Gustav Söderström, Spotify

24:28on many of the big platforms, people regretted almost 60 % of the time they spent or more. And these were young people, you know. And what shocked me was, before I saw that survey, I knew that these were insanely high engagement platforms. But I kind of mistakenly thought that they were there because they wanted to be there. I'm like, they're probably enjoying it. Turns out when you ask them, they're like, no, I'm trapped. I feel horrible about the time I spent. So I was mistaken in thinking that, you know, They were there and they loved the time. It's just very, very captivating. So then we decided, okay, we've had this as a saying internally for some time.

25:06Let's just make it an actual strategy to be some of the most time well spent on the internet. And so when we look at something, you know, we're talking about fitness now, for example. Why? Because we think very few people regret doing a workout or being fit. What do you mean you're talking about fitness? We just announced some partnerships with a bunch of companies, and we're investing in three quarters of almost 70 % of people on Spotify work out with Spotify. So we're investing more into fitness, into becoming an even better fitness app. So this is one area, kind of like music, podcast, books.

25:42We're just investing more in it. What would that look like? My partner Rob was running to Central Park this morning listening to Spotify, so he was exercising while using your app. Okay, so this is going to come out in a few weeks. So I'll tell you kind of what we're going to talk about at Investor Day. I'm a runner. I'm passionate about running. And we see a lot of people running with Spotify. They make their own playlists. One of the things I want to be possible that's going to be possible very soon is that you go into Spotify, you just tell Spotify. This is one of the good use cases of AI, I think.

26:12You say to Spotify, you know, I want running playlists for like an eight-minute mile and I want it to be in my taste. but I want it to be on the downbeat, either on both my feet or just one of my feet, right? And I want you to update it weekly. It's a pretty complicated task. So then what we want to be able to do is to first calculate like an eight-minute mile. What does that mean? Well, roughly, if your average height, maybe 165 steps per minute or something like that. Okay, now we got to go and find music in either 160 or half of that 80. So it's either on every downstep or every other downstep.

26:52okay you're going to find some music there but not a lot so now you want to look a bit broader and then you actually want to speed them up or slow them down to exactly 160 or exactly 80 and then you actually want to mix them together with perfect beat match transitions right and then you actually want to overlay commentary on top of it saying like now you're going to go into the interval part and now you're going to slow down and so forth so these are the kinds of experience that that we're building this is what i mean with going deeper into fitness that's one of those no regrets area or time no one spends an hour in the gym or an hour running no i come out and feel like oh my god i regret 70 percent of that you know you don't so so it's been our guiding principle and what i think is interesting about it is you know i'm 50 i've done a lot of interesting things in my life you got to figure out what you actually want to spend your life on right and i want to spend my life on on doing something that i feel good about personally and then i kind of feel proud of you feel good but you know like the way a human's going to feel good is if what they're doing is actually in service of other people this is a i know you're into philosophy this is a humans for yourself thousands of years ago this is not a new idea it's something that's true thousand years ago it's true today it'll be true now me and uh milan who's sitting over there i was talking to uh he works at spotify right before you came i was talking to him about this because he's like you have two two different podcasts on the business charts right now and i was like listen this new show i'm addicted to doing it i can't sleep i get wired from these conversations.

28:18I'm doing it selfishly. It's another form of education, but I really feel that like Founders Podcast is like my life's work. And the way I feel like when I put that out, I know it's good for the world. I know these conversations are good for the world. I was like, I'm not going to make fucking podcast slop. It's not, I'm not trying to, I want it to be entertaining, but at the core, it's like, I want you to be inspired and educated by these people that have accomplished great things. And then the point was just like, that knowing that like you can do it too yeah that is good for the world i feel good doing that and it's not like a i like a i need to make certain it's it's not tied to anything else other than like it's not like oh i wouldn't do this if unless i can make x dollars like i don't give a shit about that i care the money will take care of itself i care about putting out good things for the world and i think to your point everyone gets there and every philosopher in history got there the question is just like how late in life do you get there i think you got there a lot earlier It took me 32 years to find my path and another five and a half of fucking struggling until it actually could sustain me.

29:16And then now it's like I wake up every day. It's like I have no doubts what I'm doing. I was like, I'm going to build, again, I'm mining these old books of somebody who did something amazing for ideas and insights that we can push down to the next generation of entrepreneurs. And I'm having conversations like this where we talked before. I was like, oh, you know, you asked this perfect question for your audience. It's like, I'm having these conversations selfishly because I just know there's 10 million Davids listening to this that have the same interests, that want to know what is in you. You said you're 50.

29:43You've been working at, you sold your first startup. Then you have such a singular life experience. This is what me and Daniel were talking about earlier. We're like, who the hell sells their startup, works at a big company for 18 years, then becomes CEO? It's a different path. It's a very different path. It's an unusual path. I want to talk about AI because - Can I say something on the previous thing first? What I think is interesting with this time I've spent is these things are sort of easy to say. I think everyone convinces themselves that they're doing good for the world, even the ones who don't, because most, you know, it's very, I think it's very hard to be honest with yourself, totally honest, and saying, like, I'm not actually doing anything good for the world.

30:19Where if people do that, they convince themselves. Oh, I have an example of this. Yeah. That I want to talk about. Yeah. So we get, obviously, all these pitches, and don't forget, hopefully you don't forget the way you're thinking. No, no, cool. But, like, listen, no disrespect, one of my favorite movies is The Godfather. and one of my favorite scenes is where Slotso goes to meet Marlon Brando. And he's like, and Marlon's like, hey, it's none of my business how another man makes his living, but I can't get involved in that because, you know, you're dealing drugs to kids and it's not interesting to me.

30:49And so I feel the same way. It's like one of my principles I teach my kids is like, number one, rule number two is like mind your own business. But I had somebody pitch me. They're like, we want to do a deep partnership as one of the prediction markets. And I'm on the phone with them, and I didn't know anything about them. but the way they describe themselves so like we're building a maximum truth-seeking machine and i pull up on my phone i go to i'm not going to say the company i type in and i go dude the first thing i see on your website is who's going to win the coin flip for the new york for the new england patriots game if you're just saying we want to fucking gamble and make a ton of money i respect that but don't give me this other bullshit there you're building maximum truth-seeking machines yeah but that's my point i think almost everyone has to convince themselves of that so so So to kind of call bullshit on us then, does it actually mean anything to do this?

31:37Well, it means that you have to stay away from some things. So one decision that we did recently was, you know, all podcasts are turning into video podcasts. And so we followed them. The only reason I do videos is because you guys harassed me. Exactly. So they are very popular. But there was a problem, which was that, you know, a lot of people, specifically parents, who felt that, you know, they had this time well spent. Now they started seeing these videos in there that they didn't want to see there, right? So they felt that their time well spent was going down. And then if you're faced with the decision, like video is good for engagement, but these people feel that it's not good for their time well spent.

32:15So we made the decision, sort of the anti-engagement decision, to allow people, anyone, to turn off video if they want to and just listen. Not just for the kids, but for themselves. themselves so and that that may mean that you know we take some engagement hit on that person but so if you're going to have these principles you kind of have to live with them and they're going to have consequences now we still think this is very good business because most of our revenue is from subscribers paying for their experience you know like almost 90 percent of the revenue and i think that what you pay for when you vote with your wallet every month you're not going to pay for your engagement or time spent you're going to pay for the value you feel right if you feel that this was time well spent if you feel that this was high value you're going to say i want to pay for this so i think when you pay with your own money that is very very well aligned with optimizing food is good for the user whereas if in a pure engage in a pure you know advertising based model your incentives are clearly to maximize time spent at any cost So I think it's a luxury for us because most of our revenue comes from subscription to not have that pressure.

33:24Maybe we lucked into that business model. Maybe it was semi-deliberate. That's what I was going to ask you. There's no way you could have predicted that when you chose a subscription model. But it had to be a subscription model based on your very first product, which is music. Yes. So now that we see it, we're doubling down on it. And I think it's going to be the right bet for Spotify. I think people are getting more and more aware of how other time is getting captured and how they have less and less control over their life. This, by the way, leads us into AI, which everyone is talking about. And there's a lot of negativity around AI now, which I understand, and for good reasons.

33:59There is a promise for generative AI to be the most addictive algorithm you have ever heard of, because now we can understand you so deeply. There is potential for darkness over there, right? But what I'm trying to say, what we're trying to say is like, there is, but it's a dual-use technology. You could choose to do something else with generative AI. And so what we're choosing to do, for example, is to give back users control over the algorithm. So the other thing you can do is, which we're doing, so you can say like, hey, David, here's who we think you are using LLMs. And based on all your listening, this is who we think you are musically.

34:36this is the podcast we think you're interested in. These are the audio books that we think you're interested in. Then we can put a box where you can say like, no, you're wrong. Maybe that's what I do, but it's not what I want to be. You know, I want much more. I want more, even more biographies. You know, I want to get back into classical music, which is something I've tried. But because I listen to mostly EDM, I got most EDM. So now I can go in and say like, now I want to be, I want to have classical music. And now I get classical music. The best way I think to describe generative AI is that finally computers understand English.

35:09Like it used to be a small population of about 1 million developers on GitHub who could talk to computers. Now we all can. And so I think consumer companies could and should give everyone access to talk to them in plain English. So it means that at Spotify, we used to have these user research teams that sat with 10 users trying to understand deeply what they felt and what they did. And then we took those 10 users and try to apply that, you know, 761 million users. What if you could do that deep user research with every single user, all 761 million of them all the time, because you talk to them and they talk back in English, high fidelity, and the experience just adapts to what they want.

35:49So my mission now is to sort of give back control to consumers over these algorithms. And it's contrarian, but I think it's the right bet. People like you and I will probably want more control, but like you're 700 million users, like what percentage of them do you actually think? I feel like people just want you to do it for them. No, you're not wrong. I think there's everything in the world is sort of a power law, right? Of whether it's music listening, some people listen a little, and then some people listen extremely much. Everything is a power law. But I think what is interesting, what Spotify has gained from, if you look at playlisting, for example, some people playlist a lot.

36:25Most people have one playlist. Maybe they're liked songs, maybe two playlist you know some indie favorites some people have like hundreds of playlists so sort of the story of spotify and what we got good at personalization and recommendation in the first place was that we had like i don't know 10 billion user playlists which is people carefully saying this track goes well with this track goes well with this track it's an incredibly valuable data set but to your point it was heavily skewed it was a few use not a few millions but not hundreds of millions that did a lot of work that benefited the others those people saying these tracks go well together meant that the others who weren't that into music, they didn't keep up with the new releases of the back catalog.

37:02They got amazing recommendations from the work of these people. And so I think that's going to be true here as well. And in fact, I know it is true. We see some people engaging a lot, talking to Spotify all the time saying, no, that's wrong. That's bad. You should be like this. They're doing a lot of work. They're making their Spotify better for themselves. But then we know that someone else who looks very similar to that, but doesn't have the time or knowledge to do all of that, they actually probably want the same thing. And they can benefit from the other so they benefit from the others the analogy i had because everybody's like oh you know everybody's gonna be building everything they want i was like i don't think i don't they're gonna build it all tell me if this is a stupid analogy i'm curious your personal opinion on this but like if you even look at like how easy is it to post to social media you you put a picture or like two buttons and you're done and it's something like you know 90 comes from one percent and then you have the next 10 do us and then like 90 85 or 90 just lurk they do nothing but i feel like that's a good representation of humanity with like 90 % are not going to build anything.

37:57There is this famous 1 ,990, right? 1 % creates, 9 % curates, and 90 % consumes. Okay. Right? Something like that. And I think that's largely true. That's what I mean with the power law. But as I said, that 1 % that creates and that 9 % that curates, it can be incredibly valuable for the other 90 % that consumes. And then it allows you to do it for them, which I think is what most humans want. Deal is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade. And one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority.

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39:05He said, we built Eleven Labs to break down language and communication barriers. With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world. Deal is trusted by over 40 ,000 businesses. Learn how they can help your business today by going to deal.com forward slash Senra. That is deal.com forward slash Senra. There's some context I think people need here. So the fourth most listened to on my Spotify wrap for podcasts was Spotify product story, which you narrate. That came out in 2021, 23.

39:43Yeah, something like that. Over a couple of years. Came out there. Long time ago. And it tells the history, which I think more company, I talk to founders about this all the time, because like you essentially is like, why don't we just tell our own company history? And then you interview the people that were there at the time, like Sean Parker's in there, Daniel X there, people that played a role, even if they only played a role for a few years. But the crazy thing is you have entire episodes, I think from 2021 or 2022, dedicated to how you're using AI in Spotify way before, you know, people have been talking about AI for 60 years, but even back then, way less people were talking about it now.

40:16Tell me the difference of how you view AI back then in 2021, 2022 to Spotify to today. Yeah, so my interest in AI, I think as many, you know, I was always interested in growing up and then I became an engineer and so on. In university, which was like in the late 90s, I was interested in it. There wasn't no networks back then, but you can do anything. Computers were not powerful enough. And then I went into what was called IT, right? And I did my own companies and I started Spotify. And then when I came to Spotify, we already had one of these large data sets of music playlists. And so there were some very talented people there, specifically a guy named Eric Bernadsson, who at the time, this is 2009, was doing machine learning, something called collaborative filtering on what was the world's largest Hadoop clusters.

41:08And I'm like, this is super cool. Like this scale of data and these algorithms, I hadn't been thinking about it for a long time. So I got very inspired by that, kind of got back into it. And then what happened was DeepMind started doing these reinforcement learning-based things. They had this thing called the DeepQ Network that started beating Atari games, if you remember that. And it looked like a toy back then, like everything does. But I was so pilled already on the idea of how do we actually work as humans from a philosophical point of view. And I didn't have a good answer. But I had this idea that maybe it is.

41:43Maybe it is computational because it was the model of the artificial neuron. But it was hard to believe in the 90s with these deep Q networks from Demis Asabes and David Silver and the whole DeepMind team. You could see the scaling of like it's handling more and more complex problems. So I got very deep into that. I went home and I started coding again and I did my own sort of recurrent neural networks and LSTM and GRUs and stuff. just for fun, you know, during my vacations and evenings and nights. And we kept doing our recommendations problem, which was sort of old school AI, which was called ML, machine learning.

42:21But then when what is called the Transformer paper came out in, I think, June of 2017, it was a paper called Attention is All You Need. I think I read it like in the first few days and I was completely blown away by it. And I started talking to anyone who wanted to listen. So I was just primed for that happening. So then we started investing quite aggressively towards this. I think if you extrapolate it out, if you really believe in that exponential curve, which I've tested a few times, then eventually computers would be able to start talking to you and reason. And you would be able to talk to computers.

42:57We started preparing for that quite early. We bought this company called Sonantic to be able to produce voice. I mean, you can buy voice anywhere on the internet today, but it's quite expensive per minute. So if you want to serve 700 million users with like a few minutes of voice per day, you're gonna go bankrupt. So we bought this company producing voice very, very cheaply with the different technology, even before the LLMs were smart enough to produce the script for that voice. Because we just bet on, you know, intercepting that curve instead of waiting for it and then building for it. So I think it comes from a personal interest in AI and then a bit of luck being at a place like Spotify that had access to lots of data.

43:40And then when you see it, just, you know, have to bet on it. And I think the interest is a personal interest. Spotify is sort of my excuse to get as close as possible to the philosophical side of AI, sort of what it means to be a human. Say more about that. Well, I think, you know, you go through life and I was thinking a lot as a kid about things. And there were a few problems that really like dumbfounded me when I learned about them. One was this notion. I don't remember exactly when, but someone told me, you know, all the atoms in your body or like 99 % of them get switched out every seven years.

44:24I'm like, yeah. Wait, what? Every seven years? What do you mean? So yeah, every seven years, they're all switched out. But that means I'm not the same person. So I thought I was my atoms. I thought it was my body. Clearly, this is me. And you're telling me, I see you in seven years, and I'm someone else. So then what am I? If I'm not my atoms, what am I? You know, if you look at a rock, it is its atoms. You look at it, you come back seven years later, same atoms. But in you and I, like your atoms may have been, first of all, most atoms never get destroyed or created, right? They're largely the same.

45:00So you may have a bunch of Napoleon atoms in your body or something. And when you die, it's going to go to someone else, right? So it's just the construction of those atoms that is you for like a very brief time, right? So I got to that realization that, you know, you're not your atoms, you're the structure of your atoms. and another word for structure is information so then i'm like okay so it's a dna like dna is the blueprint and like you arrange the atoms in a certain thing that's you and then someone said like no that's not really it either because if you think about something for a long time if you play the piano for a long time so you think certain patterns your brain will grow you're going to get an overdeveloped musical center if you're good at languages your language center developers or the most famous example are cabbies in the uk you know they have to learn all of london by heart.

45:49And when you brain scan them, they have a very overdeveloped 3D center for three-dimensional thinking. So clearly, it's not static. What you think about moves those atoms around in new patterns. And it's not even the same atoms. The atoms get switched out over time. So now you're not your atoms. You're not even the structure of the atoms. You literally are your thoughts. Literally, not as an analogy. It's the only thing that is constant. It's the processing information pattern right everything like the atoms that do the processing get switched out so now i'm like okay shit i'm information processing and that that was kind of a mind fuck and then i got comfortable with it because i'm like well now i can sort of live forever because if i'm information processing i'm thinking in certain ways that's really what i am you could have instantiated me with some other add some other atoms etc then if i bring some of that into my kids, if they're thinking a little bit in the same way, like 32 % of me is still living in them because I am my thoughts.

46:48And then it turns for my thoughts. And, you know, if you're Ray Kurzweil, you say that, well, now transfer them to computer and you get to live forever because you are your thoughts. And if that information processing lives there, that was really you. You were not your atoms. So this whole thing of like, we probably are computational beings, things, information processing. I think it was, is what got me into AI in the first place. But then at university, almost two decades ago, more than that in university in the late nineties, you couldn't do anything with it. The computers were not powerful enough.

47:19So when you try to instantiate those ideas, you built a neural network, like a few nodes and it slowed their crawl and it was unimpressive. And you're like, nah, that can't be it. Okay. So this is interesting. So you've been thinking about this for multiple decades. You had, you had to have this like favorable occurrence of events that now leads you to have, I think you guys are the second largest subscriber base in the world behind Netflix, am I correct? Yes. And you have this huge data set. Now the technology can catch up with the thing you've been taking about since you're in college. Yeah, it's a good excuse to get to spend all my day thinking about learning about these things, working with the best people in the business.

47:52You know, I get, I have the fortune of meeting all of these people that are changing the world. I get to meet them and talk to them and ask my interesting stupid questions about, you know, things. So it's just a fortunate position to be in, to get to do something that you're passionate about. But I feel very lucky because I can do that, but I can do it in an area where I think it's still good for the world. And I can have impact on, I can steer this towards what I think is a good outcome of AI, like giving back user control, for example. I don't want to skip over that because I truly believe we've had enough private conversations.

48:25And I know you talked to all the other like people designing products of all the big companies. We talked about this privately in the past. And it's just like, yeah, some of them, you know, have made decisions where they know, they have optimized. They're like, hey, we ran this test. This is great for engagement. It's terrible for the mental health. And they're like, push it. That's insane to me. That is insane. This is what we were talking about before we started recording. It's like, I told you, it's like, it sounds silly, but like, I deeply desire a world in which Steve Jobs is still alive.

48:54Because I obviously love technology. but I love, I want the people building the technology that we all use on the scale that we all use it at to like build tool tools. And that's all technology is that enhance humanity instead of trying to replace it or to make you dumber or fatter, or just, you know, sucked into your phone and depressed, which I feel is a lot of what's going on now, which is, I think what you said earlier was like, well, podcasts, we have this thing growing massively. That's good for the world. Assuming you were listening to the right podcast and you should be listening to David and founders, of course, at the same time when these people are like destroying their brains in 15, 20 second, you know, five second, one second scrolling.

49:33And it reminded me when you said that earlier, I was like, oh, you go back and read Jeff Bezos' shareholder letters. He talks about why he invented the Kindle. He said the Kindle was an anecdote to short attention spans. He was worried that people weren't going to read anymore. I'm deeply impressed by the Kindle, by the way, as a product. And it's not just the technology, like the passive screens and so forth. What people miss is the business model innovation they did. the WhisperSync, where it silently just updates in the background because they bought a certain amount of mobile data. It's a great product.

50:03Explain the business model innovation on the Kindle. Well, normally you would have to pay for data. If you would have been lazy, which they weren't, you would have said like, here's a Kindle, now go and buy a mobile subscription monthly for that, for the bookstore update. And what they did was they signed deals with these carriers, They calculated the average book size and they made a fixed cost deal where all the data forever was included in the price of the hardware. You bought this thing for a one-time cost and it just magically updates. At the time, that was magic. There was good business model innovation on top of all the product innovation, which is something I'm very passionate about.

50:38I believe that technology is a necessary ingredient for change, but not sufficient. I think you can cause havoc with technology like piracy. but when things really change is when you take a new technology and marry it with a new often contrarian business model this is the spotify story of access versus versus ownership for example which is by the way why i would also love steve jobs to be around but also not because you know he tried to kill us many times it's funny we had this conversation so we had jimmy ivn on the show earlier and you know jimmy was in like top three people i wanted meet of all time because I love Defiant Ones, the documentary of him and Dr.

51:16Dre. And I've watched it, I don't know, now 10 times or something. And it's weird because me and Jimmy are friends and we're like, we live close to each other. And he swears up and down. He's like, I was going to kill him. He's just like, Apple held me back. And I was like, Jimmy, there's just no way. He's like, you're like a small part in a huge company that built the most successful consumer product of all time. These were small guys in a tiny, there's like 5 million people in Sweden and something like that. And they had, if Spotify, like there was, they only had one thing. They had, I always love this idea.

51:45It was like, if you had to pick between this, Josh Kushner's quote, where it's like, if you had to pick the person that's like, uh, the most experienced or the smartest or wants it the most, you always bet on the person that wants it the most. They had to, if they didn't succeed, they would have died. If Apple music didn't work out, they would have been fine. And I think he said when he started the fight with you guys, you guys only had like, I don't know, 3 million or 10 million or 15 million subscribers. And then you just smoked them. A lot of people were very, very scared at the time. Because he was a legend.

52:12He was a legend. He still is. And he's a killer. I mean, dude, to this day, even though he's retired. I mean, me and Daniel talk about this all the time because it's just hilarious because they're obviously close friends too. And yeah, he's a formidable individual. But again, I think being onto a bigger company and again, like it was just very fascinating. But imagine that you're a fairly small Swedish startup and you think you're good at product. And then the biggest, most respected product company in the world and the person you see up, look up to the most, Steve Jobs, says that he's coming after you.

52:45But not only that, he goes and buys Beats Music and brings in Dr. Dre and Jimmy Iveen. It's like, we're going to kill you. That's what they literally said in their internal meetings. They gave us six months. It was, those were hard times. Yeah. We worked very hard. But it worked out. There have been a few of those moments. There's a great line, though, about this, because if you think about Jimmy's experience in the music industry, it's just fascinating. They tell the story in, obviously, the documentary, you know, starting out sweeping the floor in the record plant and then, you know, becoming an engineer and then a producer and then one of the most successful creators of a new record company and then building products.

53:25products like the guy the reason I recommend you know people sending his stories because like the people that can succeed in so many different domains over multiple decades that's not luck there's something going on that they know yeah you don't get that lucky that many times yeah for sure so it had to be terrifying from from your end but the one thing I think there's great maxim from Game of Thrones which I'm obsessed with and it says those on the margins often come to control the center yeah and if you think about it it couldn't have been more marginal than these group of Swedish guys in this tiny country trying to take over and build the company you guys built.

53:59There were some good hard reasons for why we didn't get crushed them. What do you think they were? Well, I think the content side of the business was incredibly worried because if it was only about content and only about musicians, you had hip-hop, which has the largest appeal in the U.S. and all these powerful people. But there were some structural reasons. One is when we created our strategy, we bet on three things. And they were all basically counter positions to Apple deliberately. One was freemium. We believe that Apple would, if they even did a free product, they would struggle to do advertising.

54:38They tried the iAd, but they wanted so much control, it didn't work. So we bet that they wouldn't do a good free tier. And so we focused a lot on freemium and a really good free tier. The second was personalization. because Apple was, I would almost say, against data at the time. We bet that they would never get good at personalization recommendation. And I, and we believe that was the future. The third was Ubiquity. We bet that they were going to prefer their own products and never be good on a Samsung TV or an Android phone. So these were our three bets, freemium, personalization, and Ubiquity.

55:12And I have to say they panned out really well. They're still struggling on, They had a free tier for a while, a radio. They pulled it back. Ubiquity, you know, I think they still struggled to be good on non-Apple hardware. And personalization, I want to say, were better. So there were real strategic reasons, and still are, for why I think we held out. But it was also, to your point, for us, this was not optional. We either died or we did this. You burned the boat. Back against the wall. I think, to your point, I don't know what prior Apple Music was at the time. But it was not more important than the iPhone, for sure.

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57:10You've only done a few podcasts. The one you did with Patrick, I thought was excellent. but I want to go into some of the things that I know about you I think is very unusual. We talked about like the kind of dangers of some of these social apps and you have built your own AI agent. Can you explain how you like consume X, for example, what you've built? So this is something I'm working on at Spotify and we released this just a few weeks ago. Something called Save to Spotify. When you sit in your code code or codex or something, you can just you know you can ask these agents to go out and look at information for you write your podcast script and then generate a podcast and then we allow you to upload that to Spotify but privately right because you may put private information in there maybe you want to maybe you want to prep for your interview as I did today I don't want that to be all over Spotify so we now support private podcasts or personal podcasts and so what I do is I use these agents and I take a combination of my personal information.

58:11So, you know, documents I have and things I want to prep for. And then what I'm interested in based, you know, across my different services, all my interests. Spotify knows my interest pretty well from all my listening. It goes out and looks at what's happening in the world. And then it gives me this update that is deeply personal about what's happening in the world that I might be interested in. So it's kind of like a personal algorithm that filters out a lot of the noise and the crazy that I don't want to hear and just gives me the stuff that I want to hear. This is the kind of user control that I would like to give every user, but it's the kind of user control that you can have now if you're prepared to put in the work.

58:46And what's interesting is I didn't expect this, but I found so much music and podcast through this. Then it's filtered to the people that I'm interested in, that I follow on different social media and so forth. So it's the thing that is being talked about among the people I care about. So for example, your episode with Evan Spiegel came up again and again with lots of commentary in my personal podcast saying like this stuff, this is really interesting. You should listen to this because there are product wisdoms in there and so forth. I listened to the whole episode, which I really liked, by the way.

59:17I'm thinking about stealing his framing of like, you know, we used to have all the ideas but limited resources. Now we have all the ideas and all the resources. I really liked that. The thing about Evan, you know, people give me shit. They're like, yeah, but look at his market cap. I was like, I don't care about his market cap. I care about that you think he is truly differentiated. He is. And I spend a bunch of time with him. And at the end, I was like, I just want him to win. I don't like, I don't care about his, like, figure it out. And then everybody's like, oh, but his market is, you know, his stock's down 80 % or something like that.

59:45So I just went to ChetGPT. And I was like, how many times did Steve Jobs suffer a 75 % decline? You know, it was like four times. Like, this happens in everybody's career. The kid is young. He's not a kid. The guy is young. Like, let's see what happens over the next decade. You know, but the fact is, like, he's got a lot of very, very interesting ideas that no one else has. And he invented a pattern on social media that a billion people use every day. He invented several of them. Yes. Right? The disappearing image, the stories, like all of these things. Do you think that guy's not interesting to hear talk for an hour?

1:00:13You're fucking crazy. Of course. No, I like him. Maybe it's because I'm a product guy. He's a design guy. Close. But I like him for sure. This is one of the most fascinating things about you. And I think it's really, really important to drill down on. And it's really dangerous for people not to do. You are constantly trying to eliminate noise. It's the idea, even before you turn this into an audio, you're essentially taking text and turning it into audio now with the feature you just talked about. But when we talked about this, or maybe I heard you, I think you told me about it. Maybe I heard you talk about a podcast, but you were taking it.

1:00:41You could read it, though, before, right? It was like stripping out all like the crazy shit that happens on X or the people fighting over politics. And it's just like that. What are the people I care about? What are they talking about? It's not going to induce me, like it's not going to raise my cortisol levels or make me sad. So I literally ask my agent, filter for rage bait, filter for click bait, filter for politics. This is the kind of user control that you can have now, that very few people understand that you can have yet, and it's too complicated. But you can have all that control. So what I think is most people kind of know what they want, but you get captured in the moment.

1:01:20It's like you want something, and then someone puts candy in front of you, you're going to take that candy. So what is interesting is, can you give people the chance to decide their own future ahead of time? This is the idea behind the taste profile and behind these agents. I'm not better than anyone else. I get captured all the time. So my specific pet peeve is road rage. I'm so fascinated by it. I just go down dark holes of road rage. Because it's the weirdest thing. These supposedly fully normal, smart people, they waste their entire lives and go to jail. They shoot into cars and kill kids.

1:01:49Yes, and then afterwards you realize that, no, they were pretty normal people. is just somehow inside your car, you lose it. So I go down that rabbit hole and I watch hours of road rage, right? But what I can do now is I can say like, don't show me road rage because I know what's going to happen. So that like, what do you call it? Ahead of time, premeditated? Yeah, premeditated. Premeditated media. Yeah. It's something that I think everyone should at least have access to if they want to. It works for me. And I think it will work for a lot of people. And I think it's, I think that need is not going to get less.

1:02:22I think it's going to get, it's not going to get smaller, it's going to get bigger. So I happen to think it's also a good business. Something that just popped to mind when you were speaking just now, I'm very curious, like who influenced, so we're talking about like essentially your information diet, right? And what you're letting into your mind, you talked about, we literally are our thoughts. Like you're crazy to like let people get into your brain and affect you. And I was talking to Mr. Beast about this yesterday where he's just like, I don't think people should have Instagram because it's like, it's just making all these young kids like comparison is the thief of joy.

1:02:48and all they're doing all day long is comparing, you know, somebody else's highlight reel to them. And it's just like very, very bad for you to let that into your brain. One of my favorite things, I think Daniel said it on this podcast last year, where, you know, I'm always curious when I get to meet people, especially in things because people, it's like, who tells you the truth is a question I always ask because it's like very few. A lot of them kind of have like this almost like cloud of sycophants around them. They're like filtering their knowledge that's getting into them. And what they'll do is like they'll seek out people they can trust and it will tell them the truth.

1:03:18and I think he told the story of you being one of those people for him, for Daniel, because you pulled him aside and you're like, hey, you're running product and you're like not good at it and you're kind of fucking this up. And his response was, he went home, I think he told his wife, he's like, oh my God, I have to fire this guy. It was you. And then he goes, then he thought about it, he goes, oh, he's right. It's like, he just did me a service. Very few people are that strong, can take that credit, but that's why he's successful. Yes. And so I think this is really important. So who does that for you?

1:03:47so I do a version of the same thing this is the this is back to the thing of long tenure so I have people are long tenured but like huge disagreements with them um and they've realized that when they um when they talk back to me they get upset with me there are no consequences right but that takes that comfort takes a long while to build you can't expect someone to come in especially if they come from corporate America and expect them to like stand up to you because usually there are consequences. You just get fired. Well, yeah, but people don't know. You're a brown belt? No, no, no. I'm a blue belt.

1:04:24Oh, a blue belt is just so you could also choke that. There are many people who could choke me out, so that's a risky path to take. It's a tenure. I have a bunch of people around me who I think and hope feel comfortable saying like, no, you're wrong. I think you're just not understanding this. And I think so because they do. And they've learned that, you know, I can't always control myself. I'm very passionate about something. I'm like, no, you're wrong. That's stupid, blah, blah, blah. And then they know it's not going to be consequences. So they say it anyway. I try to do that more in like one-on-ones or small groups.

1:04:57Sometimes it's a big meeting. Someone who has worked with me for a long time feels very, very comfortable. Just says like, no, I think that's a stupid idea. And I'm like, no, your idea is stupid. And everyone around is like, oh shit. Now everyone is going to get fired. You know, so you have to build that trust over time. So I have a version of the same. Okay, so we talked about tenure at the very beginning of this conversation where I never finished a thought when I was asking Mr. Beast about turnover on his talent team, like the most talented people in there. And he's just like, there's a value here because the guy that runs his operations has been there.

1:05:29They used to live together. He's like, I've spent not 10 ,000 hours talking to this guy, 30 ,000 hours, where they walks on set, and since he's running his operations, they're running like 10 at a time. Mr. Beast can walk on set, and before he'll look up, and the guy, his name's Tyler, he's like, I already know about this, and this is why I made this decision and we're doing this. And, oh, you may not like this shot, but we're doing this shot because it allows us to shoot from this angle. And then literally nothing has to even come out. It's like they're, what's the thing from Star Trek with the Vulcan mind meld?

1:05:58Yeah, exactly. That's what happens. And he said the greatest thing. He goes, you don't get that in 100 hours. So one benefit of tenure is the trust. People keep you honest unless you, you know, you become too full of yourself, which is always a risk with success. But the other benefit is this efficiency. of like people know, you don't have to give as much context. There are some downsides to tenure, which is opposite of Elon's. You don't get fresh blood as much. And so you need to be careful. Maybe you're just a group of old people eventually. So you have to control for that. So I try to make sure that we also hire some new, but these are the two benefits, just efficiency and trust.

1:06:33The group of old people you have to be very, very careful with. Think about like the most talented people that Walt Disney had. It was like these nine guys, these animators. I think they used to call them the old men after Walt died. and I just talked to Ed Cavill, the founder of Pixar and they're going in there as a, he's a young technologist trying to pitch them. Here's a new way to animate. And Walt's dead. These guys are old. There's no fresh blood. They're like, the computers will never be able to do the stuff that you're talking about. It's like they reject. It's very inhumanization to reject these new ideas.

1:07:00So it's back to like, you optimize for some things, but then you have to mitigate for the other things. So if you're optimized for tenure, you have to mitigate for the risk that you don't get fresh blood, that your career ladder is slow. So maybe people who are talented feel like, well, that's going to take 10 years to get up the career ladder. So then you have to create programs for that to give them exposure. It took Gustav 18 years to get to the CEO. Yeah. It took 18 years to get to the CEO. Wow, it's a long time. Finally made it. But it is the same principle. Well, how do you get new talent then?

1:07:29Like, what are you guys doing literally at Spotify? Because I know you have the same idea. You guys have the same idea that Toby from Shopify talked to me about and my friend Kareem from Ramp, dude. Which was another great episode, by the way, the Toby episode. Yeah, he's the best. But that you guys are fine hiring for Spikes. Yeah. So how do you, like today, how are you getting in your huge platform, business around, I think it's just celebrated 20-year anniversary, right? Yes, exactly. How are you getting new, young talent then? How do you think about that? It's a couple of things. One is you get junior talent, and then we have this Rising Stars program.

1:08:09We literally ask managers to identify, like, these are rising stars. So then we have a program for them every year. It's like maybe 20, 30 people. And so they get to go on this program where they go out into the different markets, like India, U.S., you know, Germany, et cetera, and learn about the different problems in different markets. Then they go and sit with Alex and talk to him. Then they sit with me. It's literally this internal, you know, MBA program where you learn business, technology, product, and you build relationships across the org. So now these people come out 12 months later. They know everyone in Spotify across the world.

1:08:47So they can get anything done. So now they're going to start rising much faster. So we have these specific programs to identify the talent and help them accelerate versus the organic path of them doing something, getting noticed, and slowly working their way up. So that's one thing. But then every now and then, you also just have to hire a more senior level. right so if you look at when ai started happening or was called machine learning back then i felt that we just weren't strong enough in deep learning specifically we knew the old school matrix factorization stuff so we did an acquisition of a company called the econest in boston just to get very close to mit and then we got a bunch of talent in that field and established ourselves so sometimes you have to do acquisitions and just get when it's a completely new skill.

1:09:34Something like, you know, if you need to get big in crypto quickly, yeah, you can wait for years for the organization to understand crypto learn. You may have to acquire or hire at some senior level. You have to mitigate for the problems of tenure. And if I'm going to make some far-fetched analogies, maybe this is one of the challenges that Apple had with machine learning and AI. On average, they were slightly too old to see that. Probably people in their org knew all about it. We're all over it. It was just too late to see it. They should have gotten someone at a more senior level sooner. So sometimes you have to mitigate for the drawbacks of long tenure as well.

1:10:14What's the thing that keeps you up at night? What do you think the weakest spot for Spotify is right now? I think the thing that keeps me up at night is not surprising what AI truly means in The Limit. I'm pretty sure that media habits are going to change. because of AI. And so I don't think it's an option to just sit still. But the way I think about it is the world moves in macrowaves. You get some new technology. It often causes a bunch of havoc. Then there's some new business model that emerges and then things change, right? This was the original Spotify. We kind of wrote on the macrowave of cheap broadband and PCs, right?

1:10:54And then all of a sudden they were so ubiquitous and the broadband was so fast, you didn't actually need to own files anymore you could just stream them right we realized that we built a business model around it that became very disruptive to the to the download industry and so forth and then you wait a few years everything looked great then the smartphone came along and now everything changes again you have people that don't have a computer we only had a free tier on the computers we had no free tier turns out that while the pc and the internet the desktop was had at such low latency that you could stream it.

1:11:28If you try to stream a song over cellular back in 2008, it wouldn't even start. It was 20 seconds to start and it would chop. So like everything changed again. And then we had to adapt to that. And we managed to, we came up with the offline sync business model and the mobile model and so forth. But then you get these periods of stability. So if I was an analyst and I try to predict the world between 2015 to 2025, those 10 years, just like, you know, what would the world be like? I would have done really well to just extrapolate. More mobile, more subscription, more ads, just more of everything.

1:12:04And you would have gotten really close to what happened. But if you would have shifted that 10 years earlier, 2005 to 2015, you would have extrapolated PCs and internet. You would have missed the smartphone. You would have missed everything. You would have missed Uber. You would have missed the entire world. So the question is, which era are we in? Are we in the calm waters of extrapolation or in the macro change. I think we're one of these where everything changes. So I can't tell you what's going to change, but I'm pretty sure that things are going to change. But the way we think of it as a company is the scariest periods are the periods of change.

1:12:37Guess when Spotify grew the most? Periods of change. Periods of change. When things are stable, market share stays stable. You don't eat market share. So when there's change, there's risk. You can lose market share. But that is also when you have the most opportunity to eat market share. If you adopt the change. So my principle is just always be first. be first and adopt it first like the world is going to change just accept that and get ahead of the curve so i think this is a time of great opportunity for us to do new things but it is also the thing i'm thinking about constantly what does it actually mean and what are the right bets are the right bets to bet on user control and and and these things are you know whereas others are going to bet complete opposite of us so that's that's what keeps me up at night is we're still in this change it hasn't finished yet no one knows exactly where it's going to end up they're going to be the Ubers and Airbnbs of this era.

1:13:27And maybe they are open philanthropic, but maybe not. Maybe it hasn't even happened yet. That's a perfect place to end. Gustav, thanks for doing this, man. Always good to talk to you. Thank you, man. Appreciate it, man. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.