Business

How Daniel Ek Runs Spotify: 'Very Few Things Make Their Way Up to Me'

Daniel Ek
Ilya S. Savenok/Getty Images for Spotify

Founder and Chief Executive Officer of Spotify Daniel Ek speaks onstage during Spotify Investor Day at Spring Studios on March 15, 2018 in New York City. 

In a 7,000-word interview with The Observer Effect, the Spotify CEO discussed his leadership style, content acquisition, the limits of playlist algorithms and more. 

It’s as busy a week as ever for Spotify co-founder and CEO Daniel Ek. On the heels of a string of new Spotify features unveiled this week -- including lyric search, a free HIIT workout service and a weekly albums chart -- the Swedish executive recently sat down for an expansive interview with new online publication The Observer Effect published today (Oct. 5).

While the conversation focused more on Ek's leadership style (including several hundred words about the structure of meetings) than any specific developments at the company, it offers a rare, wide window into Ek's thoughts on everything from what he learned by shadowing executives like Facebook CEO Mark Zuckerberg to the ways fatherhood has changed him.

Below are the biggest takeaways from the 7,000-word transcript, including the revelation that Ek isn’t, actually, as busy with decision-making as he appears.

1. He doesn’t make as many company decisions as you might think -- and he prefers it that way.

Throughout the interview, Ek stressed that he wants his leadership team -- which includes chief content officer Dawn Ostroff, CFO Paul Vogel, CHRO Katarina Berg and co-founder and director Martin Lorentzon, among others -- to feel empowered to make their own decisions, and not be slowed down by the need to secure his approval. "I trust them and the analytical way they look at things," he said. "When they do run things past me, it’s because they truly want my advice [...] In short, very few things -- despite what I just mentioned, which is typically five or six things a day where people want my time -- make their way up to me."

A better use of his time, he said, is Spotify's "Company Bets," which are “large-scale initiatives that we believe will have a significant impact on the business within a relatively short period of time.” He is usually thinking far into the future, and is currently focused on the company’s plans for 2025. "I trust my team to manage the day-to-day, shorter-term initiatives and iterate as needed based on data and insights," he added. "They’re the best at that and I appreciate that this then frees me up to think about the long term."

2. He views Spotify’s hard push into the podcasting business as an ongoing experiment.

Ek didn’t reveal much about Spotify’s plan to invest $500 million in podcasting, which includes the acquisitions of podcast firms Gimlet Media, Parcast and Anchor last year. Over the summer, the company signed new podcast deals with the likes of Kim Kardashian West, Warner Bros., and Joe Rogan for his podcast The Joe Rogan Experience (although the latter deal has turned into a headache for the streaming service).

However, Ek did admit that while the company’s content acquisition moves "may have looked like a straight line," it has in reality been a learning process paved with many failures. "We made a lot of attempts and tried many different things," he said. "We tried a video service, which didn’t seem to work for us. We tried to acquire some podcasts just to see if that would work. It didn't, et cetera."

Ek is still aggressively pursuing the podcast market, though. “For all forms of audio, we want to become a one-stop destination for all the music and podcasts people love,” he mentioned later in the interview. He gives most of the credit for the company's podcast successes thus far to Ostroff, who joined the company from Condé Nast Entertainment in 2018, saying that she understands both the creative and business sides of the music industry. "I found an executive who could skillfully do both," he said.

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3. He recognizes that algorithmic and editorial playlists each have their limits, and prefers to combine them in an approach he calls "algotorial."

While streaming service algorithms can quickly and efficiently help music listeners discover artists they might not otherwise, data can never replicate the human touch of a curator. On the flip side, curated playlists are always somewhat subjective to the curator, and have stoked fears that record labels and artists might bribe playlist editors for song placement.

Ek understands all of these arguments. That’s why, he says, the company is taking an approach internally referred to as "algotorial," which means relying on editorial insights to understand the human sentiment and culture around a particular playlist, and then using algorithms to "optimize" the reach of that playlist.

"A concrete example is the Black Lives Matter movement," Ek said. "How can an algorithm detect that momentum and figure out the most culturally appropriate way to create playlists celebrating Black Culture? The simple answer is: it can’t. At Spotify, that's an editorial decision. Now, the algorithmic decision is: who sees the content? Is that the right content fit for everyone globally? Is it appropriate that someone who doesn't even speak English, but lives in America is served this content?"

4. Unsurprisingly, Spotify’s company culture is heavily influenced by Sweden.

Later in the interview, Ek explained that his hands-off approach to leadership stems from his native Sweden, a "consensus-driven culture" in which, he says, decisions happen slowly and communication is much more ambiguous. "Americans typically say, 'Well, I thought you, Daniel, were supposed to make the decision,'" Ek said. "And I'm like, 'No, I mean, you can make it if you want to.' Some people don't like that ambiguity; that's not for them."

Spotify, Ek continued, combines Sweden’s focus on balance and long-term thinking with America’s propensity for debate and clear, concise communication. "It's not always friction-free, I have to say that," he explained. "I find many times it takes the average American at least a year to be productive within Spotify’s culture." He added that Swedish companies are required by law to file an annual sustainability report (which Spotify does in the U.S.) and public diversity report (which Spotify did once, in 2018, although it also published diversity statistics as part of its 2019 sustainability report).

5. He’s investing in "moonshot" startups to boost Europe’s impact on tech.

Late last month, Ek revealed during a tech conference webinar that he will invest €1 billion ($1.2 billion) of his personal assets to fund early-stage European startups over the next decade -- specifically so-called "moonshots," or projects that are too young to draw venture capital funding.

Founded in 2006, Spotify is seen as one of Europe’s few tech startup successes, and Ek wants to change that.

"The success of companies out of Silicon Valley is well documented but the same cannot be said for Europe despite the incredible talent and ideas coming out of the region," he said during the interview. "Europe needs more super companies for the ecosystem to develop and thrive. [...] And this is why I’m devoting one billion euro of my personal resources to enable the ecosystem of builders who can build a new European Dream."