Spotify CEO Daniel Ek

29:58I 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 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 what seems to be resonating and all, but that's the cool part. 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.

30:36But 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, we're struggling. 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.

31:15Right. To the pod. Or in many cases, we do know it translated to a single new subscriber. A single new subscriber. Right. Welcome both of you. 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 tick tockification of podcasts it's the new home screen the new home screen yeah yeah both extremes seem to work i believe one of the biggest problems we have in this new creator economy is um is the one of attribution right so you know many creators like you um have or try 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.

32:04And 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.

32:45So 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 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. And if you think about it, it's kind of logical because 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 radiohead 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 gonna give this song a chance and maybe not just one chance 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 for sure but I may give it 10, 15, 20 minutes, right?

34:22Because I have that relationship. But if I've never listened to you guys before, that one hook that gets me in, how many people 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 US. Makes sense. You have like consumers who are probably more attuned to music being a big part of their life, small geographical areas.

35:01So we kind of bombarded it. We did a bunch of different things. It was 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 UK 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.

35:42And 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 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.

36:25Like, come on. You told the stories of you believed and you told investors like, oh, we're going to be live in the US in like three months. We're having the conversations. And then it was three years later. Oh, yeah. You must have been so stressed. Yeah. uh well i had many uh many of those episodes and and it always followed with enormous weight gains uh and hair loss so that was basically you literally ripped your hair out yeah pretty much like i i started when i started i had hair and then like two three years later i didn't have when you started spotify you had hair yeah whoa yeah there's like old pictures um of me with hair like from the first year or something and then it kind of all disappeared.

37:09Wow. 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.

37:53It's certainly not been my journey. Like my journey was, you know, I had a lot of luck. I worked insanely hard. to get 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. Wow. All right, listeners, it's time to talk about another one of our favorite companies, Statsig. Since you last heard from us about Statsig, they have a very exciting update. They raised their Series C, valuing them at $1 .1 billion.

38:37Yeah, huge milestone. Congrats to the team. And timing is interesting because the experimentation space is really heating up. Yes. So why do investors value Statsig at over a billion dollars? It's because experimentation has become a critical part of the product stack for the world's best product teams. Yep. This trend started with Web 2 .0 companies like Facebook and Netflix and Airbnb. be, those companies faced a problem. How do you maintain a fast, decentralized product and engineering culture while also scaling up to thousands of employees? Experimentation systems were a huge part of that answer.

39:13These systems gave everyone at those companies access to a global set of product metrics, from page views to watch time to performance. And then every time a team released a new feature or product, they could measure the impact of that feature on those metrics. So Facebook could set a company -wide goal like increasing time in app and let individual teams go and figure out how to achieve it. Multiply this across thousands of engineers and PMs and boom, you get exponential growth. It's no wonder that experimentation is now seen as essential infrastructure. Yep. Today's best product teams like Notion, OpenAI, Rippling, and Figma are equally reliant on experimentation.

39:51But instead of building it in -house, they just use Statsig. And they don't just use Statsig for experimentation, over the last few years, Statsig has added all the tools that fast product teams need, like feature flags, product analytics, session replays, and more. So if you would like to help your team's engineers and PMs figure out how to build faster and make smarter decisions, go to Statsig .com slash acquired, or click the link in the show notes. They have a super generous free tier, a $50 ,000 startup program, and affordable enterprise contracts for large companies. Just tell them that Ben and David sent you.

40:27we wanted to ask about, I wonder if you consider this one of those near -death moments, but because we did the T -Swift episode, we talked a lot about it on the show, 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, etc.

41:22For a few days. and then you know 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 US 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 US 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 all in with me or not.

42:06And actually that's not how I advise artists or creators. I always tell them like this kind of, and it's kind of 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 Adels 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. um the number of those artists uh were going to be very very small yeah uh but she was certainly one of them was that because of the demographics of her uh audience or i think so but also she on her own um can basically control the zeitgeist right like she can decide that this is a big cultural moment taylor swift yes yeah um 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.

43:15And 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.

44:04That'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 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?

44:46Probably 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 the predominant thing uh at that time physical sales i was still very big um you know i remember i think it was little wayne that sold 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 intersection of like charlie and Lil Wayne and Costco.

45:33Costco 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 US. 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 him Spend some time with them. So yeah, I mean, the world just looked very different back at that time. And I think that changed.

46:10And 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.

46:52They certainly have people who help them. But at this level today, there's almost no one of them that's not 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 know, 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 order of magnitude scale, right? I don't pretend to know all of Taylor Swift's business sides and who's involved in everything.

47:39But 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, uh 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 group is yeah well that that could be your next deep dive 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 uh all the digital platforms they have their own developers uh programmers building specific platforms uh it it's 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.

49:03I'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. 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? We're now living in a very 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.

49:45But 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, gospel music is quite big and funk music is also quite big okay well that's probably not what you associate with popular music but there are real things and obviously they exist in microcosms elsewhere like you could probably guess in the south in the u .s gospel might be a larger genre etc so it's not like it's totally kind of isolated and just happening there but there's something that creates a sort of cultural resonance with those types of styles.

50:35And then you have something like reggaeton, and it usually starts pretty small. And then 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 u .s 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 um if we invested in that genre 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 there are examples where it did but like that's like it's just so what 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 yeah that would be a very different thing There's a lot of local cultural things that seems like, what?

51:55It's talking about, you know, someone cheating with this one, all this kind 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.

52:34And it is the foundational storytelling. We'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, 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 they have some sort of God -given talent.

53:15that'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 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, no, it's more about nurture than nature. Yeah. It's like we were talking about on the Nintendo episode.

53:55There 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. You need to also have the luck of being in the Venn diagram of a Shigeru Miyamoto who happened to be the arcade cabinet designer at Nintendo in order for 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.

54:32I was talking to Ted Sarandos about this. He's on our board and 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 in able to build a game and that's still not cheap um 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 um but these days you still like a triple a game uh is a few hundred million dollars yeah very big production five years very big productions right and and uh sure you can build an indie game and so on and so forth but But it's still a very limited number of people that are able to do that.

55:15But 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 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 to diminish any of their talent, 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, etc.

55:58Because 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 lat -time 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 like some more unknown talent making its way as well. And there are more people trying, but there are also more opportunities.

56:41And 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 lot of money of it. They're naturally 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.

57:14Right, there are a lot more people who are failing, but there are also a lot more people who are succeeding. The total pool is so much bigger. And I think podcasting is 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 it's 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 not been, you know, it's probably less than 100 years that we've had recorded music and it being a forum.

58:03And yet it's part of the copyright regime. It's part of like some pretty important laws. 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 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.

58:48Right? 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 little bit on the piano, but then they kind of needed to not visualize, but somehow internalize what that ended up being. 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 move forward and think about sort of the era of playing instruments and take jazz, which is highly technical, right?

59:41Like 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 but he actually had a different tool he had he had software right and he's actually he was really good at that software and you know 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 it's very uh detailed it's very nuanced like i have this um thing that i do where i probably shouldn't admit this but like i sit 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 0 .1 % of it.

1:01:05Well, I think we are. You know better. And then we walk into this studio here in Stockholm and we're like, this is just a scale beyond our imagination. Yeah. Yeah. 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 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.

1:01:44And a lot of these, today's composers are experts in their workflows, right? Like they've kind of have their plugin sets. They've got like these 16 things that they see change 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 getting easier and easier. But I would still argue the bar for you to make something that sounds professional would actually be a high quality song.

1:02:24It requires a lot of time and a lot of effort. And it might be less CapEx and less equipment. I mean, you hear the rise of the apartment music producer on the laptop, 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 all Smule and all these other apps. You can probably make something. but from there on to actually compose something getting into the the idea of the workflows the plugins all that kind of concepts it's quite a lot to master and 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 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 for me was so high with all you know node all of these different frameworks even setting up my own workflow for me to be able to do something in the Spotify ecosystem, hundreds of hours probably for me to kind of reacquaint myself with all the stuff, right?

1:03:54How do I install the PHP server? Yeah, exactly. Like I got bad news for you. Yeah, it's changed a lot, right? And so the amazing thing is I just for the fun of it, like wanted to start doing stuff and I asked ChatGPT to help me. And pretty much on a few hours on a Sunday afternoon, I was up and running. and because of that sort of starter help, I had my own 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 got a little bit more work to do before they allowed me to do it. You got to pass a coding test.

1:04:33Yeah, I think out of spite, they probably won't let me do that anyway. They pride themselves on not, I don't have any access to it. any of the actual systems. But it was such a liberating feeling because it made the re -entry for me 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 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 and actually becomes even more valuable in that world.

1:05:40Photography being the sort of key reference point. When Instagram came, oh no, no one's gonna want photography, but price of fine art photography actually increased, not decreased. So my view is you're gonna see both extremes. You're gonna 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 these are numbers like you're talking there are four to five million people out there that are like i can make a podcast Yeah.

1:06:58And 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 process. where we have to hire voice actors that reenact that. 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.

1:07:47But 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 going to say, so you have X now, the AI DJ that speaks many languages? Well, we've had him speak Swedish for sure. And he obviously doesn't know Swedish. But it's only today available because the intonation is a little bit off. So it's really only English language content. And honestly, that's probably just a training problem. So if we were training the models on specific languages and not just X voice per se, I think that would have been totally possible. And again, the largest problem today is the cost per minute would be too high for most podcasts.

1:08:41I 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 have 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, et cetera, but he certainly has a Spanish language. Computer translated or humans re -recording? I think it's humans re -recording it at the moment, but it's huge. I think it may have like 15, 20 % more subscribers, additional subscribers, not more than what the English language one has. So it's like a really big deal. And I think that's like the next step, right?

1:09:23Like where, you know, in your case, like why wouldn't you take the LVMH episode and make it all in French or whatever? It should at least be in French. Yeah. Now is a great time to thank good friend of the show, ServiceNow. We have talked to listeners about ServiceNow's amazing origin story and how they've been one of the best performing companies the last decade. But we've gotten some questions from listeners about what ServiceNow actually does. So today, we are going to answer that question. Well, to start, a phrase that has been used often here recently in the press is that ServiceNow is the quote -unquote AI operating system for the enterprise.

1:10:06But to make that more concrete, ServiceNow started 22 years ago focused simply on automation. They turned physical paperwork into software workflows, initially for the IT department within enterprises. That was it. And over time, they built on this platform going to more powerful and complex tasks. They were expanding from serving just IT to other departments like HR, finance, customer service, field operations, and more. And in the process over the last two decades, ServiceNow has laid all the tedious groundwork necessary to connect every corner of the enterprise and enable automation to happen.

1:10:45So when AI arrived, well, AI kind of just by definition is massively sophisticated task automation. And who had already built the platform and the connective tissue within enterprises to enable that automation? ServiceNow. So to answer the question, what does ServiceNow do today? We mean it when they say they connect and power every department. IT and HR use it to manage people, devices, software licenses across the company. Customer Service uses ServiceNow for things like detecting payment failures and routing to the right team or process internally to solve it. Or the Supply Chain org uses it for capacity planning, integrating with data and plans from other departments to ensure that everybody's on the same page.

1:11:25No more swivel chairing between apps to enter the same data multiple times in different places. And just recently, ServiceNow launched AI agents so that anyone working in any job can spin up an AI agent to handle the tedious stuff freeing up humans for bigger picture work. ServiceNow was named to Fortune's World's Most Admired Companies list last year and Fast Company's Best Workplace for Innovators last year. And it's because of this vision. If you want to take advantage of the scale and speed of ServiceNow in every corner of your business, go to servicenow .com slash acquired and just tell them that Ben and David sent you.

1:11:57Thanks, ServiceNow. I've been uncomfortable until now using any sort of AI for any seconds of audio in our podcast. 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 everything should be hand mastered and acquired. And then for the first time on a recent episode, 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?

1:12:39Yeah, 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.

1:13:22Or approved by the creator. Yeah. 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 the notion and idea around like staking as a way of reducing um the bot um thing and i feel like so much has just ended up being sort of hey do you 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 uh being able to truly understand what's what in in the end twitter is so interesting that um we were talking with a friend who's a creator peer but um his platform is Twitter and you can't monetize Twitter.

1:14:28Like 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 then you've got YouTube kind of in the middle. How do you think about what role for monetization, maybe especially on the podcasting side um spotify should play for creators yeah i mean um our goal is to be the best partner of creators um no not the only partner but just the best um and and win by 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.

1:15:17I think for some creators, the monetization aspect is absolutely critical. They may even 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 about your other Twitter creator friend, but perhaps that creator either has a different business model somewhere else.

1:16:01Well, you have to. You can't have a business model on Twitter. You can't do that. But the question is if that's truly a creator or you could argue VCs, a lot of them have Twitter as their marketing channel, right? Just top of funnel. 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 back end. The customization point is really interesting too. And I think that's the really interesting nuance about YouTube because like on the one hand, And I think YouTube for creators is amazing because you can completely abstract the business.

1:16:44Like 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 a 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, uh, we have to start out, um, very simple with our models, right. And it takes a long time to then change that default, um, setting. But I mean, um, I, I even talked about in music, um, it had to be like very binary.

1:17:29You had to be on or you had to be off. There was kind of no in -between of 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 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?

1:18:47The answer would probably not. Almost assuredly, no. 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 -read ads were the equivalent of sort of more native ads or paid promotional ads that both Instagram and YouTube ads. So we're living in an ecosystem where on the one end, 10, 15 years ago, we were very primitive in terms of monetization.

1:19:27And 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, they're sort of like coming up in the US 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.

1:20:11They're really focused on community, 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, it's probably becoming auxiliary revenue sources around them, 360. Very similar, again, to mom -and -pop shops, where you could do live events, you could be doing merchandising, you could build another business like Kylie Jenner or something on the side of it.

1:21:02What's cool is this is true at scale now, too. I mean, Taylor Swift monetizes through everything you're talking about. the same way a 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.

1:21:45So 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 certainly when you think about it from a singular artist point of view, you know, there was a point in time where the majority of the revenue could be derived from recording music. But the challenge to that, what I would say is that the time in history where that was true was actually very, very short.

1:22:26It was the heyday of the CD era, right? Yes. That 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.

1:23:23And they're able to get across the microphone and having lots of people that can resonate with them. That opens up 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. Imagine that in the CD era. That wouldn't have happened. Oh, yeah. And that's the insane part too, right? because that fame, in a way, it doesn't necessarily, if you think about an Elvis Presley, 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 it probably took a decade at the very least, maybe two for him to do that.

1:24:11And 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 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 side guise on how you execute it. It doesn't work when it's not authentic. So you take the Rihanna example, it worked because she had a way to do it, which was authentic to her, but also authentic to her audience.

1:24:59If 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 yourself as an enterprise and you know jc um you know i'm not a business man exactly which jay -z sold his champagne company at lvmh recently 50 stake yeah but back to that they're incredibly talented um uh artists and they're incredibly talented uh 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 100 million users.

1:25:57You 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.

1:26:37Yeah, I think it's a very astute observation that you're making and 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?

1:27:35There 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.

1:28:22And 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 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 um 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 like this thing that amazon's doing so we should copy that.

1:29:16And then, oh, we like this thing that Google's doing, so we should copy that. And actually what 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 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 they expect of of spotify and the mental model may be hey your music app is so amazing how come um 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, et cetera.

1:30:14And 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 StreamOn. You got on stage to the public and said, we have audiobooks. I don't think it's great right now. Yeah. And it's true. And it's not great right now, but we will make it great. But that's a different culture, right? And that's one where we're iterating on. But then the flip side of that would be something like AI DJ, where actually, I think it is really high quality.

1:30:51And unlike a lot of other products that are AI, where it's really kind of wonky, we've made something that's actually working, and it's 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 Weekly huge? Yes. And I think it'll even outdo Discover Weekly. 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.

1:31:39So 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 culturally attuned to say. And yet with music, it's kind of the primary candidate. Plus 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 my point being is understanding when to do which and understanding that there's, both of these cultures are perfectly fine, but just being very intentful about when you're choosing to do what and having the right mental models and not sort of becoming half -assed in everything, but actually become really good at what makes you you.

1:32:34And I would say that 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 companies like Spotify, which in a way has 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 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.

1:33:15This category is toxic. Yep. You're exactly right. But also because we were kind of doing this in Europe for the first few years, we started getting some real first learnings. And I think this is like really key because if you think about 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 getting 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.

1:34:05But it's not the same culture. They didn't start it in Silicon Valley. Not the 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 have been going slower in the beginning to then go faster. But I think it's been hugely important for Spotify's journey. And I feel like 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.

1:35:16You'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. And that's not at all what's my fight today. Thank you for summarizing that so succinctly, by the way. It has to be a very methodical individual journey, too, to figure that out. Yeah. And that's why I said, I mean, I used to talk about culture, but I would honestly say it was probably two, three years ago where it really clicked for me.

1:36:04like, 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 the true culture of what makes Google, Google or an Amazon, Amazon, et cetera. 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 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.

1:36:45Well, 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. 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 StreamOn 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.

1:37:15Check out in any podcast player ACQ2 with awesome recent interviews and many more to come. I think we have the best interview lineup that we've ever had here on Acquired coming up. So subscribe to ACQ2 to get access to that. and 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?