Spotify CEO Daniel Ek

We sit down with Spotify CEO Daniel Ek live in Stockholm at Spotify’s amazing HQ studio. This was an incredibly special and timely conversation: for those who haven’t been paying attention over the past few years, after revolutionizing music Spotify has now ALSO completely transformed our own industry in podcasting. Starting from way behind with ~zero market share in 2018, Spotify has now aggregated the listener market and amazingly surpassed Apple as the world’s largest podcast platform — including close to home with the Acquired audience, where it has 60%+ market share among you all! We discuss the origins of this “second act” strategy with Daniel, the vision to move from a music company to an audio company, and what’s coming next with Spotify’s entry into Audiobooks. And of course we relive some key moments from the Acquired canon that Daniel was involved in, including his pivotal conversations with Taylor Swift and her team convincing her to come back to streaming following the release of 1984. Tune in! *Links:* - Follow Daniel on Twitter: https://twitter.com/eldsjal *More Acquired:* - Get email updates https://www.acquired.fm/email and vote on future episodes! - Join the Slack http://acquired.fm/slack - Check out the latest swag in the ACQ Merch Store https://www.acquired.fm/store! _Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions._

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ben Gilbert?

  It is impossible to flawlessly execute a podcast of this style.

• 0:04David Rosenthal?

  Yeah.

• 0:05Ben Gilbert?

  And that's the beauty of it. You come up with a bunch of stuff you want to talk about, and then you end up having a real, organic conversation, and then it turns into a product, and that product is totally different than what you envisioned in your head, but can still be great.

• 0:17Speaker 02

  But I think the amazing thing is, unlike you talking to a journalist, et cetera, it's truly a conversation one. And the second part is, there's enough time to actually elaborate on the thought and the idea. Whereas you have to be so succinct in how you express your idea and truly get it across in 30 seconds, or like you lose the moment and the journalists want to move on. And Brian Chesky is an example. He's like the master on it. And he just switches it on and he's like, so good. For some reason, he and I always end up getting on the same panels. And I'm like, it's game over even before it started. You're gonna have all the great stuff.

• 1:10Ben Gilbert?

  Welcome to this episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert.

• 1:17David Rosenthal?

  I'm David Rosenthal.

• 1:18Ben Gilbert?

  And we are your hosts. This episode, we sit down with Daniel Ek, the man who saved the music industry after Napster and the piracy era killed the CD business. Some of the stats are mind boggling. Spotify has paid $40 billion to artists over their lifetime. They're now the single largest source of revenue for the entire music industry.

• 1:40David Rosenthal?

  That's crazy. Spotify also has over 500 million monthly active listeners, over 200 million of which are paid subscribers. Both of those numbers are bonkers.

• 1:52Ben Gilbert?

  And in today's conversation, we're talking about, one, how Spotify managed to get to this 500 million number by stacking all these different expansion strategies on top of each other over the years. And two, we're going to dive into the current moment that Spotify is in. They've entered podcasting in a huge way that has not only changed the experience for consumers, but Spotify's business and their future as a company, which is of course, very interesting to David and I, as Acquired's growth has really exploded on Spotify.

• 2:22David Rosenthal?

  Totally. As I think we reference early on in our conversation with Daniel, over 60% of Acquired's audience is now on Spotify, which is up from basically zero four years ago.

• 2:32Ben Gilbert?

  It's wild. In fact, we were so interested in having this conversation that when Spotify asked if we wanted to fly to Stockholm and record in person with Daniel in the Spotify studio, we jumped at the chance. Daniel also foreshadowed some of what's to come with the cousin of podcasting, audiobooks. We can't wait to hear what you think. Come discuss it after you listen to this episode in the Acquired Slack, acquired.fm/slash/Slack. You should subscribe to our interview show, our second show, ACQ2. You can find it in any podcast player, and we've had some killer back-to-back discussions with the CEOs of Retool and Angel List, both about AI. Now, without further ado, this show is not investment advice. David, myself, and our guest may have investments or many shares in the companies that we discuss, and this show is

• 3:17Ben Gilbert?

  for informational and entertainment purposes only. Now on to our conversation with Daniel Ek.

• 3:23David Rosenthal?

  We wanted to start with, like, something kind of incredible has happened in podcasting.

• 3:28Ben Gilbert?

  If you look at January 1st, 2019, we had less than 1,000 listeners on Spotify.

• 3:31David Rosenthal?

  Yeah, crazy. And now it's by far the majority of our listeners.

• 3:37Ben Gilbert?

  And unless you're us and you're looking at the data all the time, or other podcasters, I think it's easy to underestimate how seismic of a shift has happened in the podcasting ecosystem since you guys dove in. And I just wanted to, sort of Acquired-style, go to a moment in time and say, how did that happen? And how did you guys decide to become an audio company instead of a music company?

• 4:00Speaker 02

  I like to say that there was probably this genius insight at some point in moment, but that's certainly not, in the case of Spotify, true. It is often quite serendipitous. And for a long time, you know, I was kind of fighting the urge on this, but we were oftentimes trying to not think of ourselves as the users and customers, because once you got to kind of 100 million users, you're kind of like, well, obviously I shouldn't be the target demo. I need to kind of listen to what the actual users are telling me. And there's some part that's true with that. But then, more and more, what I've realized is also that, actually internally, we probably have the best sounding board of a quite representative Spotify user and what they might like.

• 4:46Speaker 02

  And so one of my favorite topics is how often people game our platform. For instance, in Germany, unbeknownst to us, but one of the the sort of crazy things that ended up happening was just people started uploading audiobooks. Because it turns out that these music labels actually own a bunch of audiobook rights. And so as the platform was taking off, they realized what else can we put on this platform that gives us a leg up and creates more revenue for us? And they realized that they have this catalog of audiobooks sitting on there. So I think that was kind of one realization where we kind of realized, hey, this platform, it doesn't seem to matter all that much what we're putting on it. People just like consuming content. And then I and others at Spotify, we were big podcast listeners ourselves.

• 5:32Speaker 02

  And we love that, but we hate the fact that we had to switch app from our our normal one. We hate the fact that we couldn't get the recommendations working. We hate the fact that we couldn't get this to work on my car speaker or my home speaker. And all these things that we spent literally a decade building for the music industry. So it kind of dawned upon us that podcasters have sort of the same problems that the music creators have. And we should be able to play a pretty big role. And all the primitives that we built for music should work really well in terms of discoverability, in terms of ubiquity that we call, which is sort of our ability to play on on any device.

• 6:11Speaker 02

  And of course, our freemium model where the ad supported and eventually paid models as well should be able to all work together. And so the craziest thing in the beginning was probably when when we started talking about it as building it in the same app. That was what the biggest resistance was. Because the common wisdom at the time was obviously, well, podcasting has to be a distinct own thing.

• 6:38David Rosenthal?

  I mean, this was like the, you've talked about this before, the constellation of apps was the, you know, oh, the like, all the rage. Facebook's got all these different apps and Apple has all these different apps.

• 6:48Ben Gilbert?

  And unless I'm a person who already defines myself as into podcasting, I'm never going to click a podcast app to try and get into podcasting. You can't expand the TAM if they're all in separate apps.

• 6:59David Rosenthal?

  Which still was a super nerdy thing.

• 7:02Speaker 02

  Even merchandising podcasting is a very different problem than music. And it's actually one of the things that we're still working on trying to crack the code on. But that was probably the most contrarian, both inside and outside. But to us, it was probably the most obvious one because we had already seen the behavior happening in Germany. And once we had tried unloading it for ourselves so that we could play around with the product, it was kind of obvious that this would be a great experience. And it's probably been the most interesting one for me where, and what I often tell other entrepreneurs is like, well, the fact that people doubt you in the beginning, you kind of need to pay attention to that and hear what valid concerns they may have.

• 7:46Speaker 02

  But a bunch of that is just like they're not used to the concept and it's going to change. But by the time it changes, it will have already passed over. And not that you were right, but actually, well, of course, this is kind of obvious, right? So my favorite one, obviously streaming music, where when we began doing it, I always got this sort of pushback of like, why would I want to rent my music? I want to own my music.

• 8:10Ben Gilbert?

  And the phrase streaming did not exist.

• 8:13Speaker 02

  Yeah, people were not talking about it and people actually conceptualized it more around sort of renting things. And why is that good for me? This is horrible. And you know, that means that technically what happens if you guys don't want to have that song anymore, the song disappears and.

• 8:31David Rosenthal?

  People care so much about their music, like it's their identity. Like I want to own this. I want my, you know, record collection.

• 8:36Speaker 02

  Yeah, exactly. And we were fighting against it where it was so obvious to us that, because I grew up with piracy, that no, actually all you want is access to it. And it was such a hard notion for people to get conceptually because we'd been spending 30 years just getting people into that. And I feel like most of the tech industry had spent a decade plus learning about having separate apps. And we kind of said, no, no, no, it doesn't really matter. We can put it in the same app and actually people will love it even more because we're solving the same sort of user needs.

• 9:10David Rosenthal?

  Where did that insight come from? Was it? You as a user, was it elsewhere in the company?

• 9:16Speaker 02

  Well, it was really a lot more of a first principles kind of thinking around it. It didn't really make sense if you looked at sort of like, what are we trying to solve for? And was it truly so different in terms of a consumer experience? No, it was the same playing view, slightly different sort of modalities, but totally possible. And if you thought about it as a discovery, okay, well, that's a similar problem. Ubiquitous being able to play it on all these speakers made a lot of sense of having the same thing. Search, all of these things were basically shared infrastructure that we could utilize. And again, if you're searching for content, why you don't really care all that much about it on YouTube.

• 10:01Speaker 02

  And on one end, you're listening to music on one side. You had all these other short form videos and sports and so on. You don't think that those are distinctly different behaviors. So why do you think about it that way? And it's because you really think podcasting is a different format. But actually it's audio, all right?

• 10:18David Rosenthal?

  Let's go back to the radio days, talk, radio and music and sports. They were all on the same device.

• 10:24Speaker 02

  Yeah, I mean, that's the thing with audiobooks too, right? Like, what's the difference between an audiobook and a podcasting? Well, you would say chaptering and some of those stuff.

• 10:34David Rosenthal?

  We think of ourselves as like right on that line between a audiobook and a podcast.

• 10:38Ben Gilbert?

  Actually, we'd love your help trying to solve this for ourselves. So we have recently realized that acquired is the canonical episode, Nvidia episode or TSMC or Taylor Swift. These are more like conversational audiobooks between David and I than they are podcasts. Yeah, they're four hours long, they drop infrequently. How does that kind of fit into what you imagine is the job to be done by audio? And is it an audiobook? Is it a podcast?

• 11:10Speaker 02

  My view, I guess, is the boundaries are from a format side is definitely being blurred quite a lot. And, and for right reasons. But the better way to think about audiobooks and podcasting is it's, it's really around a business model mostly. So one way to frame it instead would be podcasting is ad supported audio and audiobooks is paid audio. So for you guys, I mean, I also happen to know you've spent so much time and effort on the research of that site. You could imagine that in the future, you have the ad-supported side of your podcast be certain types of episodes and you'd have for your subscribers,

• 11:53Speaker 02

  the unlock where they get access to, you know, these kind of deep dives, et cetera. And obviously, the subscription thing could be as simple as like, hey, you're part of our other network and it doesn't cost money, or you could pay gate it all the way through. But I think it's more of a business model. That's the big format differentiation. Because as we said, like the quality, the mics we're using relative to an audiobook, there's no difference here. You're using like high-quality camera equipment, also very similar to more professional style than sort of do-it-yourself kind of equipment, editing, all these things. It's getting more and more blurred.

• 12:32David Rosenthal?

  Yeah, which is so interesting, like to us, like we've lived this over the past eight years, like what podcasting has unlocked, and now with Spotify bringing so many more people to the medium that weren't consuming before, is like a mass audience for niche products. Like if we were authors and we wrote a book, and we get pitched all the time on writing a book, like the business model for us does not make sense anymore, given the audience size that we have and the particular type of audience. We monetize so much better with the ad-supported content. But like to make that unlock happen, it needed to become a mass medium.

• 13:09Speaker 02

  Yep.

• 13:10David Rosenthal?

  It's interesting to think about, would that change if audiobooks can access a mass audience in the same way?

• 13:17Speaker 02

  Yeah. And obviously, our view is we eventually think audiobooks should be much, much larger than what it is today. Hundreds of millions of people who are actually listening to audiobooks because the content is great, rather than today, what's tens of millions of people.

• 13:33David Rosenthal?

  Is that the market size today of?

• 13:34Speaker 02

  Yeah, we believe it's like tens of millions. It's one of the fastest-growing categories, which makes it interesting. But it's again fundamentally, it's both a business model problem. It's, you know, again, a discovery problem and all those other things.

• 13:50David Rosenthal?

  You either got to pay a lot of money for a one off purchase.

• 13:53Speaker 02

  Yep.

• 13:54David Rosenthal?

  Or you need to have a pretty expensive subscription to a service that you may or may not use that and get value out of.

• 14:00Ben Gilbert?

  It reminds me of music in 2008.

• 14:02David Rosenthal?

  Exactly.

• 14:04Speaker 02

  You guys are exactly right and there probably needs to exist a different business model for all of these things. But you could even, in your case, I mean, you guys have probably right now a pretty defined audience, I would guess. And probably a very high value audience, which makes ad supported monetization probably better than the average creator for you guys. Just given the type of audience that people want to want to get to. But you could even contemplate like some of your deep dives, like I've, I've heard like actual hedge fund investors literally have that as the sole input to their entire process.

• 14:43Ben Gilbert?

  Which is terrifying.

• 14:44Speaker 02

  Yeah, well.

• 14:45David Rosenthal?

  Not investment advice.

• 14:46Speaker 02

  Yeah, exactly. But I mean, you know, it is one of the areas that I'm, I'm kind of the most intrigued about. I think Ben Thompson had this piece very recently. I think he called it like the unified content business model piece. I don't necessarily agree with everything he said, but, but I think his main takeaway is obviously that all media models ought to move to freemium. It's as someone who's been saying that for, for 15 years, I obviously agree with him there. But I think that's true in all formats, right? Like, as I said, I think, you know, what's the difference between audiobooks and podcasting? There are definitely differences, but, but the formats are blurring.

• 15:28Speaker 02

  But the main one is, is the business model, as I said, so it's just, it's talk audio, but with a paid or an ad supported business model. And I guess my advice to you guys would just be, I think you should kind of like explore both and see to an extent what's possible.

• 15:45Ben Gilbert?

  Yeah. All right, listeners. Now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you prove that you were secure once a year on audit or a static PDF, then everyone would nod and you're done. But in an AI-first world, that doesn't hold up anymore.

• 16:05David Rosenthal?

  Yep. Your risk surface changes every week now. A vendor turns on an AI feature, or someone writes in a new model without telling IT, and your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this quote-unquote "shadow AI" running with no security review at all.

• 16:26Ben Gilbert?

  Right. And that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap. And the way that they close that gap is Vanta Agent. Think of it as a GRC engineer, that's Governance, Risk and Compliance, except that it's software and it doesn't sleep. It finds the issues, drafts the fixes, and cuts the time that you'd spend on vendor assessments in half.

• 16:48David Rosenthal?

  In half! Which is exactly why more than 16,000 companies today run on Vanta. Companies like Ramp, Cursor, and Snowflake all stay audit-ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment.

• 17:06Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of Acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off, and just tell them that Ben and David sent you. Speaking of the podcasting business model, there's the potential for podcasting to be a far better Business at scale than music streaming. Obviously with music streaming, you take 30% and you share 70% with the labels.

• 17:50Ben Gilbert?

  With podcasting, there's the potential for real operating leverage, especially if you own the content, to build a fantastic ad network or however you want to monetize it. But you actually can take advantage of the scale of your audience in a way that it's sort of hard to outrun your costs in the music world. I'm curious, how early in your dreaming about becoming a podcasting platform, did you start thinking about that or was it purely product driven?

• 18:20Speaker 02

  Well, I think it was a bit of both. And you have to contemplate that if you're making moves like certainly of our size, because many of these investments that we're making are multi-year ones. And pretty substantial from a signaling point of view too. And obviously, public market investors want to know, like, well, is this ultimately a good business and why do you think that is? And for me to have said, well, we've bought a bunch of companies, but I don't really know what kind of business it'll be, it's probably not going to be the right answer. So obviously, we contemplated that and we thought about that. But the reality is, there's a lot of the grass is greener on the other side when you go too deep in that.

• 19:03Speaker 02

  So obviously, on the one hand, if you deal with a lot of licensed content and in this case, from some major labels and obviously a lot of indies as well, but still relatively supply constrained from some big ones. The natural tendency is for you to think, well, this is much better because all of a sudden, you have this sort of much wider scope of different creators that matters. It's great.

• 19:29Ben Gilbert?

  And aggregate a fragmented market.

• 19:31Speaker 02

  Yeah, you can do the aggregation theory. That's all good and great. We don't really contemplate all that much. It's obviously, there's other challenges with that business model. Moderation, all of a sudden, becomes a massive thing. You have to build an actual ad network that probably then scales. So in theory, yes, you're right. You may have an opportunity to gain. More margin over time in this model. But fundamentally, you have to do many more steps along the way. Like, we don't have to contemplate content moderation as much when it comes to music. We certainly don't have to have these very elaborate systematic processes about what constitutes

• 20:13Speaker 02

  speech and, you know, violence. And we knew that because I'd seen enough of these, obviously, platforms. But but it is important because if you think about it from a P and L. So on the surface of this, these models are great, right? Because very high gross margins and so on and so forth.

• 20:33Ben Gilbert?

  Great at scale. Expensive at small scale.

• 20:35Speaker 02

  Yes. But even at scale, if you think about it, is the cost increasing or decreasing? And if you think about, you know, right now, obviously, AI will come in and it will be massive. But I think at one point in time, Facebook, or now Meta, had over 100,000 content moderators actually working for them.

• 20:55Ben Gilbert?

  100,000?

• 20:57Speaker 02

  I believe so. I don't know. An insane amount of people.

• 21:00Ben Gilbert?

  So it's tempting to believe that that's a fixed cost and that they're running this like unbelievably high gross margin advertising business. And they can outrun those fixed costs no problem. But in reality, what you're saying is actually they build up a whole bunch of variable costs too that don't fit into this platonic form of ideal social media business model.

• 21:22Speaker 02

  Yeah, for sure. And even today, if you think about it, so all right, well, maybe that's not 100,000 anymore because they've been able to automate some of that process. But it's kind of a mouse game as well. So the other side is now using quite sophisticated AI.

• 21:37Ben Gilbert?

  They use OpenAI too.

• 21:38Speaker 02

  Yeah, exactly, to do that. And that means that your AI models has to be a lot more, you know, sophisticated. And that still adds cost. So I think the best case scenario, I was looking at this. This is very old data, but I believe at the time of Facebook's IPO, it was something like the cost for Facebook to onboard a user was like a dollar a user or something like that in like hardware. Cost and all that stuff basically to have lifetime value of a customer. And so at that time, obviously, the monetization wasn't as advanced. So that was what was burning cash for quite a while. And then eventually their growth rate probably slowed down enough where their monetization started

• 22:24Speaker 02

  kicking in and kind of scaled up enough where where those two effects kind of took out each other and they became very profitable. But if you look at, look at it now, I would, I don't know what the cost would be. But if I would guess, if I would start a social media company today, the cost may be an order of magnitude more. Right. Because of all the other things you now have to do. The ad platforms are way more sophisticated. They have to build the moderation tools are way more sophisticated. Now, the good news, so you may then come to this and say, well, was that a mistake then? Well, we knew a lot about that going in and we weren't entirely new. It wasn't like we were starting an ad business from the scratch.

• 23:09David Rosenthal?

  Right.

• 23:10Speaker 02

  So we had already.

• 23:11David Rosenthal?

  With Facebook for a long time.

• 23:13Speaker 02

  Yes, that too. So we had, we had relatively good idea of what type of problems we would encounter.

• 23:19Ben Gilbert?

  And to give you some credit for listeners, I think at the time, you probably had maybe 200 million people on the ad supported tier who weren't in premium when you launch podcasting, maybe something like 150 million. But you had a gigantic scale advertising business. You just didn't have user generated content being the content that it was advertising against.

• 23:41Speaker 02

  Yes, that's accurate. And, and the amount of inventory, obviously, that we were, were monetizing it against was relatively small. And, and one of the big things right now is obviously this is a huge thing, perhaps even more so than music for us to offer monetization to a lot of these podcasters that perhaps unlike yourself can't sell ads.

• 24:04David Rosenthal?

  Unless you're in a niche like ours. If you're subscale, you're never going to be able to access Unilever or P and G or Coke, you know, on your own or Nike.

• 24:16Speaker 02

  So I want to ask you about that because I saw the episode you guys did with David Senra, by the way.

• 24:22David Rosenthal?

  Oh.

• 24:23Speaker 02

  So, so, and he's interesting because like, in my opinion, he seems to almost dig in more in like what made him successful and like tries to not at all veer to broadening the base. So how do you think about that? Like, because you could just go serve your niche even better. Or you could try to like, well, let's try to include other forms of content. Like, how do you decide what type of content to go after?

• 24:52David Rosenthal?

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

• 25:03Ben Gilbert?

  I'm not sure I'd go that far, but I would rather saturate our niche and then at some point stop growing, then expand the niche.

• 25:11David Rosenthal?

  And then.

• 25:12Ben Gilbert?

  Which I think we have three to four X headroom on our current.

• 25:14David Rosenthal?

  Yes, we still can expand in our niche, but then we did our Taylor Swift episode. We did the NBA, we did the NFL, and then we did LVMH. And LVMH, we got 40,000 new subscribers.

• 25:28Ben Gilbert?

  Wow.

• 25:29David Rosenthal?

  And we were like, okay, so to your point about like some, something is hacked here. Like there's a, there's a new phenomenon happening.

• 25:36Ben Gilbert?

  So we, we have had to redefine what acquired is basically once a year since we started. It used to be technology acquisitions that actually went well. And then it was acquisitions and IPOs.

• 25:47David Rosenthal?

  Still that.

• 25:48Ben Gilbert?

  And then it was, you know, and, and, and so at some point, um, we expanded beyond just tech founders and engineers, it became venture capitalists also. And then it became their LPs. There's a bunch of university endowment folks that listen. And now we're realizing as long as we keep making these really deep, really long, really esoteric stories and analysis, you can create smart content for smart people that is not scoped to a particular industry. And I think that that's our new sort of definition of the job to be done from acquired.

• 26:24Speaker 02

  Yeah, I think it's brilliant how you're able both to satisfy your own curiosity, I guess, and at the same time, sort of, it doesn't seem that far fetched. Some of the ideas you're trying, obviously, I would probably assume the Taylor Swift one was more out there than than something else, but but the LV image one actually felt to me supernatural. And it's funny, you know, how well talked about it it's been even among like what I would have not assumed would have been your crowd. Like, I had a bunch of like, really old school value investors that I honestly didn't even

• 27:07Speaker 02

  realize, listened to podcasts, been ping me about it, and like, have you listened to this one? It's like, which is pretty cool. So I think there's a way where there's probably some overlap between the audiences, but also kind of clearly attracts a new.

• 27:21David Rosenthal?

  Yeah, I mean, it's kind of like, it's a very, very different scale and different business, but it's a little bit like the Spotify adding podcasts to a music, but like, we have this audience that is like traditionally very tech focused. We have this format that we've refined. And now we're like, well, okay, if we bring something else into it, is that going to expand it?

• 27:44Ben Gilbert?

  Yeah, but I will say, unlike Spotify, which you can, by virtue of being a tech platform, you can aggregate a bunch of different audiences and then let them choose their own adventure on a really broad platform.

• 27:58David Rosenthal?

  We choose the adventures.

• 27:59Ben Gilbert?

  We create these serial episodes. And so if we go on a bender and do, like, we just did Lockheed Martin, and it hasn't hasn't come out yet as we speak, but we could have done eight Lockheed Martin episodes, and we chose two particular stories to tell, and we called that the Lockheed Martin episode.

• 28:14David Rosenthal?

  Yeah.

• 28:14Ben Gilbert?

  If we went on a bender and did eight, then like, we're underserving a lot of our other niches.

• 28:21David Rosenthal?

  We did two and a half episodes on Nintendo, two on Nintendo, one on Sega, and we had a blast, and people who love video games had a blast. But by the time the Sega episode came out, the people who don't love video games and video game history had stopped listening.

• 28:36Ben Gilbert?

  Right, right.

• 28:37Speaker 02

  But sort of diving deeper on that, I'm curious then,

• 28:42Speaker 02

  would it have been that much more effort for you guys to produce the eight? Or did you have the content, but it just didn't make sense from an audience point of view?

• 28:49Ben Gilbert?

  I think we had high level concepts in our head for for eight, but it it turns out most of the work is the last 10%.

• 28:58David Rosenthal?

  Yeah.

• 28:58Ben Gilbert?

  Yeah, it's like that. It's like software engineering where like there's the first 90% and then there's the second 90%.

• 29:03Speaker 02

  Yeah.

• 29:04Ben Gilbert?

  And I think so much of the work is.

• 29:06David Rosenthal?

  The last 10, 20%.

• 29:08Ben Gilbert?

  Yeah. There's usually one thing on the cutting room floor though. So we're playing with this idea of shorts, what we did for Sega. If in approximately one hour, can we take one thing that just we couldn't squeeze it in? And and and tell one more story?

• 29:25Speaker 02

  Yeah, I was just thinking about sort of touching upon where we sort of were a little while ago about sort of paid versus ad supported. I bet you that there would be a very small one, but there would be an audience that would listen to all eight. Whether you want to spend all the time doing the eight is a totally different question. It seems to me like the best creators just pursue whatever they're interested in. And some of it will work, some of it won't work. They don't really seem to care all that much. Obviously they'll learn from from what seems to be resonating and not. But but that's the cool part, like we're living in an internet where, on the one hand, everyone talks about this 15 second kind of clips thing.

• 30:08Speaker 02

  And everyone's sort of getting down in that rabbit hole. But then, at the same time, you could have like three, four, five hour long conversations in super esoteric, very, very deep topics. And people love that, too.

• 30:23Ben Gilbert?

  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.

• 30:32David Rosenthal?

  We want your views on this. On our very small scale, like we're struggling, like we haven't acquired TikTok. We're on YouTube Shorts. We post on Twitter and like. None of that drives the needle for us. We've had videos on TikTok get a couple million views and we don't know if it translated to a single new subscriber.

• 30:50Ben Gilbert?

  Right.

• 30:51David Rosenthal?

  To the

• 30:51Ben Gilbert?

  Or in many cases, we do know it translated to a single new subscriber.

• 30:55David Rosenthal?

  Single subscriber.

• 30:56Ben Gilbert?

  Right. Welcome both of you.

• 30:58David Rosenthal?

  Yeah.

• 31:00David Rosenthal?

  Thank you for staying with us. At the same time, like you get, 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 Tik Tok-ification of podcasts.

• 31:12Ben Gilbert?

  It's the new home screen.

• 31:13David Rosenthal?

  The new home screen.

• 31:14Speaker 02

  Yeah, yeah. Both extremes seem to work. I believe one of the biggest problems we have in this new creator economy is, is the one of attribution, right? So many creators like you have or try many of these different platforms and use it, but you know, and they can, they can see on each individual platform how well they're doing, but it's very hard for them to understand what actually drives what. And I actually see both. I see some creators who are like, under investing in other platforms and probably too singularly, just because they have success on one, they kind of ignore all the others, which my advice to all of those is that feels kind of dangerous to do because if there would be an algorithm

• 31:57Speaker 02

  change or any of the kind, even you know, unanticipated by the platform, because you know, they may see that something resonates, watch time resonates better with some other metric. It doesn't have to be skewed as an evil thing. It just could be something that actually benefits the user. But if you built your entire livelihood of that one platform, that could be a big problem for you. So I see them under investing in other platforms. And then the other one also be true, which is they're over investing in too many and not realizing that, that actually they probably would do better in just focusing more on one or two. And so I think that there's two different problems. I, I believe that for

• 32:41Speaker 02

  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 audiobook or a podcast. And if you think about it, it's kind of logical because in a song, it's a three minute commitments 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

• 33:21Speaker 02

  the time and attention to it because you're like, well, I love Radiohead. I'm gonna give this song a chance. And maybe not just one's chance. I'll, I'll listen to it a few times before I make up my mind.

• 33:34Speaker 02

  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.

• 33:49David Rosenthal?

  It's a much bigger commitment, though.

• 33:51Speaker 02

  It is a much bigger commitment for sure. But I may give it 10, 15, 20 minutes, right? Because I have that relationship. But if I've never listened to you guys before.

• 34:01David Rosenthal?

  Yeah.

• 34:02Speaker 02

  That one hook that gets me in the how many people, you know, in marketing, you usually had it. 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. So we, we kind of bombarded it. We did a bunch of different things. It was hugely successful.

• 34:41David Rosenthal?

  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?

• 34:57Speaker 02

  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 ourself to finding what our first audience is. And it could be geographically niched. It could be that it actually is, you know, again, a subset of a

• 35:26Speaker 02

  Uh, demographic or, or, or whatever, but, but, but I'm 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 US as our first market, huh? And, and if you asked 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, I'm running an internet company. Like, come on.

• 36:01David Rosenthal?

  You told the stories of, uh, 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.

• 36:10Speaker 02

  Oh, yeah.

• 36:10David Rosenthal?

  Actually, you must've been so stressed.

• 36:14Speaker 02

  Yeah. Uh, well, I had many, uh, many of those episodes and, and it, it always followed with enormous weight gains, uh, and hair loss. So that was basically.

• 36:26David Rosenthal?

  You literally ripped your hair out.

• 36:27Speaker 02

  Yeah, pretty much. Like I, I started, when I started, I had hair and then like two, three years later I didn't have hair.

• 36:32Ben Gilbert?

  When you started Spotify, you had hair?

• 36:34Speaker 02

  Yeah.

• 36:34David Rosenthal?

  Whoa.

• 36:35Speaker 02

  Yeah, there's like old pictures, um, of me with hair, like from the first, um, year or something. And then it kind of all disappeared.

• 36:44David Rosenthal?

  Wow.

• 36:44Speaker 02

  Uh, and I don't know anything.

• 36:46David Rosenthal?

  Was it worth it? Was it worth the trade?

• 36:48Speaker 02

  Um, well, uh, so obviously I, I, I think it has been, but obviously I, I can't recommend. Um, it is an emotional roller coaster. 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, uh, whether we're going to be alive tomorrow or not. And I kind of hate, um, how media portrays this and sometimes how entrepreneurs, we're, we're supposed to be sort of like, we're so big, we're like, we understood everything from

• 37:28Speaker 02

  day one. It's certainly not been my, my journey. Like my journey was, uh, you know, I, I had a lot of luck. Uh, I worked insanely hard, um, uh, to get to, to even half of where we were today. And then.

• 37:43Speaker 02

  It's been a true sort of emotional roller coaster. 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.

• 37:56Ben Gilbert?

  Hmm. All right, listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team and deploying them is no longer the hard part.

• 38:11David Rosenthal?

  Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like, the risks are real.

• 38:25Ben Gilbert?

  Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why ServiceNow built the AI Control Tower.

• 38:35David Rosenthal?

  Yep. AI Control Tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with any AI, not just theirs. Every device on your network, every permission across every system, every AI agent, visible and secure in one place.

• 38:53Ben Gilbert?

  And ServiceNow can do this because they've spent more than 20 years building the operational backbone of the enterprise. The workflows, governance, approvals, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security.

• 39:09David Rosenthal?

  ServiceNow already runs more than 100 billion workflows annually and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.

• 39:26Ben Gilbert?

  And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all?

• 39:35David Rosenthal?

  So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely at scale, go check out servicenow.com/acquired and tell them that Ben and David sent you. We 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. Like, do you consider that one of those moments?

• 40:06Speaker 02

  This was 2014?

• 40:07David Rosenthal?

  2014, October 2014.

• 40:08Speaker 02

  Yeah, 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 like more artists sort of pulling out, et cetera, for a few days? And then, you know, I spoke to a lot of artists, but I think there were certainly a lot of sceptic about Spotify at the time.

• 40:53Speaker 02

  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. And 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.

• 41:36Speaker 02

  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 Adeles of the world, that probably benefited from physical scarcity, that probably didn't need to be on streaming, that probably should have done a windowing type model. The number of those artists were going to be very, very small.

• 42:07David Rosenthal?

  Yeah.

• 42:08Speaker 02

  But she was certainly one of them.

• 42:10David Rosenthal?

  Was that because of the demographics of her audience?

• 42:14Speaker 02

  I think so, but also she on her own can basically control the zeitgeist, right? Like she can decide that this is a big cultural moment.

• 42:24Ben Gilbert?

  Taylor Swift.

• 42:24Speaker 02

  Yes.

• 42:25Ben Gilbert?

  Yeah.

• 42:26Speaker 02

  It is remarkable. Not a lot of people in the world can get hundreds of millions of people around the world to wait for a moment. And she did it brilliantly with this album launch too.

• 42:37Ben Gilbert?

  I stayed up till midnight.

• 42:39Speaker 02

  Yeah. A lot of, I don't know if it was hundreds of millions, but certainly tens of millions of people literally waited and sort of, she got them in on the hour and it was like each hour was another sort of gift. So she played that to perfection. And she's really remarkable at understanding how to speak to her audience and she does it authentically. So she can do that. And there's definitely other artists that can do the same. But what's rare is for her to have that kind of zeitgeist and connection with that deep connection with that audience, the fan base that she has, how vigorous and how intense they are at that scale. That's the unique thing, right?

• 43:24Ben Gilbert?

  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?

• 43:47Speaker 02

  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? Probably not would have been the answer. And, and she's super smart. So she understood that.

• 44:10David Rosenthal?

  And kind of to your point, like even in 2014 in Europe, that had already happened, but it hadn't happened in the US.

• 44:16Speaker 02

  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. At that time, physical sales was still very big. You know, I remember, I think it was Lil Wayne that sold like three million albums in that year. On Costco out of all places.

• 44:42Ben Gilbert?

  No way.

• 44:42Speaker 02

  Yeah, it's, it's some sort of demographic connection thing was going on.

• 44:47David Rosenthal?

  I love that. The intersection of like Charlie Munger and Lil Wayne and Costco.

• 44:52Ben Gilbert?

  Costco sells more chickens than anyone in the US. In the world, actually Costco just is an unbelievable distribution channel, if you can get it.

• 44:58Speaker 02

  Yeah. And we were talking about it before, but Starbucks and Howard Schultz was actually one of the biggest retailers of CDs in the West. That's actually how I met him the first time.

• 45:09Ben Gilbert?

  Oh, really?

• 45:10Speaker 02

  Yeah, because they were, they were becoming a partner of ours.

• 45:15David Rosenthal?

  That's right. You did a partnership with Starbucks.

• 45:18Speaker 02

  Exactly at that moment and got to know him.

• 45:22Speaker 02

  Spent some time with them. So yeah, I mean, the world just looked very different back at that time. And I think that changed. And, and yeah, I mean, ever since she's been great with the team and, and she's super smart.

• 45:36David Rosenthal?

  That was our big takeaway from the episode. It's just like, she is really, really smart.

• 45:40Ben Gilbert?

  David and I were talking before this episode, are there other artists that you've gotten interface with where you walk away? And you're like, better business acumen than any founder I've met, any investor I've met.

• 45:52David Rosenthal?

  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.

• 45:58Speaker 02

  There's quite a few of them because I actually believe these days, if you consider a mega artist of that stature, it's like they're their own enterprise and they're the CEO of that enterprise. There's, they certainly have people who help them. But at this level today, there's almost no one of them that's not very active as well.

• 46:21Speaker 02

  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? Cause they're same order of magnitude scale, right? I don't pretend to know all of Taylor Swift's business sites and who's involved in everything. But from, from what I would guess is she probably runs with a pretty lean team.

• 47:04David Rosenthal?

  That's what we heard when we were researching the episode.

• 47:06Speaker 02

  Yeah. And that's certainly been our interaction with her. It's like very tight, very lean. And then if you think about something like BTS, but actually quite a lot of the Korean artists. It is like an industry. It's huge. Just on the songwriting side, it's the difference between if in Taylor Swift's camp, it's like two, three, four, maybe at the top. In some Koreans, it's 200 writers involved. And that's like a small part. And then you have like everything from merchandising. There's another few hundred.

• 47:41David Rosenthal?

  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.

• 47:49Speaker 02

  Yeah, well, 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. All the digital platforms, they have their own developers, programmers, building specific platforms. It's, it's pretty cool.

• 48:14David Rosenthal?

  One thing I'm really curious on that we hadn't thought about before we came here yesterday to Stockholm when we were talking with other folks on the Spotify team. I'm curious. In this lens, what the past few years have been with Bad Bunny and reggaeton. And I've heard you talk about that, like you knew from the data on Spotify that this was going to be huge. And now I think it's the largest genre on Spotify.

• 48:39Ben Gilbert?

  And many of our listeners will not know either of those two terms you just threw out.

• 48:44Speaker 02

  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. But then once every blue moon, one of these niches kind of develop into something that's actually quite sizable. And you kind of start realizing that maybe this has a global appeal on top of it. So in Latam, as an example, gospel music is quite big.

• 49:23Speaker 02

  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 US, gospel might be a larger genre, et cetera. 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. And 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.

• 50:05Speaker 02

  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 in the US would be kind of an obvious one, right? And so many years ago, we kind of started seeing. Them breaking out their natural clusters and becoming a pretty big thing. And it was for me at that time, it was just pretty obvious that if we invested in that genre on a global basis, we thought that that would have a global appeal.

• 50:40David Rosenthal?

  Yeah, because before a platform like that, obviously, like it could happen and maybe there are examples where it did. But like, that's like, it's just so, maybe the acquired audience, not as many people know Bad Bunny or like know the lyrics to his songs, but like a large portion of non-Spanish speaking Americans and like non-Spanish speaking people around the world know all the lyrics in Spanish to Bad Bunny songs.

• 51:04Speaker 02

  They may not know what the lyrics about.

• 51:08Speaker 02

  Yeah, that would be a very different thing. There's a lot of local cultural things that seems like, what is talking about? You know, someone cheating with this one and all these kind of relationship stuff. That's the sort of local nuances. But, but yeah, I mean, yeah, that's the fascinating thing, right? But, but the same, 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.

• 51:53Speaker 02

  And 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, and that's the amazing thing about what we're able to do. And the really cool thing is you're, you're able to take artists that otherwise, you know, perhaps may not even have been able to be professional and, and now they have a global audience. I don't know how to express it, other than that they have some sort of God-given talent.

• 52:35Speaker 02

  That's the best way I can describe this, kind of genius when they're able to express these things in a way that it just resonates with people all over the world. Just instantly, it's like, how do you do that?

• 52:46Ben Gilbert?

  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, like, no, it's more about nurture than nature.

• 53:09Speaker 02

  Yeah.

• 53:11David Rosenthal?

  Yeah, it's like we were talking about on the Nintendo episode. Like, there are always only going to be a handful of Shigeru Miyamotos in the world. But until recently, and in the gaming industry, it's still pretty much the case. Like, you need to also have the luck of being, be in the Venn diagram of a Shigeru Miyamoto who happened to be the arcade cabinet designer at Nintendo in order for like, the possibility of Mario and Zelda to happen.

• 53:35Speaker 02

  Yeah.

• 53:36David Rosenthal?

  And like, in music and podcasting now, and this where 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.

• 53:49Speaker 02

  I think that's so interesting. I 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 Nintendo is you have to have the resources and able to build a game. And that's still not cheap, and it's expensive. And back in the day, maybe you had to build the entire console in order to even have a chance of doing it. But these days, you still, like, AAA game is

• 54:20Ben Gilbert?

  A few hundred million dollars.

• 54:21Speaker 02

  Yeah, very big productions.

• 54:22David Rosenthal?

  And five years.

• 54:24Speaker 02

  Very big productions, right? And, and sure, you can build an indie game and so on and so forth, but, but, but it's still a very limited number of people that are able to do that. But even in filmmaking or in TV series, the amount of people that used to be able to be showrunners or like producing or directing these things, it was fairly limited group of people, right?

• 54:46David Rosenthal?

  Yeah, very socially connected, people hanging out in backlots in LA, part of the studio.

• 54:52Speaker 02

  And it probably mattered a lot, not to diminish any of their talents, but it probably mattered who you knew was an integral component and having talent. So you kind of had two different things. But in the last few years, as the budgets have expanded, and certainly in the Netflix case, it, it would have been physically impossible to just keep this same set of producers, directors, et cetera, right? Because they're just trying to make so much more content. So one of the interesting things is the same thing is happening now where there's Latam 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, in, in my case,

• 55:37Speaker 02

  there's been a bunch of Swedish writers and producers and, and actors now that are, that are getting into Hollywood productions. And it's been, you know, fun to see. And, 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. And then obviously, as you mentioned, on the podcasting side, the same is true there, but, but it's true on both sides. That's, that's the crazy thing. But there's also more competition, which is, I think when, when people are, are talking about Spotify and criticizing it, that's the part I think is the biggest misconception. Because they hear so many, many people who are trying and it doesn't work

• 56:22Speaker 02

  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.

• 56:33David Rosenthal?

  Right, there are a lot more people who are failing, but there are also a lot more people who are succeeding. Like the total pool is so much bigger.

• 56:39Speaker 02

  Yeah. And, and I think that's, podcasting is like much earlier in its maturity.

• 56:45David Rosenthal?

  Yeah.

• 56:45Speaker 02

  So we may not hear it. Plus, we don't have this sort of.

• 56:51Speaker 02

  I'm not sure a podcaster sees it as it's a 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 a relatively limited part of our human history. It's not been, you know, it's probably even less than 100 years that we've had recorded music and it being a form. And yet it's part of the copyright regime. It's 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

• 57:34Speaker 02

  just the arc of history. And I was actually gonna 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. Right? Many times, the composers of that era, they were only able to listen to their actual compositions like a few days before the actual

• 58:18Speaker 02

  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. So Having a whole orchestra is the triple A game equivalent. Yes, exactly. And so obviously, very few could do that. But also, the process, the creation process was insane because you needed to do so much. And then, you know, you move forward and think about it, sort of the era of playing instruments and take

• 58:57Speaker 02

  jazz, which is highly technical, right? Like, every single member in a jazz band is excellent at their instrument, 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.

• 59:29David Rosenthal?

  It turns out that technical musical proficiency may or may not be correlated with making great music.

• 59:36Speaker 02

  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 detailed, it's very nuanced. Like I have this thing that I do where I probably shouldn't admit this, but like I said on YouTube on evenings, I look at music producers, their workflows and like when they get into the weeds of like decoding how they do stuff.

• 1:00:12David Rosenthal?

  We were, we were like having just like our faces lit up. We walked in this studio and we're like, we think we are like highly technical podcast producers. We think we're like top point one percent of the, well, I think we are, I think we are, you know better. And then we walk into the studio here, you know, in, in Stockholm and we're like, this is just a scale beyond our imagination.

• 1:00:34Speaker 02

  Yeah, yeah, we're, we're very fortunate and it's a lot of fun because artists love just hanging out here too, because we've got kind of everything that they like to, to use and to do. But my point is, I mean, if you think about it, it is a kind of a very technical workflow that takes a lot of time to get into. And some of the parts of that workflow, you'd have to watch probably hundreds of hours of YouTube videos to even decode or how to do it and like start getting into it. And a lot of these, today's composers are experts in their workflows, right? Like they've, they've kind of had their, their plugin sets, they've got like these 16 things that they, they see chained together in order to create that one effect that defines them

• 1:01:18Speaker 02

  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 but but I would still argue the bar for you to sound make something that sounds professional would actually be high quality song, it requires a lot of time and a lot of effort.

• 1:01:46Ben Gilbert?

  And it might be less CapEx and less equipment. I mean, you hear the the rise of the, you know, apartment music producer on the laptop.

• 1:01:54Speaker 02

  Yep.

• 1:01:54Ben Gilbert?

  But it still takes an enormous amount of self-training, mastery, creativity.

• 1:02:01Speaker 02

  My opinion is it takes a little bit too much to get started. Like, it's quite a barrier to entry still. I mean, if you just want to make something like super simple, it doesn't take a lot. There's there's all 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 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.

• 1:02:37Speaker 02

  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. There's hundreds of hours probably for me to kind of re-acquaint myself with all the stuff, right?

• 1:03:13Ben Gilbert?

  How do I install the PHP server?

• 1:03:15Speaker 02

  Yeah.

• 1:03:15Ben Gilbert?

  You're like, I got bad news for you.

• 1:03:16Speaker 02

  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 and because of that sort of starter help, I had my my own sort of environment set up. I was contributing code, I was iterating.

• 1:03:42Ben Gilbert?

  Did you contribute code to the Spotify codebase?

• 1:03:45Speaker 02

  No, they won't let me do that yet. So I got a little bit more work to do before before they allowed me to do it.

• 1:03:51Ben Gilbert?

  You got to pass a coding test.

• 1:03:52Speaker 02

  Yeah, 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 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 hundred, 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

• 1:04:37Speaker 02

  to make something that actually sounds pretty good. Now, again, 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. Photography being the sort of key reference point. When Instagram came, oh, no, no one's going to want photography. But price of fine art photography actually increased, not decreased. So my view is you're going to see both extremes. You're going to see the middle getting wiped out. More people participate, but the very, very top is probably going to increase in value as well.

• 1:05:20Speaker 02

  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.

• 1:05:54David Rosenthal?

  This is kind of like already happened over the past few years in podcasting too, right? Like there, I don't know, you probably know better than me, millions of podcasts out there, right?

• 1:06:03Speaker 02

  Two million?

• 1:06:04David Rosenthal?

  Two million plus, I'm sure at this point.

• 1:06:06Speaker 02

  It's about. A little bit more than double that now. Really? Yeah, yeah. Wow.

• 1:06:10David Rosenthal?

  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.

• 1:06:16Speaker 02

  Yeah.

• 1:06:17David Rosenthal?

  And yet, the very, very top ones are still like of a quality bar that is so high and getting higher.

• 1:06:25Speaker 02

  Yep.

• 1:06:26David Rosenthal?

  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.

• 1:06:37Speaker 02

  Yeah.

• 1:06:38David Rosenthal?

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

• 1:06:41Speaker 02

  Yeah. And right now, obviously, that's a manual process where, you know, 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. But there's, there's no reason technically why you guys and I, this podcast couldn't be done right now in Chinese with our voices.

• 1:07:16David Rosenthal?

  Well, I was gonna say, as a, so you have X now, the AI DJ.

• 1:07:21Speaker 02

  Yeah.

• 1:07:22David Rosenthal?

  That speaks many languages?

• 1:07:25Speaker 02

  Well, we've had him speak Swedish, for sure. And he obviously doesn't know Swedish. But, but it's only today available, because the intonation is a little bit off. So it's, it's really only English language content. And honestly, that's probably just a training problem. So if, if we were training 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. I think you guys could actually support it probably with your model, but the average podcaster couldn't.

• 1:08:05Speaker 02

  You know, I don't know if you guys seen, seen this, but like Mr. Beast has like a Spanish language channel. I don't know if he has like a, you know, French one, etc. But we certainly have. The Spanish language.

• 1:08:17Ben Gilbert?

  Computer translated or humans re-recording?

• 1:08:20Speaker 02

  Uh, I think it's humans re-recording it at the moment, uh, but it's huge. Uh, I think it may have like 15, 20% more subscribers, uh, additional subscribers, not more than what the English language one has. So, so it's, it's, it's like a really, um,

• 1:08:39Speaker 02

  a really big deal. And I think that's like the next step, right? Like where, where, you know, in your case, like, why wouldn't you take the LVMH episode and make it all in French?

• 1:08:51David Rosenthal?

  It should at least be in French.

• 1:08:53Speaker 02

  Yeah.

• 1:08:54Ben Gilbert?

  All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 1:09:07David Rosenthal?

  Yep. It's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Logora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 1:09:24Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 1:09:39David Rosenthal?

  And that's how you get features that customers love, like tabular review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Logora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 1:10:03Ben Gilbert?

  And they recently launched Logora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective, then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required. And Logora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Logora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Logora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million

• 1:10:47Ben Gilbert?

  to 100 million in ARR in about 18 months. Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at logora.com/acquired and just tell them that Ben and David sent you. I've been uncomfortable until now using any sort of AI for any seconds of audio in our podcast. Like, we always played around with the descript replacement of certain

• 1:11:29Ben Gilbert?

  words, but then we never shipped it to production because I was always like, eh, it doesn't sound quite as good. And, you know, everything should be hand mastered and acquired. And then, for the first time on a recent episode, we used an AI tool that our editor found it dramatically increased 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?

• 1:11:56Speaker 02

  Yeah. Yeah. I mean, I think we're only in the beginning, obviously. And that's hugely exciting for creators like yourself. But it's also scary, right? Because it's totally possible for us to make an entire episode where we're saying totally different things than what we're saying now. And it, at some point in the future, might be virtually indistinguishable from the real thing.

• 1:12:22Ben Gilbert?

  Yeah. And platforms probably have a role to play in verifying authenticity. Like, that, that actually raises the value of platforms because platforms like Spotify, YouTube, you actually can point to, we know for a fact that this was created by the creator and we can stamp it and say that this, you know, Or approved by the creator. Yeah.

• 1:12:42Speaker 02

  No, no, I think you're entirely right, which is why, you know, there's been a lot of sort of debate around the Elon Musk, the subscriber thing. And actually, as usual, when you tease it out, there's many different things in that controversy. But perhaps the most potent and most interesting one has been the one around the notion and idea around like staking as a way of reducing the bot thing. And I feel like so much has just ended up being sort of, hey, do I have to pay in order to reach my audience now, that kind of switcheroo. But I think the more interesting one was kind of like, well,

• 1:13:21Speaker 02

  forget about if it's paid or not, but just increasing the costs of spam, but also increasing kind of the quality of verification and being able to truly understand what's what in the end.

• 1:13:35David Rosenthal?

  Twitter is so interesting that we were talking with a friend who's a creator here, but his platform is Twitter. And you can't monetize Twitter, like there's no rev share. Traditional social platforms like that, you've kind of got them on one end of the spectrum. You've got Spotify, well, maybe Spotify Podcasting and then Spotify Music at the far end of the spectrum. And 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, Spotify should play for creators?

• 1:14:10Speaker 02

  Yeah, I mean, our goal is to be the best partner of creators. Not the only partner, but just the best and win by basically not forcing the creator to do something, but just offering a really good way for creators to work. Low friction, but also lots of potential to customize their business the way they would like to. I think for some creators, The monetization aspect is absolutely critical. They may even be 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.

• 1:14:53Speaker 02

  If they want to like take their thing, okay, well, maybe my, uh, this will, I will be less valuable on cable or whatever other thing I'm on. That would be one end of the spectrum, right? Um, 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 um, uh, perhaps that creator either has a different business model somewhere else.

• 1:15:18David Rosenthal?

  Well, you have to, you can't have a business model on Twitter.

• 1:15:20Speaker 02

  Yeah, you, you, you can't do that, but you know, the question is if, if that's truly a creator or, you know, um, you could argue VCs, a lot of them have Twitter as their marketing channel, right? That's true. Just top of fun.

• 1:15:32David Rosenthal?

  And podcasts.

• 1:15:33Speaker 02

  Yeah, there are many different ways and the needs are different. Um, 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 um, on, on the back end.

• 1:15:48David Rosenthal?

  The customization point is really interesting too. And I think that's the, that's the um, really interesting nuance about, about YouTube. Because like, on the one hand, I think YouTube for creators is amazing because you can completely abstract the business. Like you just make the content and they take care of the business and you get a check.

• 1:16:05Speaker 02

  Yep.

• 1:16:06David Rosenthal?

  On the other hand, like, you know, I can't even remember if we have ads on, uh, 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, like we want creative control and like you lose that in a, if the platform is like too opinionated about what's happening with monetization.

• 1:16:27Speaker 02

  Yeah. Most of us, as platforms go, we have to start out very simple with our models, right? And it takes a long time to then change that default setting. But I mean, as I even talked about in music, it had to be like very binary. You had to be on or you had to be off. There was kind of no in-between, like, well, let's do windowing, let's do this and that, et cetera. Because that was the only way. My biggest problem was getting everyone off of piracy into this other model. And I needed the consistency of user experience. That was the model. Now, the next decade of music may look very different.

• 1:17:10Speaker 02

  It may look like something where there's going to be a lot more options for what a creator chooses to do. I certainly would hope so, and we're certainly going to work towards that avenue. But any change that we're doing with the scale that we're having is going to be, there's going to be winners and losers. It's almost impossible to find a single thing we could do that's just universally going to help. And that naturally creates the constraints that it's more of a one-way door than a two-way door, where we can kind of like iterate and invest on it. So I'm fairly certain that like what you're seeing now in this world of platforms and creator ecosystems is if you asked YouTube, like, hey,

• 1:17:55Speaker 02

  if you had, if you could redesign the platform right now, would you just make all the same decisions you made about discovery and monetization all over again? The answer would probably not. Almost assuredly, no. No, yeah, right. As evident, actually, by Shorts, that works a little bit different on their platform, right? And they're all different too, because Shorts, obviously, you have many more potential impressions over a shorter period of time. And, you know, an average YouTube video has been X minutes, and that means more interstitial ads. And then we have host-read ads, or the equivalent of sort of more native ads or paid promotional ads that both Instagram and YouTube have.

• 1:18:36Speaker 02

  So we're living in an ecosystem where, on the one end, 10, 15 years ago, we were very primitive in terms of monetization. And today... It is very, very different.

• 1:18:48David Rosenthal?

  Yeah.

• 1:18:49Speaker 02

  And I kind of think about it in a way like this is not too dissimilar from mom and pop shops. They've 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. They're really focused on community, in many cases, really knowing your customer.

• 1:19:33Speaker 02

  They're offering events around their stores. They're offering obviously online things through Shopify and so on and so forth. And in a way, I think about it in a very similar way for the creator economy too. We had to start very simple. It was based on a very simple model where there were free platform, ad-supported platforms and paid platform. All of that is kind of not merging together. In addition to that, just monetizing the content in itself is probably becoming auxiliary revenue sources around them, 360, very similar again to mom and pop shops, like where you could do live events. You could be doing merchandising.

• 1:20:14Speaker 02

  You could build another business like Kylie Jenner or something on the side of it.

• 1:20:19David Rosenthal?

  What's cool is like, 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.

• 1:20:30Ben Gilbert?

  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 saved the music industry. Like it is the thing that while the industry was in dramatic decline, ended up making it so that the music industry now generates more revenue than it ever has before, with by far the largest thing being streaming. At the same time, if you're a Taylor Swift or you're any big artist, you're not making as much money streaming as you would have on CD sales in the CD sales heyday. So you sort of have to figure out what the new business model looks like as a creator. And you have to figure out what your sort of unique constellation of revenue streams are, because it's not just going to be Walmart or Target is going to cut me the check from selling CDs.

• 1:21:16Speaker 02

  Yeah, the music industry is healthier than it's ever been before. But, but certainly when you think about it from a singular artist's 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, right?

• 1:21:44David Rosenthal?

  It was the heyday of the CD era, right?

• 1:21:45Speaker 02

  Yes.

• 1:21:46David Rosenthal?

  That wasn't true back in the radio era.

• 1:21:48Speaker 02

  And so the question is, 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?

• 1:21:58Speaker 02

  But there happened to be a moment in time where recorded music was sort of the prevalent revenue source. And 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 Taylor Swift or whoever.

• 1:22:32David Rosenthal?

  Or Joe Rogan.

• 1:22:33Speaker 02

  Or Rogan or whoever that are like really deep on whatever they're passionate about. And they're able to get across the microphone and, and having lots of people that can resonate with them.

• 1:22:49David Rosenthal?

  That opens up like so much more opportunity. One of the things we learned on the LVMH episode is that Rihanna became the first female recording artist billionaire. Because of Fenty Beauty.

• 1:23:01Speaker 02

  Yeah.

• 1:23:01David Rosenthal?

  And like, imagine that in the CD era, like that wouldn't have happened.

• 1:23:04Speaker 02

  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. And sure, it was worth a lot, that billion then, but it was hard to scale to that. And then you think about how many artists today get to be heard by a billion people. And actually, that number is way higher and it's way faster for you to do it now. But because it's not as scarce anymore,

• 1:23:48Speaker 02

  perhaps the societal value slash monetary value, whatever you want to put it on it, maybe it's not 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. If she would have tried to flog something else that she didn't care about, it probably wouldn't have worked. And that's the unique thing when you realize and you think about it yourself as an enterprise and, you know, JC, you know,

• 1:24:32Ben Gilbert?

  I'm a businessman.

• 1:24:34Speaker 02

  Exactly.

• 1:24:35David Rosenthal?

  Which Jay-Z sold his champagne company to LVMH recently, 50% stake.

• 1:24:41Speaker 02

  Yeah, but back to that, they're incredibly talented artists and they're incredibly talented business people as well.

• 1:24:50Ben Gilbert?

  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. You guys are now over 500 million users. A, I didn't know the scale of that before I started researching. It's pretty unbelievable. And B, I sort of thought that, well, you know, they just let compounding do its thing. But I think you guys, it's not well understood by the public, or certainly wasn't by me,

• 1:25:33Ben Gilbert?

  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?

• 1:25:54Speaker 02

  Yeah, I think it's a very astute observation that you're making that it's not been sort of being able to just ride on this macro tailwind and just do that. But actually, it's been many different things that's driven the success of Spotify. And the way I oftentimes talk about it is, if you think about an exponential curve, if you really zoom in on that exponential curve, it actually is like a lot of different linear curves stacked on top of each other that creates that kind of exponential curve. And this will sound like a little bit of a cliche,

• 1:26:34Speaker 02

  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?

• 1:26:53Speaker 02

  There are many different cultures that can be successful, but there are trade offs with each cultural expression. And oftentimes today, what I see with younger entrepreneurs is that they're unintentional about what type of culture they are. So they flip flop between them. So as an example, you know, we all, you know, many years ago, I was certainly enamored with Google, right? Like the 20% projects and all these different things. Those are cultural expressions. It's not the culture itself, but it's the cultural expressions. So that's where, where, where the early innings of Spotify's culture was like, I'm sure,

• 1:27:36Speaker 02

  almost every Silicon Valley company of that era. And then we all switched, maybe became Facebook for a while. And we all kind of took that of like moving fast and breaking things and so on and so forth. And then you had like an Amazon kind of model where on the one end it was incredibly long term, but also maybe a little bit more bottoms up innovation than top down. And then you see another cultural expression with like a Tesla, where incredibly top down, incredibly focused company, actually for this type of scale that they're doing. And my point is, I think the most important thing is to really, really think through and be really, really diligent about the culture you create.

• 1:28:20Speaker 02

  And we certainly were victims of that at Spotify because we had taken all these different things. There were certainly things that were Spotify. But we kept talking about all these other companies and we're like, well, we like this thing that Amazon's doing, so we should copy that. And then, oh, we like this thing that Google's doing, so we should copy that. And actually 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, we started iterating and improving on that culture. And I often get this question.

• 1:29:01Speaker 02

  So for instance, you know, when we launched certain things, people are like, well, You know, this thing wasn't very great. And they have a mental model of what they expect of Spotify. And the mental model may be, hey, your music app is so amazing. How come in 2019, your podcast just sucked? And so that must mean that podcasting won't work. Having a separate app must be the right thing to do, et cetera. And what people didn't realize is we're actually one of these companies that happily will release something out that's not great. It's probably have the right strategy, but the execution isn't super crisp and perfect.

• 1:29:43Ben Gilbert?

  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.

• 1:29:50Speaker 02

  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. And 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 is working on very large scale, probably one of the most popular AI products out there now in terms of reach. We don't really tout it all that much, but it's huge in terms of like moving our metrics in a pretty substantial way.

• 1:30:34Ben Gilbert?

  Like Discover Weekly huge?

• 1:30:35Speaker 02

  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. So as you can imagine, one of the benefits by choosing to do it for music and not for podcasting was obviously that it would have been horrible if we somehow summarized or said something based on a podcast that wasn't safe or culturally attuned to say. And yet with music, it's kind of the primary candidate.

• 1:31:19Speaker 02

  Plus it's the one where we have a huge audiences listening in the background every day and there really wants more context. And my point being is,

• 1:31:30Speaker 02

  Understanding when to do which and understanding that there's, there's, both 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, and not sort of becoming half-assed in everything, but actually become really good at what makes you you. And 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 of our few companies like Spotify, which in a way has been heavily influenced by Silicon Valley, but we are not Silicon Valley first. So that

• 1:32:11Speaker 02

  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.

• 1:32:23Ben Gilbert?

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

• 1:32:34Speaker 02

  Yep. You're, you're exactly right. And, and, um, but, but also because we were kind of doing this in Europe for the first few years, we, we started getting some, some real, uh, first learnings. And I think this is like really key because if you think about the, the ones we talk about as iconic companies, the Apples, the Amazons of the world, we all tend to forget a few things, but one is that many of them are quite old at this point. They're 20 plus years old. So they've had a time to refine their cultures and, and getting that, that right. And the other thing is they almost started in empty ecosystems. And Amazon, sure, there was Microsoft, but they started an internet company in Seattle, right? Where

• 1:33:20Speaker 02

  There was a software company that was really big, but it's not the same culture. They didn't start it in Silicon Valley.

• 1:33:25David Rosenthal?

  Same culture.

• 1:33:27Speaker 02

  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 it 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 we're, I feel like we're, we're just right now getting into our own of like, what is our culture in a very unique way that is probably the most exciting thing for me at the moment of still being here at Spotify 17 years.

• 1:34:06David Rosenthal?

  This is so cool. I love this as a final thought from you because it so matches 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,

• 1:34:22Speaker 02

  Yeah.

• 1:34:23David Rosenthal?

  They are all N of one. You can't copy them. They don't copy anybody else. They are their own thing. If you're going to be around for 400 years, that is by necessity the case. You're not taking from anybody else.

• 1:34:35Speaker 02

  Yeah.

• 1:34:35Ben Gilbert?

  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.

• 1:34:55Speaker 02

  Yep.

• 1:34:56Ben Gilbert?

  And that's not at all.

• 1:34:57Speaker 02

  Thank you for summarizing that so succinctly, by the way.

• 1:35:01Ben Gilbert?

  It has to be a very like methodical individual journey too, to figure that that out.

• 1:35:09Speaker 02

  Yeah. And that's why I said, I mean, I used to talk about culture, but, but I would honestly say it was probably two, three years ago where, where it really clicked for me like, oh, that's what it actually means. It's not 20% work time. That's just an expression of a culture. The more interesting thing is the true culture of what makes Google, Google or an Amazon, Amazon, et cetera. And

• 1:35:38Speaker 02

  I don't even know whether that's possible to change. Going a decade forward, that's probably the most exciting thing for me to still contribute to and work on is the culture. And, and I think that's what's driving at the moment, pretty much every major decision we're making. Well, Daniel, thank you so much. Thank you, guys, for coming. Really appreciate it.

• 1:36:00David Rosenthal?

  Thank you for hosting us.

• 1:36:01Speaker 02

  Of course.

• 1:36:03David Rosenthal?

  All right, listeners, now is a great time to talk about one of our favorite companies, Statsig.

• 1:36:09Ben Gilbert?

  Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale.

• 1:36:20David Rosenthal?

  Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers and how fast you can use that signal to guide what you ship next.

• 1:36:40Ben Gilbert?

  This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

• 1:36:53David Rosenthal?

  So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com/acquired to get started.

• 1:37:04Ben Gilbert?

  Well, 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?

• 1:37:19David Rosenthal?

  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.

• 1:37:31Ben Gilbert?

  Awesome. Well, thank you so much, listeners. Check 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.

• 1:37:44David Rosenthal?

  I know.

• 1:37:44Ben Gilbert?

  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.

• 1:37:54David Rosenthal?

  We'll see you next time.

• 1:37:58Speaker 03

  Is it you, is it you, is it you? Who got the truth now? Huh?