than 100 years that we've had recorded music and it being a form. And yet, it's part of the copyright regime. It's sort of like some pretty important loss. So, I think it comes with a different expectancy. I'm not saying that's wrong. I'm just saying just the arc of history. And I was actually going to latch on to something you talked about sort of being creative to. One of the things I often think about when you think about sort of the history of music, going back to it at the time of Mozart, if I wanted to create music, the reality is I had to be a musical genius. Because I needed to hear every single thing. Every single tone in my head. Every single note. I needed to hear all the different instruments, how they would all play together. I could write them down, but I could never hear them all being played at once, right? Many times, the composers of that era, they were only able to listen to their actual compositions like a few days before the actual concert that they were doing and then making small tweaks. But by that time, it had to be pretty perfect. And so, sure, they could play a few notes on the piano, but then they kind of needed to not visualize, but somehow internalize what that ended up being. So, having a whole orchestra is the AAA game equivalent. Yes, exactly. And so, obviously, very few could do that. But also, the process, the creation process was insane because you needed to do so much. And then, you know, you move forward and think about sort of the era of playing. And then, you know, you take the instruments and take jazz, which is highly technical, right? Like, every single member in a jazz band is excellent at their instruments, right? Like, really excellent. And it's really hard. Like, it's really hard to be that good of a musician and play jazz. And then, you know, fast forward a little bit more and take someone like, you know, Swedish Avicii as an example. He was a brilliant composer. He truly was. But he didn't really know how to play any instruments. It turns out that technical musical proficiency may or may not be correlated with making great music. Exactly. Exactly my point. But he actually had a different tool. He had software, right? And he's actually, he was really good at that software. And he knew all the knobs and, you know, plugins and all that stuff and how it worked. And a lot of musicians are that way today. Like, if you actually look at the workflow, it's very technical. technical. It's very detailed, it's very nuanced. Like I have this thing that i do where i probably shouldn't admit this but like i said on youtube on evenings i look at music producers their workflows and like when they get into the weeds of like um decoding how they do stuff we were we were like having just like our faces lit up we walked in this studio and we're like we think we are like highly technical podcast producers we think we're like top 0.1 well i think we are i think we are you know better and then we walk into this studio here you know in in stockholm and we're like this is just a scale beyond our imagination yeah yeah we're we're very fortunate and it's a lot of fun because artists love just hanging out here too because we've got kind of everything that they'd like to to use and to do but my point is i mean if you think about it it is a kind of a very technical workflow that takes a lot of time to get into and some of the parts of that workflow you'd have to watch probably hundreds of hours of youtube videos to even decode or how to do it and like start getting into it and a lot of these uh today's composers are experts in their workflows right like they've they've kind of had their their plug-in sets they've got like these 16 things that they they see shamed together in order to create that one effect that defines them and so on and so forth so the barrier still like if you said today i want to start making music and i want to make something that sounds pretty good it's still quite high that barrier and it's getting lower and lower and it's it's getting easier and easier but but but i would still argue the bar for you to sound make something that sounds professional it would actually be a high quality song it requires a lot of time and a lot of effort and it might be less capex and less equipment i mean you hear the the rise of the you know apartment music producer on the laptop yep but it still takes an enormous amount of self-training mastery creativity my opinion is it takes a little bit too much to get started like it's quite a barrier to entry still i mean if you just want to make something like super simple it doesn't take a lot there's there's all smuvel and all these other apps you can probably make something um but from there on to actually compose something getting into the the uh idea of the workflows the plugins all that kind of concept it's quite a lot uh to master i think that's the potential power with something like ai obviously right which is we're most likely going to have another order of magnitude of simplicity you know on a personal level if you liken that to coding um i used to code but i haven't now for for about 10 years and so probably a little bit embarrassing to admit but the barrier to entry or re-entry uh for me was so high with all you know node all of these different frameworks uh even setting up my own workflow for me to be able to to do something in the spotify ecosystem this is hundreds of hours probably for me to kind of re-acquaint myself with all all the stuff right how do i install the php server yeah i got bad news for you yeah it's changed a lot right and so the amazing thing is um i i just for the to help me and pretty much um on a few hours on a sunday afternoon i was up and running and and uh because of that sort of starter help i had my my own uh sort of environment set up i was contributing code i was iterating did you contribute code to the spotify code base no they won't let me do that yet so i i got a little bit more work um to do before before they allow me to pass a coding test yeah i think out of spite they probably won't let me do that anyway they pride themselves on on not um i don't have any access to any of the actual systems um but it was it was such a liberating feeling because it made the re-entry for me um so much easier uh and so much more enjoyable and so i think about that so if you think about the world of music now there are tens of millions of people uh in the world that probably are recording stuff but there's 100 200 million something like that that's playing some kind of instrument and expressing themselves musically there's nothing that says that it wouldn't be possible for those 100 million plus people to make something that actually sounds pretty good now again um what is that going to do with the music industry and is it really going to be that all of a sudden everything becomes commoditized i don't believe so because we've seen time and time again the quality rises to the top actually becomes even more valuable um in that world photography being the sort of key reference point every when instagram came oh no no one's going to want photography but price of fine art photography actually increased not decreased so my view is you're going to see both extremes you're going to see the middle getting wiped out more people participate but the very very top is probably going to increase in value as well and they'll figure out other things to do with this technology but it is pretty cool for humanity and we talked about that being able to relate and like you know expressing ideas every permutation of every cultural idea will finally be able to be expressed we've never been in a world where that's been possible before and it'll be really fascinating to see what that means for our understanding of other cultures our ability to relate to other people some really cool stuff this is kind of like already happened over the past few years in podcasting too right like they're i don't know you probably know better than me millions of podcasts out there right two million two million plus i'm sure at this point it's about a little bit more than double that now really yeah yeah whoa so like it's kind of like you're using numbers like you're talking they're four to five million people out there that are like i can make a podcast yeah and yet the very very top ones are still like of a quality bar that is so high and getting higher yep but like i've heard you guys talk about this that you now can take shows that are in a specific language in a specific region that you can identify based on the data there's something really cool happening here yeah and then bring them to other around the globe to other audiences yeah and right now obviously that's a manual um process where um you know we have to hire voice actors that reenact that we have to kind of tweak the system and we have to kind of tweak the system and we have to kind of tweak the script a little bit to make it culturally relevant and obviously this won't be news to you but perhaps to some of your listeners that i mean already probably today it won't be as high quality and the cost would be too expensive to express this but there's there's no reason technically why you guys and i this podcast couldn't be done right now in chinese with our voices well i was gonna say as a so you have x now the ai dj yeah that speaks many languages well we've had him speak swedish uh for sure uh and he obviously doesn't know swedish um but but it's only today available uh because the intonation is a little bit off uh so it's it's really only english language content and honestly that's probably just a training problem so if if we were training uh the models on specific languages and not just x voice uh per se i think that would have been a lot of work but i think that's a lot of work and totally possible uh and again the largest problem today is the cost per minute uh would be too high for most podcasts i think you guys could actually support it probably with your model but the average podcaster couldn't you know i don't know if you guys seen seen this but like mr beast has like a spanish language channel i don't know if he has like a you know french one etc but he certainly has a spanish language computer translated or humans re-recording uh i think he's re-recording it at the moment uh but it's huge uh i think it may have like 15 20 more subscribers uh additional subscribers not more than what the english language one has so so it's it's it's like a really um a really big deal and i think that's like the next step right like where where you know in your case like why wouldn't you take the lvmh episode and make it all in french or whatever at least be in french yeah all right listeners now is a great time to talk about one of our favorite companies legora the agentic operating system for legal work yes most of you have dropped a contract into a chatbot by now but as a lawyer how far can that really take you it's never seen your firm's precedence it doesn't respect confidentiality and you can't check where its answer came from so legora's founders approached this the way that great founders do early on the team moved into the office and they were like oh my god i don't know how to do this of a big law firm in stockholm and learned for months how the work actually gets done a couple of thousands of enterprise customers and a hundred thousand users later they still work that way they employ a hundred legal engineers on staff these are lawyers sitting inside of firms and legal departments to deploy legora onto live situations like the deal closing this week or the policy review due friday the product has gotten very powerful in a short period of time a year ago the goal was a good answer from a chatbot with the legora agent you hand it the work and it comes back with a plan Desks like running diligence on a data room or reviewing a new vendor contract get completed inside the tool you use every day, like Microsoft Word, and against your own precedents and playbooks. Every finding is sourced, the lawyer directs the work and signs off before the system executes any steps. Every legal team can get access to the same AI models, so the models themselves do not give you an edge. What you can do with your own data, people, playbooks, that's the whole game. Today, over 100,000 legal professionals at more than 1,800 law firms and in-house legal teams in over 50 markets use Legora. And when Legora goes head-to-head with its top competitor in a pilot, it wins 70% of the time. A demo is one thing, but what matters most is an associate who reaches for it at 2 in the morning during a closing or whether a general counsel trusts what it says before the board meeting. So if your legal team wants to check it out, whether you're at a firm or in-house, go to Legora. dot com slash acquired and be sure to tell them that Ben and David sent you. I've been uncomfortable until now using any sort of AI for any seconds of audio in our podcast. Like, we always played around with the Descript replacement of certain words, but then we never shipped it to production because I was always like, eh, it doesn't sound quite as good and, you know, everything should be hand-mastered and acquired. And then for the first time on a recent episode, we used it. We used an AI tool that our editor found to dramatically increase the quality, the sound quality of the episode based on the mic that the guest was using. And once you start doing that, you're like, well, I mean, shouldn't AI do all sorts of things to our audio? Yeah, I mean, I think we're only in the beginning, obviously, and that's hugely exciting for creators like yourself. But it's also scary, right? Because it's totally possible for us to make an entire episode. Where we're saying totally different things than what we're saying now. And it, at some point in the future, might be virtually indistinguishable from the real thing. Yeah, and platforms probably have a role to play in verifying authenticity. Like, that actually raises the value of platforms because platforms like Spotify, YouTube, you actually can point to, we know for a fact that this was created by the creator and we can stamp it and say that this, you know, you can trust this. Or approved by the creator. Yeah. No, no, I think you're entirely right, which is why, you know, there's been a lot of sort of debate around the Elon Musk, the subscriber thing. And actually, as usual, when you tease it out, there's many different things in that controversy. But perhaps the most potent and most interesting one has been the one around the notion and idea around like staking as a way of reducing the bot thing. And I feel like so much has just ended up being sort of, hey, do I have to pay in order to reach my audience now? That kind of switcheroo. But I think the more interesting one was kind of like, well, forget about if it's paid or not, but just increasing the cost of spam. But also increasing kind of the quality of verification and being able to truly understand what's what in the end. Twitter is so interesting that we were talking with a friend who's a creator peer. But his platform is Twitter. And you can't monetize Twitter. Like, there's no rev share. Traditional social platforms like that. You've kind of got them on one end of the spectrum. You've got Spotify. Well, maybe Spotify podcasting and then Spotify music at the far end of the spectrum. And you've got YouTube kind of in the middle. How do you think about what role for monetization, maybe especially on the podcasting side, Spotify should play for creators? Yeah, I mean. Our goal is to be the best partner of creators, not the only partner, but just the best and win by basically not forcing the creator to do something, but just offering a really good way for creators to work, low friction, but also lots of potential to customize their business the way they would like to. I think for some creators, the monetization aspect is absolutely critical. They may even be. They may be a gatekeeper or a gate between them doing something on that platform or not. And maybe they have switching costs relative to what other stuff they're doing. Think about a creator that's in a traditional media ecosystem. If they want to take their thing, okay, well, maybe I will be less valuable on cable or whatever other thing I'm on. That would be one end of the spectrum, right? And then you have another creator that may have an entirely different business model. I don't know. Maybe I'll talk about your other Twitter creator friend, but perhaps that creator either has a different business model somewhere else. Well, you have to. You can't have a business model on Twitter. Yeah, you can't do that. But, you know, the question is if that's truly a creator or, you know, you could argue VCs, a lot of them have Twitter as their marketing channel, right? Just top of mind. And podcasts. Yeah. There are many different ways and the needs are different, which is why, you know, for some of them, they would probably happily. Forfeit all the monetization because they feel like they have such a strong other business model on the customization point is really interesting, too. And I think that's the that's the really interesting nuance about about YouTube, because, like, on the one hand, I think YouTube for creators is amazing because you can completely abstract the business like you just make the content and they take care of the business and you get a check. Yep. On the other hand, like, you know, I can't even remember if we have. Ads on YouTube ads on acquired content. I think we don't because, like, do we want to sprite ad in the middle of this? Like, no, we want creative control. And, like, you lose that in a if the platform is, like, too opinionated about what's happening with monetization. Yeah. Most of us as platforms go, we have to start out very simple with our models. Right. And it takes a long time to then change that default setting. But, I mean. As I even talked about in music, it had to be, like, very binary. You had to be on or you had to be off. There was kind of no in between, like, well, let's do windowing, let's do this and that, et cetera, because that was the only way. My biggest problem was getting everyone off of piracy into this other model, and I needed the consistency of user experience. That was the model. Now, the next decade of music may look very different. It may look like something where there's going to be a lot more options for what a creator chooses to do. I certainly would hope so, and we're certainly going to work towards that avenue. But any change that we're doing with the scale that we're having is going to be, there's going to be winners and losers. It's almost impossible to find a single thing we could do that's just universally going to help. And that naturally creates the constraints that it's more of a one-way door than a two-way door where we can kind of, like, iterate. And invest on it. So I'm fairly certain that, like, what you're seeing now in this world of platforms and creator ecosystems is, if you asked YouTube, like, hey, if you could redesign the platform right now, would you just make all the same decisions you made about discovery and monetization all over again? The answer would probably not. Almost assuredly, no. Yeah. Right. As evident, actually. By Shorts, that works a little bit different on their platform, right? And they're all different, too, because Shorts, obviously, you have many more potential impressions over a shorter period of time. And, you know, an average YouTube video has been X minutes, and that means more interstitial ads. And then we have host red ads, or the equivalent of sort of more native ads or paid promotional ads that both Instagram and YouTube have. So we're living in an ecosystem where, on the one end, 10, 15 years. 10, 15 years ago, we were very primitive in terms of monetization. And today, it is very, very different. And I kind of think about it in a way, like, this is not too dissimilar from mom-and-pop shops, the sort of, like, coming up in the U.S. as a cultural norm. You know, on the one hand, you had physical infrastructure, urbanization driving these kind of things, where we both created these mega. Walmarts of the world as a direct consequence. But actually, the complete opposite was also true. We had this hyper-local thing, et cetera. And if you think about it today, these mom-and-pop stores, the ones that are still around, they're hyper-distinct in what they're offering. They're really focused on community, in many cases, really knowing your customer. They're offering events around their stores. They're offering, obviously, online things through Shopify and so on and so forth. And in a way, I think about it in a very similar way for the creator economy, too. We had to start very simple. It was based on a very simple model, where there were free platform, ad-supported platforms, and paid platform. All of that is kind of not merging together. In addition to that, just monetizing the content in itself is probably becoming auxiliary revenue sources around them. Very similar, again, to mom-and-pop shops, like, where you could do live events. events you could be doing, merchandise advertising you could build um another business uh like kylie jenner or something on the side what's cool is like this is true at scale now too i mean taylor swift well it monetizes through everything you're talking about the same way mom and pop coffee shop does she just does it at scale and it's necessarily had to be because streaming while at first it looked risky and then turned out to be i don't think it's blowing smoke to say you guys save the music industry like it is the thing that while the industry was in dramatic decline ended up making it so that the music industry now generates more revenue than it ever has before with by far the largest thing being streaming at the same time if you're a taylor swift or you're any big artist you're not making as much money streaming as you would have on cd sales in the cd sales heyday so you sort of have to figure out what the new business model looks like as a creator and you have to figure out what your sort of unique constellation of revenue streams are because it's not just going to be walmart or target is going to cut me the check from selling cds yeah the music industry is healthier than it's ever been before but but um certainly when you think about it from a singular artist point of view um you know there was a point in time where um the majority of the revenue could be derived from recording music but um the challenge to that what i would say is that the time in history where that was true was actually very very short right like the heyday of the cd era right yes it wasn't true back in the radio era and so the question is what what's the analogy was it that like that's the right model or was it actually that having multiple revenue models was always the answer um but there happened to be a moment in time where recorded music was sort of the prevalent um revenue source and i i don't know i mean i certainly don't say that to try to shy away from from sort of our role and and my goal is just like i think these people generally whether you're a podcaster whether you're a musician are insanely creative people and i love seeing people like yourself or david or sandra or or taylor swift or whoever or joe rogan or rogan or whoever that are like really deep um on whatever they're passionate about and they're able to get across the microphone and and having lots of people uh that can resonate with them that opens up like so much more opportunity one of the things we learned on the lvmh episode is that rihanna became the first female recording artist billionaire because of fenty beauty you know and like imagine that in the cd era like that wouldn't have happened oh yeah and that's the insane part too right because uh that fame uh in a way it doesn't make any sense if you think about it elvis presley um what time did it take for elvis presley to get to a billion people that had heard him i don't know but i would venture to say um it probably took a decade at the very least maybe two uh for him to do that and sure it was worth a lot that billion then but it was hard to scale to that and then you think about how many artists today get to be heard by a billion people and actually that number is way higher and it's way faster for you to do it now but because it's not as scarce anymore perhaps the the societal value slash monetary value whatever you want to put it on it maybe isn't the same because it's not as scarce but as you said if you're smart in how you do it and this is the sort of the the zeitgeist on how you execute it it doesn't work when it's she had a way to do it, which was authentic to her, but also authentic to her audience. If she would have tried to flog something else that she didn't care about, it probably wouldn't have worked. And that's the unique thing when you realize and you think about it yourself as an enterprise and, you know, JC, you know, I'm a businessman. Exactly. Which JC sold his champagne company to LVMH recently, 50% stake. Yeah. But back to that, they're incredibly talented artists and they're incredibly talented business people as well. Yeah. Well, as we start to wrap up here, there's one question that I've really wanted to ask you, which is, as I've studied Spotify over the last month and a half preparing for this, it seems like you guys have been very intentional about those things. And I think that's a really good point. I think that's a really good way that you grow and having a completely different strategy to add each next 100 million users. You guys are now over 500 million users. A, I didn't know the scale of that before I started researching. It's pretty unbelievable. And B, I sort of thought that, well, you know, they just let compounding do its thing. But I think you guys, it's not well understood by the public, or certainly wasn't by me, how you change strategy in order to go get that next group of people each time. And I'm curious, as you reflect back, what advice would you have for founders who are scaling to sort of continually stack these S-curves on top of each other and do completely new different business activities while maintaining the cohesiveness of one platform? Yeah, I think it's a very astute observation that you're making that it's not been sort of being able to just ride on this macro tailwind and just do that. But actually, it's been many different things that's driven the success of Spotify. And the way I oftentimes talk about it is, if you think about an exponential curve, if you really zoom in on that exponential curve, it actually is like a lot of different linear curves stacked on top of each other that creates that kind of exponential curve. And this will sound like a little bit of a cliche, but what I've really realized, perhaps even in just the last two, three years, more, I knew that I could talk about it, but I hadn't truly internalized it, is to be intentional about the culture you're building, right? There are many different cultures that can be successful, but there are trade-offs with each cultural expression. And oftentimes today, what I see with younger entrepreneurs is that they're unintentional about what type of culture they are. So they flip-flop between them. So as an example, you know, we all, you know, many years ago, I was certainly enamored with Google, right? Like the 20% projects and all these different things. Those are cultural expressions. It's not the culture itself, but it's the cultural expressions. So that's where the early innings of Spotify's culture was like, I'm sure, almost every Silicon Valley company of that era. And I think that's that era. And then we all switched, maybe became Facebook for a while. And we all kind of took that of like moving fast and breaking things and so on and so forth. And then you had like an Amazon kind of model where on the one end, it was incredibly long-term, but also maybe a little bit more bottoms-up innovation than top-down. And then you see another cultural expression with like a Tesla, where an incredibly top-down, incredibly focused company actually for this type of scale, that they're doing. And my point is, I think the most important thing is to really, really think through and be really, really diligent about the culture you create. And we certainly were victims of that at Spotify because we had taken all these different things. There were certainly things that were Spotify, but we kept talking about all these other companies and we're like, well, we like this thing that Amazon's doing, so we should copy that. And then, oh, we like this thing that Google's doing, so we should copy that. And actually, when I was at Amazon, I was like, oh, I like this thing ended up happening was we were at one point in time almost like a little bit of a Frankenstein monster because we had some of the stuff from everyone and we had some of the bad stuff from everyone too instead of sort of really leaning into that and then sort of without really being intentional about it we started iterating and improving on that culture and I often get this question so for instance you know when we launched certain things people are like well you know this thing wasn't very great and they have a mental model of what they expect of Spotify and the mental model may be hey your music app is so amazing how come in 2019 your podcast just sucked and so that must mean that podcasting won't work having a separate app must be the the right thing to do etc and and what people didn't realize is we're actually one of these companies that happily will release something out that's not great it's probably have the right strategy but execution isn't super crisp and perfect you said this about audiobooks at stream on you got on stage to the public and said we have audiobooks I don't think it's great right now yeah um and it's true and it's not great right now but we will make it great um but that's a different culture right and that's one where we're iterating on but then the flip side of that uh would be something like AIDJ where I think it is really high quality and unlike a lot of other products um that are AI where it's really kind of wonky we've made something that's actually working and is working on very large scale probably one of the most popular ai products out there now in terms of reach we don't really tout it all that much but it's huge in terms of like moving our metrics in a pretty substantial way like discover a weekly huge yes uh and i i think it'll even outdo discover weekly um so it is really cool but we had to be super intentional about it because we knew that it was an area where we had to think through the consequences of this because it would be highly scrutinized so as you can imagine one of the benefits by choosing to do it for music and not for podcasting was obviously that it would have been horrible if we somehow summarized or said something based on a podcast that wasn't safe or or or culturally attuned to say and yet with music it's kind of the the primary candidate plus it's it's the one where we have a huge audience that's listening in the background every day and they really want more context and and my point being is um understanding when to do which um and understanding that there's there's both these cultures are perfectly fine um but just being very intentful about when you're choosing to do what and having the right mental models and and not sort of becoming half-assed in everything but actually becoming really good at what makes you you and i would say the probably other thing that's been hugely important and that i wish more people talked about it is there are not many of us but there's a few of our few companies like spotify which in a way has been heavily influenced by silicon valley but we are not silicon valley fans so i'm a silicon valley fan so i'm a silicon valley fan so i'm a silicon valley fan so i'm a silicon valley fan so that sort of notion of being on the side and watching um and sort of iterating in a corner spotify is definitely sort of not the overnight success it's been a sleeper for many many years and when you started the common wisdom was anybody who's starting an online music thing it will die and i think you sought advice from hundreds of people who all told you don't do this this category is toxic yep you're you're exactly right and and um but but also because we were kind of doing this in europe for the first few years we started getting some some real uh first learnings and i think this is like really key because if you think about the the ones we talk about as iconic companies the apples the amazons of the world we all tend to forget a few things but one is that many of them are quite old at this point they're 20 plus years old so they've had a time to refine their cultures and and getting that that right and the other thing is they almost started in empty ecosystems and amazon sure there was microsoft but they started an internet company in seattle right where there was a software company that was really big but it's not the same culture they didn't start it in silicon valley same culture and i like to believe that that culture became very distinct also by having to figure out its own things from first principles and from learning rather than just being able to gather through osmosis and that might might have been going slower in the beginning uh to then go faster but um i i think it's been hugely important for spotify's journey and we're i feel like we're we're just right now getting into our own of like what is our culture in a very unique way that it's probably the most exciting thing for me at the moment still being here at spotify 17 years and this is so cool i love this as a final thought from you because uh it so matches uh something that surprised us from the lvmh episode it's just like all of those brands which are like you know the most iconic things you know both owned by lvmh and ones that aren't like hermes and you know yeah they are all n of one you can't copy them they don't copy anybody else they are their own thing if you're going to be around for 400 years that is by necessity the case you're not taking from anybody else yeah and i have to imagine it's hard for you internally and that it takes a decade or two to figure out what it is that makes you special too because when you started you were the company that figured out how to make it so music felt like it was on your hard drive and play fast when it wasn't through a hybrid of peer-to-peer and client server solutions yep and that's not at all thank you for summarizing that so succinctly by the way it has to be a a very like uh methodical individual journey too to figure that that out yeah um and that's why i said i mean i i used to talk about culture but but i would honestly say uh it was probably two three years ago where for where it really clicked for me like oh that's what it actually means it's not 20 work time that's just an expression of a culture the more interesting thing is um the true culture of what makes google google or um an amazon amazon etc and i don't even know whether that's possible to change going a decade forward that's probably the most exciting thing for me to still contribute to and work on is the culture and and i think that's what's driving at the moment pretty much every major decision we're making well daniel thank you so much thank you guys for coming really appreciate it thank you for hosting us of course all right listeners now is a great time to talk about one of our favorite companies stats egg yes there is a reason why the 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listeners thank you so much for tuning in for this conversation with daniel we'd love to hear what you think of course in the slack at acquired.fm slash slack where we're always hanging out discussing episodes after we release them um but there's a new spotify feature that we've been playing around with too david what is it yeah spotify just launched this at stream on recently there is a question on the page in the spotify app for this episode that says what did you think of this episode and you can reply and leave your thoughts right there awesome well thank you so much listeners uh check out in any podcast player acq2 with uh awesome recent interviews and uh many more to come i think we have the best interview lineup that we've ever had here on acquired coming up so uh subscribe to acq2 to get access to that and um i think that's it listeners thank you so much thanks to spotify and daniel we'll see you next time we'll see you next time who got the truth is it you is it you is it you who got the truth now you