Spotify CEO Daniel Ek
01:37:27 Share

IT is impossible to flossy execute a podcast of the style, and that's the beauty of IT. You come with a match 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 invisible in your head, but can still be great.

But I think the amazing thing is, unlike you talking to a journalist, that that that is is truly a conversation one. And the second part is there's enough time to actually elaborate on the thought and the idea, whether you have to be so succeed in how you express your idea and truly get IT across and thirty seconds, or like you lose the moment. And journalists one IT.

Brian, chess is an example. He's like the matter on, and he just switches IT on and he's like, so good for some reason here, I always end up getting on the same panels and I it's game over, even started. You get all the great stuff who.

Get true. get. Easy you, easy you with you, sit me down, say, welcome to this episode of acquired the .

podcast about great technology companies and the stories and play books behind them and then gilbert, David all, and we are your hosts this episode. We sit down with Daniel ec, the man who saved the music industry after napster and the piracy era killed the city business. Some of the stats are mind boggling. Spotify has paid forty billion dollars to artists over their lifetime. There are now the single largest source of revenue for the entire music industry.

That's crazy spot. I also has over five hundred million monthly active listeners, over two hundred million of which are paid subscribers. Both of those numbers are bunkers.

And in today's conversation, we're talking about, one, how spotify managed to get to this five hundred million number by stacking all the these different expansion strategies on top of each other over the years. And two, we're going to dive into the current moment that spotify is in. They ventured podcasting in a huge way that is not only changed the experience for consumers, but spotify business and their future as a company, which is, of course, very interesting to David and I as a quired growth has really exploded on spotify totally.

as I think we references early on in our conversation with Daniel. Over sixty percent of required audience is now on spotify, which is up from basically zero four years ago.

wild. In fact, we were so interested in having this conversation that when spotify asked if we wanted to fly a stockroom and record in person with annual in the spotify studio, we jumped at the chance. Daniel, also for shadow wed, some of what's to come with the cousin of podcasting audio books.

We can't wait to hear you think, come discuss IT after you listen to this episode in the acquired slack, acquired dota FM slash slack. You should subscribe to our interview show, our second show, A C Q two. You can find IT in any podcast player.

And we've had some killer back to back discussions with the cees of retool and Angela st. Both about ai. Now without for there are do this show is not investment advice. David, myself and our guest may have investments or many shares in the companies that we discuss, and the show is for informational and entertainment purposes only. Now onto our conversation with Daniel ek.

We wanted to start with like something kind of incredible has happened in act casting feel.

Look at january first twenty, twenty. We have less than a thousand listeners .

on spotify crazy and now it's by far the majority listers.

And unless you're us and you're looking at the date all the time where other podcasts ers, I think it's easy to underestimate how seismic of a shift has happened in the podcasting ecosystem since you guys go 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 like to say that there was probably this genius inside at some point in moment, but that's certainly not in the case of spotify. true. Uh, IT is often quite certain puts. And for a long time, you know, I was kind of finding the urge on the spend.

We were often times trying to not think of ourselves as the users and customers because once you got to kind of one hundred million users, you are kind of like, well, obviously, I shouldn't be the target demo. I need to kind of listen to what the actual users are me and there there's some part that's true with that. But then uh more and more, what I have realized um 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 a one of my favorite topics is how often people game our platform princess in germany, human ones to us. But one of the this is crazy things that end up happening was just people started uploading audio book because IT turns out that um these music labels actually own a bunch of water of rights. And so as the platform was taking off, they realize what else can we put on this platform, gives us a leg up and creates more revenue for us.

And they realize that they have this catalog audio book sitting on there. So I think that was kind of one realization where we kind of realize this platform. IT doesn't seem the matter all that much.

What we're putting on IT people just like consuming content. And then I and others spotify, we were big podcast listeners ourselves and we love that. But we hate the fact that we had to switch APP uh 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 work on my car speaker or my homework. Aker and all these things that we and literally a decade um building for the music industry. So kind of dawn apart us that podcasts ers have sort of the same problems that the music creators have.

And we should be able to play a pretty big role and all the primitives that we built for music and should work really well in terms of discover ability, in terms of, uh, ubiquity that we call, which is sort of our ability to play on on any device. And of course, our premium model where the ad supported and eventually paid models as well, should be able to all work together. And so the crazy thing in in the beginning was probably when when, uh, we started talking about IT as building IT in the same map, that was what the biggest resistance was because the common wisdom at the time was, obviously, well, podcasting has to be a distinct thing. I mean.

this was like that. You've talked about this before the conStellation of apps was down like all the rage. Facebooks got all these different apps, and apple is all these .

different apps. And I let M, A person who already defines myself is in the podcasting. I'm never gonna click a podcasting APP to trying get in the podcasting. You can expand the time if they're all in separate.

which there was a super early thing.

Even merchandising. Podcasting is a very different problem. The music that is 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. Um and once we had tried and unloading IT for ourself so that we can play around with the product, kind of obvious that this would be a great experience and it's probably been the most interesting one for me.

Where are and what I often tell all the entrepreneurs is like, well um the fact that people doubt in the beginning you kind of need to pay attention to that um and here what ballot concerns they may but a bunch of that is just like they're not used that the concept uh and is going to change but by the time and changes, if you 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 to obviously streaming music, where when we we began doing IT, I always got this sort of push back 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 and people actually conceptualized more around sort of renting things. And what wise that good for me? This is horrible. And you know that means that technically what happens, uh, if you guys don't want to have that song anymore, that song disappears and .

people care so much about their music like their identity like I want to own this.

I want my record collection yeah exactly and we were fighting against that where IT was so obvious to us that um because I grew up with see 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 thirty years just getting people into that. And I feel like most of detect industry spent a decade plus learning about having separate apps.

And we kind of said, no, no, IT doesn't really matter. Uh, we can put IT in the same map. And actually people will love IT even more because we're solving the same sort of user .

needs we 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 about IT. IT didn't really make sense if you look that sort of like what are we trying to solve for? And was IT truly so different in terms of a consumer experience? Now he was the same playing view, uh, slightly different sort of modalities, but totally possible.

And if you thought about IT as a discovery, okay, well, that's a similar problem. You think we 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 realize.

And um again, if you're searching for a content, why you don't really care all that much about IT on youtube uh 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 is because you really think podcasting is a different format. But actually it's audio. I 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 chapter ing in some of those stuff.

I think we think of ourselves as like right on that line between a audibility in .

a actually love your help trying to solve this for ourselves. So we uh, have recently realized that acquired is a the canonically episode, a NVIDIA episode or T S M C or tailor swift. These are more like conversational audio books between David and I than they are podcast.

The four hours long, they drop infrequently. How does that kind of fit into, uh, what you imagine is the jo B2Be don e by aud io? And is that an audio book is at a podcast?

My view, I guess, the boundaries are from a four map side is definitely being blurred quite a lot and and for right reasons. But the Better way to think about audio books in podcasting is is really around a business model mostly. So one way to frame IT and that would be podcasting is ad supported audio and auto books is paid audio.

So for you guys, I mean I also happy know you spend so much time and effort on the research of that side. You could imagine that in the future you have the um ad supported side of your podcast be. Certain types of episodes and and you'd have for your subscribers um the unlock where they get access to um you know these kind of deep dives.

It's said I obviously this subscription thing could be as simple as like k, you're part of our other network and IT doesn't cost money or you could pay gates, uh, all the way through. But I think is more of a business model that's the big format differences because as as we said, like the quality, the mix we're using relative to an audio book there, there's no difference here using like high quality camera equipment are also very similar to more professional style and sort of do IT yourself kind of equipment editing. All these things is getting more.

more bly yeah which is so interesting like us, like we live this over the past eight years, like what pancaking is unliked. And I would sort if I 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 a itch all the time on reading a book like the business model for us does not make sense anymore, given the audience that we have an particular type of audience. Yes, we monitise 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 and obviously are our view as we eventually think auto books should be much, much larger than what IT is today? Hundreds of millions of people who are actually listening to all the books because the is great rather than today. What's tens.

millions of people is that the market is today of .

yeah we believe it's like tens of millions. It's one of the fastest grown categories, uh which makes IT interesting. But um it's it's again a fundamentally it's both a business model problem. It's um you know again the discovery problem. Others have to pay .

a lot of money for a one off purchase, yes. Or you need to have a pretty expensive subscription to a service that you may or may not use that .

and reminds me of music in two thousand .

days yeah you guys are exactly right. And and there probably needs to exist of a different business model for all of these things. But you could even in your case, I mean, you guys have probably right now um pretty defined audience, I would guess and and probably a very high value audience, which makes a about supporting monitise ation probably Better than the average crature for you guys. Just given type of audience that people want want to get to. You could even contemplate like some of your deep types like i've i've heard like actual hedge fund investors literally have, that is the sole input to their entire .

process is terrifying.

Yeah well.

not the investment advice.

Yeah exactly. But I mean, you know I just one of the areas that i'm i'm kind of um the most intreat about. I think bentham's had the peace very recently.

I think he called IT like the unified content business model yeah peace. I don't necessarily agree with everything he said, but but I think he is main take away is obviously that all media models are to move to premium. It's as someone who's been saying that for for fifteen years, uh, I obvious ly agree with them there.

But I think that's true in all formats, right? Like as I said, I think you know what's the difference between audio books and podcasting? There are definitely differences, but but the formats are blurry. But the main one is, is the business model, as I said. So is is just is it's talk audio. But with a paid or not support the business model, 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 okay. Listeners, now is a great time to tell you about long time friend of the show service now.

Yes, as you know, service now is the A I platform for business transformation, and they have some new news to share. Service now is introducing A I agents. So only the service now platform puts A I agents to work across every corner of your business.

yeah. And as you know from listening to us all year, service now is pretty remarkable about embracing the latest AI developments and building them into products for their customers. A I agents are the next phase of this.

So what are A I agents? A I agents can think, learn, solve problems and make decisions autonomously. They work on behalf of your teams, elevating their productivity and potential. And while you get incredible productivity enhancements, you also get to stay in full control.

Yep, with service now, A I agents proactively solve chAllenges from I T H R customer service software development. You name IT. These agents collaborate, they learn from each other, and they continuously improve handling the busy work across your business so that your teams can actually focus on what truly matters.

ultimately service. Now, an agenda. I is the way to deploy ai, us, every corner of your enterprise. They boost productivity for employees and rich customer experiences and make work Better for everyone.

yeah. So learn how you can put A I agents to work for your people by clicking the link in the shower notes or going to service now document slash A I dash agents. Speaking of the podcasting business model, there is the potential for podcasting to be a far Better business at scale.

Then music streaming. Obviously, with music streaming, you take thirty percent and you share seventy percent with labels. Uh with podcasting. Um there is the potential for real Operating leverage, especially if you in the content to uh build a fantastic ad network or you know however you want to monetize that. But you actually can take advantage of the scale of your audience in a way that it's sort of hard out out run 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 uh or was a purely product driven?

Well, I think he 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 any of these investments that we're making, our multiyear once um and pretty substantial for a signaling point of view to and obviously public market investors want to know like, well, is this ultimately a good business and why think that is? And for me up said, well, where we've bought a bunch of companies, but I don't really know what kind of business be. That's probably not gonna the right um answer.

So uh obviously, we contempt 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 are we saw the one hand, if you deal with a lot of license content and um you know this case from some major labels and obvious a lot of indo uh as well, but still relatively supply from from some big ones, the natural tendency for you to think, well, this is much Better because of the sudden you have this a much wider scope of different craters that matters. It's great. Um yeah you .

can do the aggregation .

theory that is all good great. We we don't really contemplate all all that much is obviously there's other chAllenges for that business of uh, moderation of the sudden becomes a massive thing. Um you have to build an actual add network are probably the scales.

So in theory, yes, you write uh you may have an opportunity to gain um more more margin over time uh in the smart l but fundamentally you I have to do many more steps along the way like we don't have to contemplate contel moderation as much when the comes to music. We certainly don't have to have this very systematic processes about what constitutes speech and um you know um violence. And we knew that because i've seen enough of these obviously platforms. But but IT is important because if you think about IT from A P N L, so so on on the surface of these these these models are great, right? Uh.

because a very high gross margins and ale pensive 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 I will come in and will be massive. But I think at one point in time, uh face broker now meta head 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. They can out run those fixed cost, 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 play tonic form of ideal social media business .

model for sure. And even today, if you think about IT, sorry ah well, maybe that's not one hundred thousand and more because they have been able to automate some of that process, uh this kind of miles game as well. So the other side is now using quite sophisticated .

yeah exactly .

to to to 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 facebooks IPO IT was something like the cost for facebook to on board a user was like a dollar a user or something like that in like hardware cost and all that stuff um basically to have lifetime value of a customer then so at that time, obviously the modernization was as well. So that was what was burning cash for quite a all. And then eventually their growth rate probably slow down enough where the monitise ation started, uh, kicking in and kind of scale up enough where where those two effects can uh 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 in order of magnetic more um 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 when you mean then come to IT to this and say, well, was that a mistake then? Well, we knew a lot about that going in and we weren't entirely knew IT wasn't like we were starting an add d business from the scratch. So we had already been .

for a long time.

yes, 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 a listeners, I think at the time, you probably had maybe two hundred million people on the ad supported teer who weren't in premium when you launch podcasting, maybe something like one hundred and fifty million, but you had a gigantic scale advertising business. You just didn't have user generated content being the content .

that I was advertising against. Yes, that's accurate. And and the amount of inventory obviously um that we were were monetising 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 monitise ation to a lot of these podcasts. ers. That parts, unlike yourself, cancel heads.

unless you're in a night like ours. If your subscale, you're never going to be able to access you ever, or P N G or coke, you know, on your so I want .

to ask you about that because I saw the episode guys David center, by the way. So so in he's interesting because like in my opinion, he's almost dig in more in like what made him successful and like tries to not at all where to broaden the base. So how do you think about that? Like because you could just go serve your niche even Better or you could try to like, well, let's try include other forms of content, like how do you decide what what type of content to go after?

And we are right in the middle of figuring this. I mean, you always said for a long time you are like I would rather not have growth and keep our audience who they are.

I'm not sure I go that far, but I would rather saturate our nit and then at some point stop growing, then expand the and then which I think we have three to four x had room.

yes yes, we we still can expand our IT. But then we did our tailor swift episode. We did the MBA, we did the nfl and we did L H and L B M. We got forty thousand new subscribers ww, and we like okay, to your point about like something is hacked here. Yeah like there's there's a new phenomenon.

So we we have had to redefine what acquire is basically once years since we started, IT used to be technology acquisitions that actually went well.

And then I was I was he was .

still and then IT. And so at some point, and we expanded beyond just tech founders and engineers that became venture capitalists also, and that he became the l PS. There's a bunch of university and dwyer folks that listen.

And now we're realizing as long as we keep making these really deep, really long, really esoteric c 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 the jo B2Be don e fro m acq uired.

Yeah, I think it's brilliant how 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 we are trying. Uh obviously I would I would probably assume the tailor swift wms more out there than than something else but but the L V mage one actually felt to me supernatural 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 assume would have been your crowd like I had a bunch of like really old school value investors that I honestly didn't been realized listen to podcast, been picking me about IT and I have you listen to this one and like uh which is pretty cool. Um so so I think there the way where there's probably some overlap between the audiences but also kind of clearly attracts a new yeah mean.

it's like it's a very, very different scale in different business. But IT is a little bit like the spotify adding podcast to a music for like we have this audience that is like traditionally very tech focus. We have this format that we were find. And now like, well, OK, if we bring something else in, do IT is that .

can I expand?

IT, yeah. But I will say unlike spotify, which you can buy 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 adventure.

Yeah, we create these serial episodes. And so if we go on a ender and do like we just did, locky, Martin and IT hasn't come out yet as we speak, but we could have done eight lucky mark episodes, and we chose two particular stories to tell. And we called that the lucky Martin episode here. If we went on a and did eight, then like we did underserved a lot of our other niches.

We did have episode s on tender two tender and we had a blast and people whose love video games had a blast but by the time the sagar episode came out, the people who don't love video games and video game history head stuff listening right .

but so 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 I just didn't make sense from an audience .

of 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 it's like that it's like soft engineering where like there's the first ninety percent, then there's the second ninety percent yeah and I think so much of the work is the last .

ten twenty percent yeah.

There is usually one thing on the cutting room floor so we're playing this idea of shorts what we did for sea in proximately one hour uh can we take one thing that just we couldn't squeak IT in and and um and tell one more story .

yeah I was just thinking about sort of touching upon where we are sure where uh, little while ago about sort of paid versus as supported. I bet you that there would be a very small one, but there would be an audience that we listen to all eight, whether you want to spend all the time, right? 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 are learn from from what seems to be resonating and now but but that's the cool part like where we're living in an internet where on the one hand, everyone talks about this fifteen second kind of clips um thing and everyone's sort of getting down in that rabbit hole. But then at the same time you could have like three, four, five hour long conversations in super eric very, very deep um topics and people love that too.

It's funny us uh joe rogan lex at the same time that short form is having a break out moment. Extreme long form is also having a break out a moment.

We want your reviews on this on our very small scale like were struggling like we have an acquired tiktok. We're on youtube shorts. We post on twitter and like none of that drivers the needle for us like we've had videos on tiktok, get couple million views. And we don't know if IT translated to a single new, or in many cases.

we do know IT translate .

to a single new, single room.

Welcome both of you.

Yeah, come to me. Thank you for staying with us. At the same time, you get your you are at least on the pig gest side, the home of the long farm content and you just launched the new wall street. All thinks it's the tiktok fiction .

of podcast is the new homework?

Am the new stream? Yeah, that both extremes seem to work. I believe one of the biggest problems we have in this new critter economy is um is the one of attribution, right? So you many craters like you um have or tried many of these different platforms and use IT. But um 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 craters are like under investing in other platforms and probably too sing Larry, just because they have success on one they kind of into all the others, which my advice told those, is that feels kind of dangerous to do because if there would be an allegory m change for any of the kind, uh even you know unanticipated by the platform because, you know, they may see that something, uh, resonates watch time resonates Better with some other metric. He doesn't have to be secured as an evil thing. That just could be something that actually benefits the user.

But but if you built your entire lively od of that one platform, that could be a big problem for you. So I see the mon investing another platforms um and then the other one also matter, which is there are over investing in too many, not realizing that, that actually they probably would do Better and just focusing more on wonder too. And so I think that there's two different problems. I I believe um that for us and why we care about this um and certainly we design them the home feed the way we did is um because fundamental how we merchandise content has to be very different for music, that is for an audio book or a podcast. And if you think about IT is kind of logical because in a song it's a three minute commit of your time and you can actually probably tell within the first ten fifteen seconds whether this is worth investing your time in or not unless .

is the radio head on that is true.

that is true. But you probably then know the brand and you know how to give IT the time and attention because, well, love, rather i'm going give this song a chance and may be not just one please. I'll listen to IT a few times before I make up my mind. And obviously, if you is now think about that with podcasting. I mean, if if i'm listening to you guys and even if it's a topic I don't necessarily know that i'm interested in, I might give you a shot because of you guys and I trust you because I built up this report with you.

It's a much bigger commitment though IT is a .

much bigger commitment for sure. But I may give IT ten, fifteen, twenty minutes, right? Because I have that relationship.

But if I never listen to you guys before, yeah that a one hook that gets mean that how many people you you know marketing, you usually had her. 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, ed, that the geographically density in which that happened was actually key sort of contributor and a time line. So much of our early marketing efforts were in college cities in the U S.

sense. You have like consumers are probably more attune to music being a big part of their life um small geographical areas. So we we kind of bomb IT did a bunch of different things that .

successful in retrospect, now got how long fifteen years later was IT almost like a benefit that you had to launch geographic ally, specifically because of the label negotiations like that. You could really sacy sweden, the U. K.

For moving or, oh yeah, for sure. We all believe that this, like sort of internet companies ago, global day one. That's like the right approach.

I I actually think nineteen nine, two nine percent this is just untrue and false. The entrepreneurs, the revise we are all are benefit from constraining ourself to finding what our first audience is. And IT could be geographically ized.

IT could be um that IT actually is um you know again subset of a demographic or or or whatever, but but but more often than not is 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 had not been that we couldn't launch in the U.

S, S. Our first. And and if you ask me at the time, I was like a huge kind of step back to say, well, I can't launch the most uh, biggest market in the world and i'm i'm running a little a company life come on.

You told the stories of you believed and you told investors like we're going to be live in the U. S. And like three months yeah having the conversations .

yeah and then there .

was three years later yeah .

you must have been so stressed yeah um well I had many A A many of those episodes and and IT always followed with enormous weight gains and hair loss basically you literally rip your .

hair out yeah pretty much .

like I arted when I started, I had her and then like two three years later I didn't have when you started spotify you at here yeah wow yeah there's like all pictures of me with hair like from the first year or something and then you can all disapearance wow .

and I don't know anything and .

worth IT and worth the trade um um so obviously I I I I think IT hasn't but obviously I can't recommend um IT is an emotional role across you guys know this being an tremendous r is not for the faint arted.

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, uh, whether we're gonna live tomorrow or not. And I can hit um how media purchased this and sometimes have on 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 pat a lot of luck. I worked in sidedly hard uh to get to to even half where we were today. And then it's been a true sort of emotional roll coaster. And IT is true when you say, but like for me, had you told me how hardest would have been, I wouldn't never got IT. I'm happy I I went through IT, but I would have never .

done IT all right. Listeners are next sponsor is a new friend of the show. Huntress huntress is one of the fastest growing and most loved cyber security companies today. Its purpose built for small emd size businesses and provides enterprise grade security with the technology, services and expertise needed to protect you.

They offer a revolutionary approach to manage cyber security that isn't only about tech, it's about real people providing real defense around the clock.

So how does IT work? Well, you probably already know this, but IT has become pretty trivial for an entry level hacker to buy access and data about compromised businesses. This means cybercriminal activity towards smell and medium businesses is at an all time high.

So hunches created a full managed security platform for their customers to guard from these threats. This includes end point detection and response, identity threat detection, response security awareness training, and a revolutionary security information and event management product that actually just got launched. Essentially, IT is the full suite of great software that you need to secure your business, plus twenty four, seven monitoring, buying a elite team of human threat hunters in a security Operation center to stop attacks that really software only solutions could sometimes miss countries is democratizing security, particularly cyber security, by taking security techniques that were historically only available to large enterprises and bringing them to businesses with as few as ten, a hundred or one thousand employees at Price points that makes sense for them.

In fact, it's pretty wild. There are over a hundred and twenty five thousand businesses now using, and they rave about IT from the Hilton PS. They were voted by customers in the g two rankings as the industry leader in end point detection and response for the eight consecutive season and the industry leader in manage detection and response again this summer.

Yeah, so if you want cutting edge cyber security solutions, backed by a twenty four, seven team of experts who monitor, investigate and respond to threats with unmatched precision, head on over to hunt us dot com slash acquired or click the link in the show notes are huge things to huntress .

we wanted to ask about, I wonder if you consider this one of those near death moments. But because we did the teeth weft episode, we talked a lot about IT on the show the week that one thousand nine hundred eighty nine draft and Taylor pulled off the platform. Do you consider that one of .

those moments really enough?

no.

Uh, that's the .

crazy part. Uh, with IT IT IT was one of those where if you asked us um externally IT felt like this massive event but if you if you were inside of spotify that moment um there was no one who thought that that was sort of the defining moments uh we certainly worried about OK.

Well this is the beginning of right like more artists um sort pulling out at a um for a few days um and and then you know I spoke to a lot of artists, but um um I think uh there were certainly a lot of scepters uh about spotify at the time. But but generally speaking, there had been enough things in europe where people really saw like no actually this kind of works maybe doesn't work yet in the U S. Maybe it's Better for her to do this thing.

But there was enough people that believe at that time that um there was only a matter of time before the U S. Would be majority streaming to the sort of uh way it's been portrayed often times which spotify particular has been like this sort of dogmatic IT has to be uh all in with me or not and and actually does not how I advise artist or creators. I always tell them like this kind of and is kind of unusual thing because everyone wants to build their own platform and and so on.

But but my firm view is that um truly I believe in open as the model at its core. And so my view has been like there's there's some artists that at that time I don't believe IT through anymore, but like the adults of the world that probably benefit ted from physical scarcity. That probably didn't need to be on streaming, probably um should have done a window type model. The number of those artists uh we're going to be very, very small yeah um but he was certainly one of them .

was that because of the demographics of her uh, audience I think .

so but also SHE on her own um can basically control the site Price right like SHE can decide that this is a big cultural moment well 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 yeah ah for a moment. And he did brilliantly with this, uh.

album launch too. I sing up till my night. Yeah.

a lot of I I don't know if there was hundreds, millions, but certainly ten millions of people literally waited and sort of SHE got them in on the hour. And IT was like at each hour was another sort of gift so SHE played that to perfection and and she's really remarkable at understanding how to speak to her audience um and he does IT authentically so SHE can do that and there's definitely other artists that can do the same but uh was rarities for her to have that kind of site guests um in connection with that uh deep connection without audience the the the fan base that he has uh how vigors uh and how intense they are at that scale. That's the unique thing, right?

Was there something that changed between twenty fourteen and when he came back on spotify, uh, where IT may have made sense for her not to be here in twenty fourteen, but then in twenty seventeen or whenever that was that he came back that the world has changed enough where IT did make sense? And how did the relationship between like to do you actually talk to her? Like how did that all go down?

Think the predominant thing that changed streaming just became the majority of the industry in in a bigger way. So uh, if the option was like, hey, am I am streaming or not on streaming, do I think he could reached number one at that point without streaming? Probably not would have been the answer and and she's super smart. So he understood that um two .

point like even in twenty fourteen in europe that already happened but IT hadn't happened in the U.

S. No, that we hadn't happened in the U. S. We are much earlier.

I mean spotify that time was like five of three years in the U. S. Streaming penetration was relatively low. Radio was like the the predominant thing. Um at that time a physical sales. I was still very big um you know I remember I think I was a little way that thought like three million albums in that year uh on costco out of all places yeah it's it's some sort of demographic connection thing was going on.

I love that the early monger a little way in costco cost cells more chickens .

than anyone in the us. In the world. Actually costco just is an unbelievable distribution channel.

You can yes, we were talking about IT before, uh, starbucks and and how Charles was actually one of the biggest retailers of cds uh, in the west. Ah that's actually how i'd met in the first time. I really yeah because were they were a becoming a .

partner that's exactly .

at that moment and got to known. Spend some time with them. So yeah I mean, the world just looked very different uh, back at the time and I think that changed. And and yeah I mean, uh ever since, uh, she's been great with the team and she's per smart.

That was our big takeaway for the episodes. Just like he is really, really smart.

And I were talking before the episode are 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 a become obsessed 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 um because I actually believe these days, if you consider a mega artist of that structure, it's like they're their own enterprise and there are the sea of that enterprise there. They certainly people who help them. But at this level today, there's almost no one of them that's not very active as well in on the business side and understand deeply what their audience wants, what's authentic to dam um by making move x. How does that affect that relationship? And was super cal to me is that you know you you have everything from from the tailor swift of the world um and then you have um something like B T S which is like insane.

And how are they different because there is the same order of to the scale, right?

I don't pretend to know all of tailor swift business sites and who's involved in everything um but from from what I would guess, you probably runs with a pretty lean team.

That's what we heard boomer research in the epson.

Yeah um and that's certainly our interaction with with her is like very tights uh very lean. Um and then if if you think about um something like B T S, but I actually quite a lot of the crean artist IT is like an industry. It's huge.

Just on the song writing side is the difference between of tailored rift campus like two, three, four, maybe at the top in some koreans is two hundred writing involved and that's like 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. Do you become a member of is yeah that could .

be your next deep type because honestly, IT is fascinating how they do IT and the three sixty, how they think about IT, not just from sort of maximize the recorded side but actually thinking about sort of fan development, uh, all the digital platforms, they have their own developers, programmer building specific platforms and it's it's pretty cool.

One thing i'm really curious on that we had thought about before we came here yesterday to stop them when we were talking with other focus on the spotify team. I'm curious in this lens what the past few years have been with bad bunny and regret on. And i've heard you you talk about that you knew from the data on spotify that this was going to be huge. Now I think it's the largest genre.

and many of our listeners will not know either of those two terms.

You just to and I think this is a broader trend, right? We're now living in a very global world. Uh, when IT comes to culture um at the same time there's still a lot of local nuances, right? So um it's this extremely that we talked about on the one end um you have this super super ntia um that exists.

But then once every blue moon, one of these new shoes kind of develop into something that's actually quite simple and you can start realizing that maybe this has a global appeal. Um on top of IT. So in law term as an example uh gospel music is quite big ah and funk music is also quite big okay well that's probably not what you associate with popular music um but there are real things that obviously exist in microcosms elsewhere like you could probably guess in the south, in the U S.

Goal spill might be a larger generate sector. Um so it's not like it's totally kind of islam and just happening there, but there's something that creates uh sort of culture restaurant once a with um those types of styles and then you have something like region and and is is usually starts pretty small and then actually in in each clusters kind of like starts developing more broadly. And and when you really look at IT like IT pass, often times a pretty huge diaster outside of that sort of near region as well.

Mean, uh, eis matic population, the U. S. Would be kind of an obvious one right pencil. Many years ago, we kind of start seeing then breaking out their natural clusters and becoming a pretty big thing. And I was for me at that time, I was just pretty obvious that um if we invested in that journal um 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 the examples where I did but like that's like it's just so what maybe the acquired audience, not as many people know bad bunning 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 and spanish ed to bad money.

So they know what they learn about the that would be a very different thing. There is a lot of local cultural things that seems like what is talking about you know someone cheating with this one and all these kind of relationship stuff um that's the through local nuances um but but yeah I mean yeah that that's the fascinating thing right but but the same same time uh you probably wouldn't have uh imagined M S G being sold out.

And like twenty thousand, 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 its music IT makes people feel there's something about the artist there's something about how their communicating uh the resonates with U S. An individual um and IT is the foundational storytelling we've always use music.

IT is so hard to describe art right like we we can objectively describe but 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 and that's the amazing thing about what we are able to do. And the really cool thing is you you're able to take artist that otherwise you know um perhaps may not even have been able to be professional and and now they have a global audience. I don't know how to express IT other than 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 is just resonate with people, uh, all over the world instantly like how how do you do that?

It's clearly they are tapping something innate to humans, independent of culture, which absent data, if you were to ask me and say, hey, do you think that um 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 I would probably tell you like, no, it's more about nurture than nature. Yeah yeah we are legally .

talking about on the intendo episode like there are always thinking going to be a handful of cigale motors in the world. But until recently in the gaming industry is still pretty much the case. Like you need to also have the luck of being being the one diagram of a cigar.

Ea moto, who happened to be the arcade cabinet designer at intent do in order for like the possibility of mario insulted to happen and and like in music and p casting. Now in this world lake, everybody has the opportunity. Not everybody's cheer me ad most people aren't, but you have the opportunity to be one.

I think that so interesting uh I was starting to ted surrenders about this. Um he's on on our board and um 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 in intendo s you have to have the resources unable to build a game and that's still not cheap um and it's expensive and back in the day, maybe had to build the entire console in even have a chance of doing IT um but these days you still like a trip live game h is three hundred million dollars yeah .

very big product five years very .

big productions right and and a sure you can build an india me and so honors of forth. But but but is still a very limited number of people they're able to do that. But even in filmmaking or in T V series, uh the amount of people that used to be able to be show runners or like producing or direct in this thinks IT was fairly limited group of people, right?

Yeah very socially connected people hanging out and a part of the studio. And IT .

probably mattered a lot not to diminish any of their talents, but IT probably matter who you knew um was an integral components and having talent. So you kind of have two different things. But in the last few years, as the budgets have expanded and certainly the netlist case um IT would have been physically impossible to just keep this um same set of producers, directors and set 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 last time directors and producers not just to sort of local productions but actually now coming to other ge and in doing that as well. And i've seen IT in in in my case um there's been a bunch of swedish um writers and producers and and uh actors. Now there they are getting into hollywood productions and it's been you know fun to see um and and not just the usual names but actually like some more unknown talent um making its way as well.

And there are more people trying, but there are also more opportunities. Um and then obviously, you mention on the podcasting side, the same is through there, but but it's through on both sides. That's that's the crazy thing.

But there's also some more competition, which is I think when when people are are talking about spotify, criticizing IT, that's the part I think is the biggest misconception because they hear so many, many people who are trying and IT doesn't work where they're not making a lot of money of IT. They're naturally sort of join the conclusion that hate there has to be something wrong with the model. This model can't work. But 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 .

and and I think that's a podcasting is like much earlier in its maturity. yeah. So we may not hear that plus we don't have this sort of i'm not sure a pod caster sees that as uh, it's a sort of given that monitise ation is there and he needs to be there from day one.

Whether I think obviously, with the professionalized of music, that's a much bigger part of the expectancy, but that's actually a kind of a relatively limited part of our human history. It's not been you know, it's probably the last one hundred years that we've had recorded music and a thing of form and yet it's part of the cop right regime is part of like um some pretty um important loss. Uh so I think he comes with a different expectations. Cy, and i'm not saying that's wrong.

I'm just saying just the arc of history and I was actually gna latch on to something you talked about, that being creative to one of the things I often think about when you think about sort of the history music going back to IT at the time of most other, if I wanted to create music, the reality is I had to be a musical genius because I needed to hear every single tone in my head um every single note. I need 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. But they were doing and then making small tweak. But by that time, I had to be pretty perfect. And so sure they could play a little bit on the piano but then they kind of needed to visualize but somehow uh internal lize what what that and are being.

So having a whole orchestra is the triple a .

game equivalent yes exactly. Um and so obviously very few could do that, but also of the process of creation process was insane because you you needed to do so much and then you know you you move forward and think about a sort of the era of playing instruments um and take jazz which is highly technical right like every single member in a jack band is excEllent at the insurance, right, like really excEllent and it's really hard like it's really hard to be that good of a musician and and play jazz um and then you know fast for a little bit more and take um someone like um you know swedish a which as an example.

He was a brilliant composer. He truly was. But um he didn't really know how to play any instruments .

IT turns out that technical musical proficiency mayor may not be correlated with making great music .

actually exactly my point but but he actually had a different tour. He had software, right? And he's actually he was really good at that software.

He know all the norms and um a plugging and all that stuff, how how I worked. And a lot of musicians are that way today. Like if you actually look at the workflow, it's very technical.

It's very uh detailed, is very new ones. Like I have this a thing that I do where I probation met this. But like I said on ubon evenings, I look at music producers, their workflows and like when they get into the weeds of like decoding how they do.

So what we were like having, just like our faces look up. We walked in the studio. We like, we think we are like highly technical podcast producers.

We think we like point one person. I think, I think we are you know Better. And then we walk into the studio here, you know, in and we like this is just a scale beyond our imagination.

Yeah, yeah. We're very fortunate and it's a lot of fun because our love just hanging out here too because we've all kind of everything that they 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 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 have they've kind of have the plug in sets they've got like these sixteen things that they they see shame together in order to create that one effect, that to find steam and so on. And so fourth, so the barrier still like if you said today, I wanna 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 either. But but but I would still argue the bar for you to sound make something that sounds professional would actually be up up high quality selling IT requires a lot of time and a lot of effort.

and IT might be less capex and less equipment. I need you hear the the rise of the new apartment music producer on the laptop. But IT still takes an enormous amount of itself, training, mastery, creativity. My opinion ist IT.

IT takes only 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 meal and all these other apps, you can probably make something. But from there on to actually compose something, getting into the the A I D of the workflows, the plugging all that can concept is quite a lot to master. And I think that's the potential power with something like A I obviously right, which is were most likely going to have another order magnitude of simplicity. You know on on a personal level if if you're liking that to coding, um I used the code but I haven't now for for about ten years and so probably a little bit embarrassing to admit but the barrier to entry or reentry uh for me was so high with all you know no 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 so hundreds of hours probably for me to kind of rea acquaint myself with all all the stuff ery.

Do I install the P H. P 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 fun of IT like wanted to start doing stuff and ask ChatGPT to help me and pretty much um on a few hours on the sunday afternoon I was open running and and uh because of that sort of start help, I had my my own sort of environment set up. I was contributing code.

I was iterating did you contribute code to the spotify code? But no, they won't let me do that. Yes so i've got ta live more work to do before before .

they allow test yeah .

I think out of spite they probably we won't let me do that and 那个 they pride themselves on on not uh I don't have any access to any of the actual systems um but IT was uh was such a liberating feeling because IT IT made the reentry for me um so much easier 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 in the world that probably a recording stuff, but there's hundred, two hundred million something like that is playing some kind of instrument and expressing themselves musically ah there's nothing to say that I wouldn't be possible for those one hundred million plus people to make something that actually sounds pretty good. Now again, um what what is that going to going to do with the music industry? And is is really going to be that all the sudden everything becomes commoditize.

I don't believe so because we've seen time and time again, the quality arises to the top and actually becomes even more valuable um in that world. Photography being the sort of key reference point everyone instagram came oh no no one's gonna photography, but Price of fine art photography actually increased, not decreased. So maybe U S, you're going to see both thick cream.

You're going to see the middle of and wiped out more people participate. But the very, very top is probably going to increase in value um as well. Y'll figure out other things to do with this technology, but IT is pretty cool for humanity. We talked about that being able to relate and like expressing ideas um every permutation of every cultural idea we'll finally be able to be expressed.

We'd never been .

in a world where that's been possible before. And i'll be really fascinating to see what that means for our understanding of other cultures are the ability to relate other people some really cool.

This is kind already happened over the past few years in podcasting too, right? Like there you probably know Better than me millions of podcasting out there.

a lus. I'm little bit more than double that now really. Yeah yeah. wow.

So like it's kind of like these numbers, like you talk there four, five billion people out there that like I can make a big test now and yet the very, very top ones are still like of a quality bar that is so high and getting higher yeah but like I heard you guys talk about this that you know 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.

happy. Yeah yeah.

And then bring them to other around the globe, to other audiences. yes.

And right now, obviously that's the manual um process where um you know we have to hire voice actors that reenact that we have to kind of tweak to script the little bit to make IT culturally relevant. And obviously this won't be used to you but perhaps the some real listeners that, uh, I mean, already probably today, IT won't be a 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 say so you have x now the A I D G that speaks many languages. Well we've had .

him speak swedish uh for sure. I know obviously doesn't know swedish but but it's only today available uh with international is a little bit of uh so it's it's really all the english h 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 exports. A purse, I think that would be totally possible. Um and again, the largest problem today is the cost per minute would be too high for most podcast.

I think you guys could actually support IT probably with your model, but pod casters couldn't. You know, I don't know if you guys seem assumed this, but like, mr. Beast has like a spanish language. See, I don't know if he has like, you know, french one that set up, but we certainly has a spanish language computer .

translated or or humans rerecording, uh.

I think is humans rerecording IT at the moment. Uh but it's huge. I think IT may have like fifteen twenty percent more of subscribers, uh additional subway without more than what the english language one has. Um so so it's it's like a really um a really big deal and I think that's like the next step, right? Like where well, you know in your case, like why wouldn't you take the l image episode make IT all in french with .

the french yeah .

we want to think our long time friend of the show, venta, the leading trust management platform. Venta, of course, automates your security reviews and compliance efforts. So frameworks like soc two I saw twenty seven o one gdpr and hip compliance and modeling ing vent to takes care of these otherwise incredibly time and resort training efforts for your organza and makes them fast and simple.

Yeah, vana is the perfect example of the quote that we talk about all the time here and acquired jeff bases his idea that the company should only focus on what actually makes your beer taste Better. I E spend your time and resources only on what's actually gonna move the needle for your product and your customers and outsource everything else that does IT. Every company needs compliance and trust with their vendors and customers. IT plays a major role enabling revenue because customers and partners demand IT. But yet IT adds zero flavor to your actual product that IT .

takes care of all that for you, no where spread sheet, no fragment to tool, no media reviews to cobble together your security and complaints requirements in is one single software pain of glass that connects to all of your services via s and eliminates countless hours of work for your organization. There are now A I capabilities to make this even more powerful. And they even integrate with over three hundred external tools, plus they let customers build private integrations with their internal systems.

And perhaps most importantly, your security reviews are now real time instead of static, so you can monitor and share with your customers and partners to give them added confidence.

So whether you are start up or a large surprise and your company is ready to automate complaints and streamline security use, like fanta, seven thousand customers around the globe head go back to making your beer taste Better head on over to vantage outcomes sh required and just tell them that then and David sent you and thanks to friend of the show, Christina anta CEO, all acquired listeners get a thousand dollars of free credit.

Vita m slash acquired. I've been uncomfortable until now um using any sort of A I for any seconds of audio in our podcast. We always played around with the descript replacement of certain words but then we never shipped in production because I was always like um IT doesn't sound quite as good and everything should be hand mastered and acquired. And then for the first time on a recent episode, uh, we used an A I tool that dramatic editor found a dramatically increase the quality, the sound quality of the episode based on the mike that the guest was using. And once you start doing that, you're like, well, I mean, shouldn't A I 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 is also scary, right? Because uh, it's totally possible uh, for us to make an entire episode where we're seeing totally different things that were seeing now and IT at some point in the future might be virtually in english will from the real thing.

Yeah and and platforms probably have a role to play in verifying authenticity like that, 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 craters and we can stamp IT and say that this creator no no.

I think you're you're entirely right, which is why you know um there's been a lot of sort of debate around the elon mosque. The subscriber thing and and actually as usual, when you teeth IT out, there's many different the things in that controversy but perhaps the most potent, the most interesting one has been the one around the the notion and idea around like staking as a way of producing um the bot um thing and I feel like so much I just ended up being sort of, hey, you do I have to pay in order to reach my audience now that kind of switch 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 uh of spam, but also increasing kind of uh the quality of verification and uh being able to truly understand what's what in in the what is so interesting .

that um we were talking with a friend is a creator peer but um his platform twitter and you can't monetize to really like there is no understand yeah traditional social platforms like that. You can get them on one into the spectrum. You've got spotify what maybe spotify podcasting and then spotify music at the far and you get youtube can in the middle how do you think about what role for moniz ation maybe especially on the power gas sting side um spotify .

should play for creators yeah mean um our goal is to be the best partner of craters um note not the only partner but just the best and and win by by basically um not forcing the crater to do something, but just offering a really good way for craters 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 critically.

May even be a gatekeeper uh or or gate between them doing something on that platform or not and maybe they have switching costs, uh, relative to what other stuff they're doing. Think about a cradle that's in a traditional media ecosystem of day when I like take their thing, okay, well maybe my uh this would I would be less valuable on cable or whatever other thing I am on that would be one end of the spectrum, right? Um and then you have another creature that may have an entirely different business model. I don't know about your other twitter creator friend, but perhaps that crater either has a different business models somewhere else.

Will you have to you can't have moto witter?

Yeah you you can do that. But you know the question is if if that's truly a crater or you know um you could argue vcs a lot of them as the marketing yep yeah there are many different ways and the needs are different um which is why you know for some of them they were probably happily for thin all the modernization because they feel like they have such a strong other business model. Um on on the customization .

point is really interesting too. And I think that's the that's the really interesting nuances about about youtube because like on the one hand, I think youtube for creators is amazing because you can completely abstract act the business like you just make content and they take care of the business and you get to check. On the other hand, like you know, I can even remember if we have heads on uh, youtube beads on .

because like do .

we want to spread add in the middle of this, like no, like we a creative control and like you lose that. And if the platform is like too opinionated about what's go happening with modification.

most of us as platforms go, uh, we have to start out um very simple with our model straight and IT takes a long time to then change that default um setting. But I mean um I I even talked about the music um 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 um like, uh well let's do window lets do this and that it's sir because that was the only way. My biggest um problem was getting everyone 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. Uh, you may look like something where there is going to be a lot more options for what a created shoes to do. Uh, I certainly went hope so, and we're certain in going to work towards that venue. But any change that we're doing with the scale that we're having is going to be that's going to be winners and losers is almost impossible to find a single thing we can do that just university going to help. And that naturally, naturally creates the constraints that is more of a one way door than a two way door where we can kind of like iterate and invest on IT. So I am fairly certain that like what you're seeing now in this world of platforms and and crater ecosystem is if you ask um youtube, um O K if you have to, if you could redesign the platform right now, uh, would you just make all the same decisions you made about discovery and motivation all over again? The answer probably .

not almost no yeah right .

um as evidence actually buy shorts that works a little bit different on their platform, right and they're all different too because shorts uh obviously you have many more potential impressions of the shorter period of time.

And you know an average youtube video has been x minutes um and that means more interstitial and then we have host red ads or the equivalent of of sort of a more native ads or paid promotional ads that both instagram, youtube. So we're living in an ecosystem where on the one end ten fifteen years ago there h we were very primitive in terms of moitie ation. And today IT is very, very difference.

And I kind of think about IT in a way like this is not to the similar from mom and pop shop step sort of like coming up in the U S. As a cultural norm. Um you know on the one hand um you you had physical infrastructure, urban ization driving these kind of things uh where we both created this uh mega a walmart of the world um as tract consequence but actually the complete opposite was also true.

We have this hyper local thing at sea. Um and if you think about IT today, these mom and pop stores, once they're still around the hyper distinct in what they're offering, they're really focused on community, many cases really knowing your customer, their offering events around their stores. We're offering obviously online things through a shop fire and so on and so forth.

And in a way, I think about IT in a very similar way for the crater economy too. Um we had to start very simple IT was based on a very simple model where ah there were free platform and 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 A A cilly revenue sources around them. Three sixty very similar again to mom pop shops like where you could live events, you could be doing merchandising, you can build another business like kid gender or something on the side like .

this is a true at scale. Now tail swifts monetizes through everything you're talking about, coffee does doesn't have .

and it's necessarily had to be because dreaming well at first that 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 well, the industry was indrajit 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 tailor, swift or you're any big artist, you're not making as much money streaming as you would have on C, D sales in the C D 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 you are sort unique conStellation of revenue streams are because it's not just gonna be warm arter targeted is gonna 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 drive from recording music but um the chAllenge to that what I would say is that the time in history where that was through was actually very is the .

he of the C D. A right? Yes, I wasn't true back in the radio.

And so the question is what what what's the analogy? Was that like that 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 when recorded music was sort of the prevalent and um revenues 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 podcast, whether you're musician, are instantly creative people. And I love seeing people like yourself for David or sand or a Taylor swift, or whoever .

rogan or whoever that .

are like really deep um on whatever their passion about and they're able to get across the microphone and and having lots of people uh that can resonate with them.

What that opens up like so much more opportunity. One of things we learned on the L. V episode is that liana became the first female recording artist billionaire because of fenty beauty. No, I like imagine that in the C D, like that have happens and that .

thing seeing part two, right? Because, uh that theme, uh in a way that doesn't necessarily if you think about an Elvis pressly um what time did you take for obviously sly 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 too uh frame to do that ensure IT was worth a lot that billion then.

But IT was hard, hard to scale to that. And then you think about IT, how many artists today get to be heard by billion people and actually that numbers a way higher and its way faster for you to do IT. No, but because it's not a scared anymore.

Perhaps the the societal value flash monetary value, whatever you want to put IT on IT maybe isn't the same because it's not a scares. But as you said, if you're smart, how you do IT and this is the sort of the the site guys on how you executed IT doesn't work when it's not authentic. So you take the leona example.

I worked because he had a way to do IT, which was authentic her, but also author to her audience. If SHE would try to a flog something else that you didn't care about, IT probably wouldn't have work. And that's the unique thing when when you realized, and you think about yourself as an enterprise .

and you j .

and exactly which solved .

campaign L V H recent ter fifty percent stake yeah but .

back to that, they're incredibly talented uh artists and they're incredibly talented a 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 the way that you grow and having a completely different strategy to add each next hundred million users. You guys are now over five hundred million users.

A I didn't know the scale of that before I started searching, and 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 it's not well understood by the public or certain isn't 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 continued to stack these s curves on top of each other and do completely new different business activities while maintaining the cohesive veness of one platform?

Yeah, I think is a very stute observation um that you're making that um it's it's not been sort of being able to just ride on this micro tailwind and just do that. Um but actually it's been many different things that's driven this success of spotify in the the way way I I often times talk about IT is if you think about an exponential al curve, um if you really zoom in on that expensive curve, IT actually is like a lot of different linear uh curves stack on top each other. They create that kind of an exponential curve and this will sound like A A little bit of class.

But what i've really realized perhaps even in just last two, three years more, I I, I, I knew IT that I could talk about IT, but I hadn't truly internalized that is um to be uh intentional about the culture your building right there are many different cultures that can be successful but there are tradeoffs with each um cultural expression and often times today what I see with Younger entrepreneurs is that they're unintentional about what type of culture there they are. So they flip up between them so as an example, you know we all you know many years ago, I was certainly enormous red with google, right, like that twenty percent projects on all these different things. These are cultural expressions, not the culture itself, but it's the cultural expressions um so that's where where where the early inning to spotify culture was like i'm sure almost every so comment company of that era um 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 as a first.

And then you had like an amazon kind of uh model where on the one end IT was incredibly long term but also may be a little bit more bottoms up innovation, then top down um and then you see another cultural expression with like a test were incredibly top down, incredibly focused company actually for this type of scale um that they're doing. And my point is I think the most important thing um is to really, really think through and be really, really diligent about the culture you create. And we certainly were victims of that as spotify because we had taken all these different things that certainly things that were spotify.

But we kept talking about all these other companies. And we like we would like this thing that amazon is doing, so we should copy that. And then, oh, we like this thing that google doing, we should copy out.

And actually, what and that are happening was we were, at one point in time, almost like a little bit of a Frankh time monster, because we had some of the stuff from everyone, and we had some of the bad stuff from everyone too. Um instead of sort of really, really leaning into that and then sort of without really being intentional about IT, we we started iterating and improving on that culture. And I often get this question.

So for instance, uh, 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 expect of of spotify. And the mental model may be, pay your music. APP is so amazing.

How come in twenty nineteen your podcast just sucked? And so that must mean that podcasting will work. Having a separate APP must be the the right thing to do with that up. Um and and what people can realize this, we're actually one of these companies that happy label release something else that's not great. They probably have the right strategy, but execution is a super crisp and perfect.

You said this about audio books at you ve got on stage to the public and said we have audio books. I don't think it's great right now yeah .

um and it's serve and it's not great right now, but we will make a great um but that's a different culture, right? And that's one where we're IT rating on. But then the flip side of that uh would be something like A I D J where um actually I think IT IT is really high quality and unlike a lot of other products um that R A I, where it's really kind of monkey, we've made something that's actually working. IT is working on very large scale, probably one of the most popular A I products out there. Now in terms of reach, we don't really touted all that much but is huge in terms of like moving our metrics in a pretty substantial way .

like discover a weekly huge yes.

and I I think you even out to discover weekly. Um so IT is really cool, but we had to be super intentional about IT because we knew that um IT wasn't area where um we had to think through the consequences of this because of you would be highly so as you can imagine uh one of the benefits by choosing to do IT for music and not for podcasting was um obviously that he would have been uh horrible if we have somehow summarized, said something based on a podcast um that I wasn't safe or or or culturally attuned to say and yet with music it's kind of the the primary canada plus. Is the one where we have a huge audience is listening in the background every day.

Uh and the reason wants more context and and my point being is um understanding when to do which um and understanding that there there's both these cultures are perfectly fine um but just being very intentional about when you are choosing to do what and having the right mental models and and not sort of becoming half past in everything but actually become really good at what makes you you and I would say that probably other thing that been hugely important and that I wish more people talk about IT, yes, there are not many of us, but there's a few of our few companies like spotify, which in a way, it's been heavily influenced by silicon valley. But we are not silicon valley first. So that sort of notion of being on the side and watching um and sort of iterating in a corner, spotify definitely sort of not the overnight night success. It's been a sleeper for many, many years.

And when you started, the common wisdom was anybody who starting an online music thing IT will die. I think you saw advice from hundreds of people who all told you don't do this. This category is toxic.

You 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 we started getting some some real uh first learnings. And I think this is like really key because if you think about the ones we talk about, us iconic companies, the apples amazon uh of the world, we all tend to forget a few things. But one is that many of them are quite old at this point.

There are twenty plus years old. So theyve 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 I was on, sure, there was microsoft, but they started that company in seattle, right, where there was a software company that was really big, but it's not the same culture they didn't .

started and about.

And I like to believe that that culture became very district also by having to figure out its own things from first principles and from learning rather than just being able to gathered through all smooth. 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 journey and where I feel like where we're just right now getting into our own of like what is our culture in a very unique way. That is probably the most exciting thing for me at the moment. Still being here modified seventeen years.

I ve says final thought from you because a IT so matters. Uh something that surprised us from the L B M H episode is just like all of those brands, which are like, you know, the most iconic things you have, both owned by the image.

ones that aren't like our means.

They are all end of one. You can copy them. They don't copy anybody else. They are their thing. If you're going to be around for four hundred years, that is by necessity the case you are not taking .

for 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 to. Because when you started, you were the company that figured out how to make IT. So music felt like I was on your hard drive and play fast when IT wasn't through a hybrid of peer to peer and clients server solutions. And that sign at .

all think it's some way IT .

has to be A A very like uh methodical individual journey to to figure out 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 I was probably three years ago very, very, very really clicked for me like oh that's what that actually means. It's not twenty percent workday. That's just an expression of a culture.

The more interesting thing is um the true culture of what makes google google or um and amazon and amazon and I don't even know whether that's possible to change doing 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.

Daniel.

thank you so much. Thank you guys for coming. Really appreciated.

Thank you are hosting us course well lessons.

Thank you so much for tuning in for this conversation with Daniel. We'd love here what you think, of course, in the slack at acquire dota m slash, slack, wear word always hanging in out discussing episodes. We released them um but there's a new spotify feature that you playing around with two David.

what is IT? Yes, spotify. I just launched this stream on recently. There is a question on the page in the spotify up for this episode that says, what did you think of this episode and you can reply and leave thoughts right there.

Awesome will. Thank you so much. Listeners, uh check out in any podcast player A Q 2 with awesome recent interviews and uh many more to com。 I think we have the best interview lining up that we've ever had here on acquired come up.

So subscribed the E, C, Q, two to get access to that. And I think that's IT this. Thank you so much. Thanks to spotify .

and Daniel. We'll see next time time. Easy you, easy you, busy you. Who got the true.