Gustav Söderström, Spotify

Gustav Söderström is the Co-Chief Executive Officer of Spotify, the world's largest streaming platform, with more than 760 million users across 180 countries. He earned a master's degree in electrical engineering from KTH Royal Institute of Technology, founded Kenet Works in 2003 — a mobile community software company acquired by Yahoo! in 2006 — and later co-founded 13th Lab, an augmented reality startup acquired by Facebook's Oculus division. He joined Spotify in 2009 and spent the next 18 years building the product and technology organization from the inside, rising from Chief Product and Technology Officer to Co-President before becoming Co-CEO alongside Alex Norström at the start of 2026. Spotify survived an existential challenge from Apple, which launched Apple Music in 2015 and told its teams internally they would kill Spotify within six months. Spotify's answer was a three-part strategy: a stronger free tier, superior personalization, and ubiquity across non-Apple hardware. All three bets paid out. The throughline in everything both Söderström and Spotify build is a conviction that media should be time well spent. Spotify surveyed users anonymously across major platforms and found that Gen Z valued roughly 90% of their time on Spotify, while regret rates on competing platforms topped 60%. That data formalized what had been an instinct: expand only into categories that are good for users — music, podcasts, audiobooks, fitness. He believes this is not just the right thing to do; it is what makes Spotify durable. His current bet is that AI gives every user a direct conversation with the product — and that Spotify should be first. He has been preparing since 2017, when he read the Transformer paper days after publication and evangelized internally. His principle: periods of change are when market share moves, and the companies that win are the ones that get there first. Show notes: https://www.davidsenra.com/episode/gustav-soderstrom Chapters (00:00:00) How Gustav Prepared To Become CEO (00:02:30) There Is No Right Org (00:05:06) Synchronized Swimming At Spotify (00:09:25) You Ship Your Org Chart (00:10:31) Why Apple's Functional Org Works (00:11:48) Tenure Is The Key (00:13:31) Oracle vs. Elon On Churn (00:16:41) Finding Your North Star (00:18:24) Choosing Pain For Distribution (00:19:21) Prioritize The User Over Yourself (00:23:05) The No Regrets Strategy (00:25:21) Building A Running Playlist With AI (00:27:35) Figuring Out What To Spend Your Life On (00:30:01) Being Honest About Doing Good (00:32:25) The Anti-Engagement Decision (00:34:50) Giving Users Control Of The Algorithm (00:37:57) The 1-9-90 Power Law (00:40:23) Getting Into AI Early (00:43:55) You Are Your Thoughts (00:48:22) Building Tools That Enhance Humanity (00:49:45) The Genius Of The Kindle (00:51:57) When Steve Jobs Came To Kill Spotify (00:54:24) Three Bets Against Apple (00:57:07) Building A Personal AI Agent (01:00:55) Premeditated Media (01:02:27) Who Tells You The Truth (01:05:16) The Vulcan Mind Meld Of Tenure (01:07:28) Hiring For Spikes And Fresh Blood (01:10:14) What Keeps Him Up At Night Learn more about your ad choices. Visit megaphone.fm/adchoices

• 0:02Speaker 00

  So I text Daniel Ek this morning. I was like, hey, I'm recording with Gustav. You've known him for, you know, two decades. Tell me what I should ask him. And he goes, ask him to tell you how he prepared for the CEO role. We did something quite unusual. Can you describe what happened?

• 0:17Speaker 01

  Daniel is very big on preparing. You know, Daniel, he's not very rational in his decisions. And so this was one of those decisions as well that I think grew with him for a long time. So already about three years ago, he asked me and Alex Nordstrom to step up and become co-presidents and sort of start to run the day-to-day of Spotify for him. He was still the CEO. And so he's been gradually like giving us more and more rope to run the business day-to-day and week-to-week and the month-to-month. So when it actually came to sort of taking over CEOs, we already knew that part like by heart. And we had ran it for three years, the full P and A and balance sheet and so forth. And then there was still a lot of new stuff to learn. You know, all the stuff that was Daniel's responsibility alone, you know,

• 1:01Speaker 01

  PR, government, being the public face of the company. But we were very well prepared for taking over the business. I think that's unique with Daniel. I worked for Daniel for almost 18 years. And I don't think I've worked for anyone except Daniel again. I've had both great bosses and not so great bosses. Daniel is the great one. And he's incredibly delegating, you know, already from the start. I remember when I joined Spotify, it was back in 2008, 2009. And then we were going to go to the US. And Daniel knew Suck, had met him then Facebook. And we wanted to do this pretty deep integration with him.

• 1:45Speaker 01

  And yeah, I was new on the job at Spotify. And Daniel just said like, you just... Go there and like talk to Suck and Matt and like or Facebook at the time and like set this up. I'm like, that's a lot of trust for someone who's new. He's always been like super delegating. And that is also, I think, why I've stuck around for almost eighteen years. Because you get you get so much responsibility. Like you get a new job almost every year. And so this like co-CEO or or co-president partnership that he started three years ago was one of those journeys where, you know, Alex and I got to step up and try taking on the full business. We actually changed completely how we run the company from the way Daniel runs it.

• 2:26Speaker 00

  Say more about that.

• 2:28Speaker 01

  You know, when it comes to organization models in themselves, I this is not something I came up with. I think, you know, Steven Sinovski said this a bunch. You just can't win. There is no organizational model. You know, there are many, and they all work. Like, Amazon is is organized in a certain way, trillion dollar company, Apple in another way, also trillion. Elon does his thing, you know, also produces trillion dollar companies. So there is no right way. You just have to pick one that fits your personality. So I actually think organizations are quite based on personalities. And Daniel has a very specific personality, I think. He is not the typical sort of, I mean, you know him well, but he's not the typical sort of alpha male founder, which I think is one of the reasons why it's

• 3:12Speaker 01

  so successful in this type of business. Because if you think about what Spotify is, yes, it's a it's a technology company doing sort of hardcore technology innovation. But it's also a media company working in an industry with a bunch of of, you know, first music labels and then book publishers and and, you know, podcast publishers. Some of these very, very big personalities in the media business, as you can imagine. So he needed to be able to both rally a team and build world-class technology, but also get all of these people with the big personalities to work together and get to do something that they didn't want to do individually and not as a group. And I still don't understand exactly how he managed to get all of these people to do sort of what he wanted. But

• 3:56Speaker 01

  it certainly wasn't through like alpha male force. It was through

• 4:02Speaker 01

  Not being threatening, being very logical. He's very humble. But I think maybe most, you know, Americans specifically can mistake humbleness for weakness. It's the opposite. He's insane litigious, insane litigious. He just never gives up. So he has a very specific leadership style. And that shaped the company. And as I said, there are a bunch of incredible advantages to his leadership style. One thing that I think, you know, that I do choose to do differently is Daniel loves to to talk in a star pattern, one on one with many people. So he would talk to me about something, separate meeting then with Alex Nordstrom about something, the same thing, but from, you know, the business angle and then maybe with PR and finance, he just talked in a star pattern.

• 4:45Speaker 01

  He doesn't like to have meetings, everyone in the room. And that can be frustrating at times, you know? It's like he says something to me, something to Alex, and then Alex and I meet, I'm like, this is what we're gonna do. And Alex is like, not quite, that's not what he said to me. And so then, you know, we go back and we call him out on it, you know? But he likes that star pattern. Alex and I chose to do something very different. We chose to synchronize the whole company. And so you can think about Spotify as sort of a two-function org. I run product and technology by and large. Alex runs sort of business and content by and large. But instead of sort of doing the divide and conquer, which is a good idea, you divide

• 5:27Speaker 01

  and conquer because it's more effective, but it has the cost that you're unsynchronized. So instead of doing the divide and conquer in separate swim lanes, we do this thing which I've called synchronized synchronized swimming. We're kind of swimming together, which is much harder to do than than competitive swimming. And when you mess it up, it is ugly to look at. But when you do it well, that's the beautiful thing to look at. So we decided to, instead of having our the usual sort of, you know, I meet with my direct reports and we talk about product and technology, he meets with his and talks about business and content. And then our people meet in the org somewhere and they fight it out, which is how most companies work. We chose to say, we're not gonna have our own leadership meetings. We have a single one with all of our SVPs.

• 6:09Speaker 01

  So we have a single meeting every Tuesday called E-Team for three hours with all the SVPs of all the internal functions, like, you know? Marketing, ads, subs, but also all the product and technology functions in the same meeting.

• 6:23Speaker 00

  How many people are in this meeting?

• 6:24Speaker 01

  It's about fourteen people.

• 6:25Speaker 00

  Okay.

• 6:26Speaker 01

  What happens is, we meet every week to talk through the entire company. So we talk through, you know, machine learning problems that are blocking on someone experienced problems where, you know, we want to ship this music video feature and so forth. But often that music video feature is blocked maybe on the licensing discussion that sits in Alex's org. So the whole reason for the ET meeting was that previously, actually under Daniel's sort of tenure, we were in so many meetings where someone said like, "Well, I'm blocked on that person in that org. And that person is not in the meeting." So people said, "Let's take it offline." And we got so tired of hearing this phrase, "Let's take it offline," that we did ET meeting and we said, "You're never allowed to say, 'Let's take it offline' again."

• 7:09Speaker 01

  Everyone that represents all functions should be in this one meeting. So that when you say like, "I'm blocked on licensing," well, licensing is right there across the table. Now let's talk it out in real time. So we changed how the company operates and we have this synchronized operating model that is expensive in time. You have, you know, fourteen, fifteen people times three hours per week. That's a lot of leadership time. And the conversations are not relevant for everyone at every time. Sometimes we talk a lot about content that may be not that relevant or ad strategy that may not be that relevant to someone in the personalization org. But the cool thing is, we talk about everything. We talk about P and Ls and balance sheets and we talk about machine learning problems in there. So you have now fourteen people that have the full CO perspective.

• 7:52Speaker 00

  Yeah, I was gonna say, you used the word "not relevant." I just finished reading Kelly Johnson's autobiography. He's the one that did Skunk Works inside Lockheed. And his whole thing was like, no separation between any department, like engineering, designing, manufacturing. It's all the same thing. We're all working together. We all want the same amount, like the same context, the same shared base of knowledge.

• 8:09Speaker 01

  Yep.

• 8:09Speaker 00

  So it's like, it is kind of relevant.

• 8:11Speaker 01

  It's just a question of timescale. So this thing about, you know, the person and experience understanding a lot about the ad stack, it won't seem that relevant right then. But then like, the fact that this person understands how we make money is going to affect their product decisions in the future, when they build a product. Because guess what? There are ads in the product. So now they're not going to make... Decisions that go against our monetization strategy. So it is very relevant, it's just relevant on a longer time scale. So I think of it as investment. But it is contrarian. I think many people would say like you should not sit in a meeting. I hear people saying like the second you're in a meeting, you feel it's not fully relevant, leave.

• 8:49Speaker 00

  Elon says this.

• 8:50Speaker 01

  Elon says this, right? And like I said, he's not wrong. He's built some of the most successful companies on earth. It's just different approaches. We've chosen this approach. So we have a very senior group that has a complete perspective of the company. And I think that's right for our company. Because there's so many dependencies between, you know, licensers and relationships we have and contracts we have and how we can build a product and, you know, all of these things. It's very hard to divide and conquer a product like Spotify. And I think, you know, this is true, there's this truth out there that eventually your org chart shows up in your product.

• 9:24Speaker 00

  Yeah.

• 9:25Speaker 01

  And because we have a single experience strategy, our strategy is literally a super app. We try to build first music, then podcasts, then books, and more things into a single product. I think our biggest risk is to ship the org chart. So if we divided it and said everyone just run in parallel, I think it will feel very good for about six months. Then the experience will just start crumbling because you're externalizing all that complexity to the user instead of taking the fight internally and coming up with like a single experience. So in terms of organizational models, you have all, you know, you have functional orgs where has the benefit of clear leadership, clear ownership, but supposedly hard to cooperate when you want two functions to work together.

• 10:06Speaker 01

  You have the matrix org, which has the benefit that it optimizes for sort of the use case, but it's unclear even who you're reporting to. Then you have sort of the division based org, like Riot Games, you know, you organize by game. You break out the technology platform into its own org. Amazon is actually kind of a gaming org, like divisional with a strong platform underneath. And so on that scale, I've chosen to be actually very close to Apple. Because I think they cracked the problem of building something that is very, very complex underneath the surface, like insanely complex. And it still feels like it was built sort of by a single person for a single person.

• 10:43Speaker 00

  So tell me how you think Apple is run then?

• 10:45Speaker 01

  What I think is interesting about Apple is when I look at it from the outside. It's a functional org, right? And functional orgs, I used to work at Yahoo for a while.

• 10:54Speaker 00

  At where?

• 10:55Speaker 01

  At Yahoo.

• 10:55Speaker 00

  Yeah.

• 10:56Speaker 01

  I sold one of my companies there. And I thought I didn't learn anything there, but I learned a lot about what not to do. It was a completely messed up company back then as well. I think I had four CEOs in like two and a half years or something. But all the EVPs and they fought each other to the death and tried to hide information from each other. So supposedly on paper, I think Apple should not be very well positioned to be able to build that kind of product. I was marvel that why aren't those functional leads just fighting each other? That's what usually happens. The only answer I've come to, as I've spoken to people there, is that it actually has to do with tenure of leadership, which is one of the principles I've also tried to internalize at Spotify. So they have very long tenure at the senior leadership,

• 11:40Speaker 01

  which means that these functional leads have found a way to work together, to synchronize. So sometimes it's the hardware function that innovates and takes the lead. And then, you know, software and services follow. And sometimes it's a software function that takes the lead and they follow. That only works if you have super high trust in the leadership, which I think stems all the way back from Steve Jobs and they managed to keep that. But in theory, I think functional orgs tend to dissolve into politics.

• 12:07Speaker 00

  Without the tenure.

• 12:08Speaker 01

  Without the tenure.

• 12:08Speaker 00

  The tenure is the key.

• 12:09Speaker 01

  So at Spotify, most of the people that work for me, many have worked for me for 14, 15 years. I think the average is maybe seven, eight years. And then it works to have a functional org. But if you don't have trust in the leadership, I think functional orgs just dissolve into politics.

• 12:25Speaker 00

  I want to tell you about the presenting sponsor of this podcast, Ramp. I have been reading a lot about SpaceX lately. SpaceX is one of the most valuable private businesses in the world. And one of the main themes in the history of SpaceX is constantly attacking and questioning your cost. Ramp helps many of the most innovative businesses in the world do exactly that. The median company running on Ramp cuts their expenses by 5%. And one thing SpaceX has demonstrated is that a religious dedication to controlling costs can help actually increase revenue because you can pursue opportunities you couldn't otherwise. And we see that in the Ramp data. Two, the media and company running on Ramp also grows their revenue by 16%. So when you're running your business on Ramp and your competitors are not,

• 13:08Speaker 00

  you have a massive competitive advantage that compounds over time. Ramp is the only platform designed to make your finance team faster and happier. Many of the top founders and CEOs I know run their business on Ramp. I run my business on Ramp and you should too. Go to ramp.com to learn how they can help your business save time, save money and grow revenue. That is ramp.com.

• 13:31Speaker 00

  This speaks to your previous statement that there's not one right way to do it. There's multiple different ways. I just had this conversation with Mr. Beast and we talked about this. And because, you know, I was like very curious, especially in media, like your top creative talent is so hard to manage and to integrate, to keep. I was like, do you have a lot of turnover on? I'm not talking about like the people on the production. I mean, your actual, your top five most talented people, there's a lot of turnover there. And he's a huge fan of founders. And so we talk about entrepreneurial history every time we speak. And I was like, what's interesting to me is you take Larry Ellison, who he believed that one of the secrets of success oracles, the fact that they kept, I think he said the core kernel of the product team together for like two decades or something like that, or maybe decade and a half.

• 14:15Speaker 00

  And you take Elon Musk, who again Larry mentored Elon says that, you know, one of the few people he goes to for advice is actually Larry Ellison, who says the opposite. He's like, I want fresh blood. I want to keep turning through people as possible. It's like, oh, it's like Oracle's super successful, Elon's super successful.

• 14:30Speaker 01

  I think this is the whole thing. You can't, you can't win. You can only not lose as much. So the way I think about it, you have a bunch of organizational principles. And as I said, as I joined Spotify and had to like, when I was at Yahoo, I said, I never want to work in a big org. I joined Spotify when I was like 30 something. I never expected it to get to thousands. Eventually I had to do the big org thing. And then I tried to read a lot about organizational principles and models. And I think at the time, I read a lot of Steven Sinovski.

• 14:57Speaker 00

  Yeah.

• 14:58Speaker 01

  And, and his, I think the thesis is you can't win. There is no right org and companies, they sit with one type of org and then you're going to be good at something and terrible at something. People look at the terrible thing and say like, well, if we flipped to like a matrix org, we'd be great at this. They flip, now they're great at this and terrible at the whole thing. You just, you just have to choose dimensions. So what we did at Spotify was we said, yeah, we have to choose. The best outcome is that you're optimized for the thing that is important for the company, and you suck at the thing that is not as important. The worst outcome is you're really good at the non-important thing and you suck at the important thing. So like, figure out what's important, and then optimize for that, and just accept that you're gonna be average of the others. And so one thing we chose to optimize for was the single experience.

• 15:43Speaker 01

  We were really good at building a single experience that actually does a billion different things. And most people don't even realize that on the backend it's even more complicated, because you have a music business that is a royalty pool, like, so it's percentages out of a fixed pool. Music business that has a very different structure, podcast business that has ads. So when you click something in Spotify, it triggers all kinds of different business models. Like, on the backend, it is insanely complicated.

• 16:09Speaker 00

  I'm a huge, I obviously love to read, I read books professionally for a living, but I also have hundreds of audiobooks on Audible. And I remember asking Dan, I was like, "How the hell, like, why did no one think, like, 'Oh, I like this book, just press play and it goes,' instead of like a five-minute, like, Audible's like, 'I can listen for five minutes and I have to do the credits, like, awkward.' And I was like, 'How the hell did you do that on the backend?' And he was explaining to me the complexity in the backend, too.

• 16:32Speaker 01

  It's a very complicated model on the backend.

• 16:34Speaker 00

  Especially because you guys are designing this super app, though.

• 16:36Speaker 01

  Exactly. If it was three different apps, you could have, again, you could have had, like, different teams running in parallel.

• 16:41Speaker 00

  So you're optimizing for a single experience, but do you have, I feel you have an organizing principle, like a North Star, and this is why I spend so much time and I really admire, like, I've been to Stockholm, like, I think, four times the last, like, fourteen months. Because I think of, like, the best founders usually can explain just a handful of words, like, what their life's mission is. So like, we've mentioned, you mentioned Apple, let's talk about Steve Jobs. Steve Jobs did it in three words. He said insanely great products. You could hear him when he's twenty-five, he talked about insanely great products when he was dying. Insanely great products. "You wanna make insanely great products, then you come with me." Well, you knew what was important to him. And I feel, I don't know if you guys do this internally, but I've talked to, you know, Alex and Daniel and you, a bunch.

• 17:25Speaker 00

  I feel your organizing principle is time well spent.

• 17:27Speaker 01

  If you look at what we focus on and what we optimize for, you have a strategic lens, then you have sort of a...

• 17:34Speaker 01

  A business lens and then an emotional lens. So the strategic lens is really that we saw a long time ago that the biggest challenge in the world is going to be distribution. You know, when the iPhone came out, it felt like distribution was free. People went to the App Store every day and looked for like, you know, what's the top charting free and paid app? That stopped working. There was a lot of distribution through Facebook with all the install ads. That all went away. So from a strategic point of view, when we were going into podcasts, which was like the first, second product we did, we looked at that and said, okay, there again, it's all a trade off. We could do a separate app. Would be easier for us as an org because we can divide the org and people can run in parallel and so forth. But is that the biggest problem to design the experience?

• 18:18Speaker 01

  Or is the biggest problem actually getting distribution? And then we looked at in the App Store and I think there was maybe, it's probably, probably 10, but at least seven really good podcast apps in there, like Overcast and all these apps. And when we looked at their usage, I think Apple Podcasts was still like 98.5%.

• 18:37Speaker 00

  All of them.

• 18:38Speaker 01

  So like the problem wasn't that there wasn't a good enough podcast product. The problem was that they didn't get a distribution. So we chose to take the pain of doing a single app with all the complexity comes with that for the benefit of reaching what was then already 300 something million users maybe. But it was much harder. We chose like pain and cost somewhere to get benefit somewhere else. And we said like, you know, it's just software. It should be able to adapt to the use case, right? Which was contrarian at the time. And then with audiobooks, we did the same thing. So, so there was a strategic lens to that. The second thing we care deeply about is when we have to prioritize, we do prioritize the user over ourselves, over publishers and labels. We do prioritize the consumer experience.

• 19:23Speaker 00

  You saying we prioritize the user over ourselves is super important. So a few months ago, we were racing cars together in Sweden. And then we took a break from racing cars and we had lunches. Me, you, Daniel and Pia, who works at Prima Materia. Juan, I know you're super competitive. How did you feel about losing racing to a girl, by the way?

• 19:41Speaker 01

  I felt great about losing to Pia. She's an awesome driver. It was very well designed.

• 19:46Speaker 00

  She's one of my favorite people. I'd do anything for Prima Materia. I love the entire team there. But the, this is where I kind of understood your philosophy because we also previously had multiple conversations. We had this really long lunch one time. But this is what I think you guys are special in the technology industry and why I like spending time and Spotify's, you know, what? Out of the whatever your favorite AI chatbot, like chat app, it's like, what's the best apps on your phone? Like Spotify is in the top two, you know, for anybody that uses it. But it's that. We talked at lunch, you knew there's dark engagement patterns and you can put into Spotify right now

• 20:28Speaker 00

  that would have people use the app more, would have more retention, maybe bring more users, but it's not good for them.

• 20:36Speaker 01

  Yeah, so this is our guiding principle. Like, what does it mean to care about the user? You can care about the user experience, but if you really care about the user in some deeper way, it would be how they feel about what you do. And what happened with Spotify is you can say that we lucked into it because we started in music. Music is, by most people, considered almost an unequivocal good. Maybe there's bad music somewhere, but, you know, very few people feel that music is a bad thing for the world. And it also happens to have a very large TAM. There is almost no one that doesn't listen to music. It's like bigger than social networking, right? Not everyone does social networking, but everyone does music. So we started in this space, which was very positive for the world.

• 21:20Speaker 01

  And I think that was a deliberate decision from Daniel. He was passionate about music. He wanted to do something that was meaningful. I don't think it was luck, because if you look at the things he's doing now, it's in that same space of being good for the world and, you know, for Europe, et cetera, rather than just more money.

• 21:36Speaker 00

  Yeah.

• 21:37Speaker 01

  So I don't think it was an accident, but still, you could say we lucked into it. But then we realized that this is important. We're bringing a lot of joy. So when we looked at what to do next, we looked at podcasts and we saw this thing where... There was this, you know, the pattern on the internet already back then was short and short form content, short and short attention spans, and it looked like the world was lost, like, it's just gonna go to hell. But then you look at podcasts and you say, no, at the same time, there are these very long, deep discussions where people speak in full sentences, get to explain full ideas, they don't necessarily get attacked, they get retorted and so forth. We said that we think this is actually good for the world. We didn't know how big it was gonna be, so we had to take a chance on that, but we thought

• 22:21Speaker 01

  it was a business opportunity and good for the world. That's our lens. So we went into that and we built podcasts into Spotify. And it was the same thing with audiobooks. We think that books is one of the most important things that happen in the world, and I'm very passionate about books, but it's also a good business opportunity. And we were fortunate to be in Sweden, that for some reason tends to be pretty advanced in media habits. So in Sweden, audiobooks is already very big things. We have quite high conviction over the market. So we've kept going into these things that are considered by ourselves and used as time well spent. But we never fully articulated that as a strategy externally. We've only recently started talking about it.

• 23:02Speaker 00

  Did you articulate it as a strategy internally, though?

• 23:05Speaker 01

  For a long time, we've had a strategy called No Regrets, but we largely haven't said that externally. And I don't know if No Regrets is the best.

• 23:13Speaker 00

  I think Time Well Spent is better.

• 23:15Speaker 01

  You know, it's like, that's a low bar. But we've said it again and again. Like, is this really No Regrets? What that comes from is interesting. We surveyed our users through a third party anonymously. We do that all the time. Someone comes and asks you, what do you think of these media services? Without seeing who they represent. So you get the truth. That's how we understand how we're doing versus competitors and so forth. So we had them survey across all the big media platforms, and this is where the No Regrets come from. We asked the question like, how do you feel about the time you spent?

• 23:43Speaker 00

  Using Spotify?

• 23:44Speaker 01

  All of them.

• 23:45Speaker 00

  Okay.

• 23:46Speaker 01

  The time you spend on Spotify, YouTube, Apple Music, Amazon, TikTok, all of them. Just understand how you felt about it. But then we also asked the opposite question. How much of your time did you regret afterwards? And what was interesting was when we got that survey back, there were two things that surprised me. One didn't surprise me so much. We were actually the lowest regret content sort of on the internet in terms of the platforms we asked for. Or if you flip it around, some of the time most well spent on the internet. With, you know, Gen C saying that they value almost 90% of the time they spend. They feel very good about it afterwards. So that was good. But what surprised me was the opposite. Without naming which ones, on many of the big platforms,

• 24:30Speaker 01

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

• 25:11Speaker 01

  And so when we look at something, you know, we're talking about fitness now, for example. Why? Because we think very few people regret doing a workout or being fit.

• 25:21Speaker 00

  What do you mean you're talking about fitness?

• 25:23Speaker 01

  We just announced some partnerships with a bunch of companies and we're investing in, you know, three quarters of, almost 70% of people on Spotify work out with Spotify. So we're investing more into fitness, into becoming an even better fitness app. So this is one area, kind of like, you know, music, podcasts, books. We're just investing more in it.

• 25:44Speaker 00

  What would that look like? My partner, Rob, was running through Central Park this morning, listening to Spotify. So he was exercising while using your app.

• 25:49Speaker 01

  Okay, so this is going to come out in a few weeks. So I'll tell you kind of what we're going to talk about at Investor Day. I'm a runner, I'm passionate about running. And we see a lot of people running with Spotify and they make their own playlists. One of the things I want to be possible, that's going to be possible.

• 26:06Speaker 01

  Very soon is that you go into Spotify, you just tell Spotify, this is one of the good use cases of AI, I think. You say to Spotify, you know, I want a running playlist for like an eight-minute mile, and I want it to be in my taste, but I want it to be on the downbeat, either on my, on both my feet, or just one of my feet, right? And I want you to update it weekly. It's a pretty complicated task. So then, what, what we want to be able to do is to first calculate, like, an eight-minute mile, what does that mean? Well, roughly, if your average height, maybe 165 steps per minute, or something like that. Okay, now we gotta go and find music in, in either 160, or half of that,

• 26:48Speaker 01

  80, so it's either on every down step, or every other down step. Okay, you're gonna find some music there, but not a lot. So now you wanna look a bit broader, and then you actually want to speed them up, or slow them down to exactly 160, or exactly 80. And then you actually want to mix them together with perfect beat match transitions, right? And then you actually wanna overlay commentary on top of it, saying like, now you're gonna go into the interval part, and now you're gonna slow down, and so forth. So these are the kinds of experience that, that we're building. This is what I mean with going deeper into fitness. That's one of those no regrets area, or, or.

• 27:21Speaker 00

  Yeah, no one spends an hour in the gym, or an hour in running.

• 27:24Speaker 01

  No, and come out and feel like, oh my god, I regret 70% of that.

• 27:26Speaker 00

  No.

• 27:27Speaker 01

  You don't. So, so it's been our guiding principle. And what I think is interesting about it is, you know, I'm 50, I've done a lot of interesting things in my life. You gotta figure out what you actually wanna spend your life on, right? And I wanna spend my life on, on doing something that I feel good about personally, and that I kind of feel proud of.

• 27:49Speaker 00

  You feel good, but you know, like, the way a human's gonna feel good is if what they're doing is actually in service of other people. This is like, I know you're into philosophy, this is a, humans free yourself thousands of years ago. This is not a new idea. It's something that's true thousand years ago, it's true today, it'll be true thousands of years from now.

• 28:03Speaker 01

  Everyone discovers it.

• 28:04Speaker 00

  Me and Milan, who's sitting over there, I was talking to, uh, he works at Spotify, right before you came, I was talking to him about this, cuz he's like, you have two... I do two different podcasts on the business charts right now. And I was like, listen, this new show, I'm addicted to doing it. I can't sleep. I get wired from these conversations. I'm doing it selfishly. It's another form of education, but I really feel that like founders podcast is like my life's work. And the way I feel like when I put that out, I know it's good for the world. I know these conversations are good for the world. I was like, I'm not going to make fucking podcast slop. It's not, I'm not trying, I want it to be entertaining, but at the core, it's like, I want you to be inspired and educated by these people that have accomplished and great things. And then the, the, the point was just like that, knowing that like you can do it too.

• 28:46Speaker 01

  Yeah.

• 28:46Speaker 00

  That is good for the world. I feel good doing that. And it's not like a, I like a, I need to make certain, it's, it's not tied to anything else other than like, it's not like, oh, I wouldn't do this if I, unless I can make X dollars. Like, I don't give a shit about that. I care, the money will take care of itself. I care about putting out good things for the world.

• 29:01Speaker 01

  And I think to your point, everyone gets there and every philosopher in history got there. The question is just like, how late in life do you get there? I think you got there a lot earlier than me.

• 29:09Speaker 00

  It took me.

• 29:10Speaker 01

  Some people never get there.

• 29:11Speaker 00

  It took me 32 years to find my path and another five and a half of fucking struggling until it actually like could sustain me. And then now it's like, I wake up every day, it's like, I have no doubts what I'm doing. I was like, I'm going to build, again, I'm mining these old books of somebody did something amazing for ideas and insights that we can push down to the next generation of entrepreneurs. And we have a conversation like this where we talked before, I was like, I was like, oh, you, you know, you, you, you asked this perfect question for your audience. Like, I'm having this conversation selfishly because I just know there's, there's 10 million Davids listening to this.

• 29:39Speaker 01

  Yeah.

• 29:39Speaker 00

  That have the same interests that want to know what is in, you, you said you're 50. You've been working at, you sold your first startup, then you were, you have such a singular life experience. This is what me and Daniel were talking about earlier. Like who the hell sells their startup, works at a big company for 18 years, then becomes CEO?

• 29:53Speaker 01

  It's a, it's a different path.

• 29:54Speaker 00

  It's a very different path. I want to talk about AI because.

• 29:58Speaker 01

  Can you say something on the, on the previous thing first? What I think is interesting with this time well spent is. These things are sort of easy to say. I think everyone convinces themselves that they're doing good for the world, even the ones who don't. Because most, you know, it's very, I think it's very hard to be honest with yourself, totally honest, and saying like, I'm not actually doing anything good for the world. Very few people do that, they convince themselves.

• 30:20Speaker 00

  I have an example of this that I want to talk about.

• 30:23Speaker 01

  Yeah.

• 30:23Speaker 00

  So, we get obviously all these pitches and don't forget, hopefully don't forget what you're thinking.

• 30:28Speaker 01

  No, no.

• 30:29Speaker 00

  But like, listen, no disrespect, one of my favorite movies is The Godfather. And one of my favorite scenes is where Slazzo goes to meet Marlon Brando. And he's like, and Marlon's like, hey, it's none of my business how another man makes his living, but I can't get involved in that because, you know, you're dealing drugs to kids and it's not interesting to me. And so I feel the same way, it's like I mind, one of my principles I teach my kids is like, number one, the rule number two is like, mind your own business. But I had somebody pitch me, they're like, we want to partner, do a deep partnership as one of the prediction markets. And I'm on the phone with them and I didn't know anything about them. But the way they described themselves, so like, we're building a maximum truth-seeking machine. And I pull up on my phone, I go to, I'm not gonna say the company, I type it in and I

• 31:12Speaker 00

  go, dude, the first thing I see on your website is who's gonna win the coin flip for the New York, for the New England Patriots game? If you're just saying, we want to fucking gamble and make a ton of money, I respect that, but don't give me this other bullshit there, you're building maximum truth-seeking machines.

• 31:26Speaker 01

  Yeah, but that's my point, I think almost everyone has to convince themselves of that. So, so to kind of call bullshit and ask them, does it actually mean anything to do this? Well, it means that you have to stay away from some things. So one decision that we did recently was, you know, our old podcasts are turning into video podcasts. And so we followed that.

• 31:46Speaker 00

  The only reason I do videos is because you guys harassed me.

• 31:48Speaker 01

  Exactly. So they are very popular, but there was a problem, which was that, you know, a lot of people, specifically parents, who felt that, you know, they had this time well spent. Now they started seeing these videos in there that they didn't want to see there, right? So they felt that their time well spent was, was going down. And then you face with the decision, like, video is good for engagement, but these people feel that it's not good for their time, their time well spent. So we made the decision, sort of the anti-engagement decision, to allow people, anyone, to turn off video if they want to, and, and just listen, not just for their kids, but for, for themselves. So, and that, that may mean that, you know, we take some engagement hit on that person, but.

• 32:32Speaker 01

  So if you're gonna have these principles, you kind of have to live with them and they're gonna have consequences. Now, we still think this is very good business because most of our revenue is from subscribers paying for their experience, you know, like almost 90% of the revenue. And I think that what you pay for when you vote with your wallet every month, you're not gonna pay for your engagement or time spent, you're gonna pay for the value you feel, right? If you feel that this was time well spent, if you feel that this was high value, you're gonna say, I wanna pay for this. So I think when you pay with your own money, that is very, very well aligned with optimizing food as good for the user. Whereas if in a pure, in a pure, you know, advertising based model, your incentives

• 33:15Speaker 01

  are clearly to maximize time spent at any cost. So I think it's a luxury for us, because most of our revenue comes from subscription, to not have that pressure. Maybe we lucked into that business model, maybe with someone deliberate.

• 33:27Speaker 00

  That's what I was gonna ask you. There's no way you could have predicted that when you chose a subscription model, but it had to be a subscription model based on your very first product, which is music.

• 33:34Speaker 01

  Yes. So now that we see it, we're doubling down on it. And, and I think it's gonna be the right bet for Spotify. I think people are getting more and more aware of how their time is getting captured and how they have less and less control over their life. This, this, by the way, so leads us into, into AI, which everyone is talking about. And, you know, there's a lot of negativity around AI now, which I understand, and for good reasons. There is a promise for generative AI to be the most addictive algorithm you have ever heard of, because now we can understand you so deeply. There is potential for, for darkness over there, right? But what I'm trying to say, what we're trying to say is like, there is, but it's a dual-use technology.

• 34:17Speaker 01

  You could choose to do something else with generative AI. And so what we're choosing to do, for example, is to give back users' control of the algorithm. So the other thing you can do is, which we're doing, so you can say like, hey, David, here's who we think you are, using L L M's and, you know, based on audio listening. This is who we think you are musically, this is the podcast we think you're, you're interested in, these are the audiobooks that we think you're interested in. Then we can put a box where you can say like, no, you're wrong. Maybe that's what I do, but it's not what I want to be. You know, I want much more, I want more, even more biographers. You know, I want to get back into classical music, which is something I've tried. But because I listen to mostly EDM, mostly EDM.

• 35:00Speaker 01

  So now I can go in and say like, now I want to be, I want to have classical music. And now I get classical music. The best way, I think, to describe generative AI is that finally computers understand English. Like, it used to be a small population of about one million developers on GitHub who could talk to computers. Now we all can. And so I think consumer companies could and should give everyone access to talk to them in plain English. So it means that at Spotify, we used to have these these user research teams that sat with, you know, 10 users, trying to understand deeply what they felt and what they did. Then we took those 10 users and tried to apply that, you know, 761 million users. What if you could do that deep user research with every single user, all 761 million of them, all the time?

• 35:44Speaker 01

  Because you talk to them and they talk back in English, high fidelity, and the experience just adapts to what they want. So my mission now is to sort of give back control to consumers over these, over these algorithms. And it's contrarian, but I think it's the right bet.

• 35:57Speaker 00

  People like you or an I will probably want more control, but like you have 700 million users. Like, what percentage of them do you actually think? I, I feel like people just want you to do it for them.

• 36:08Speaker 01

  No, you're not wrong. I think there's, everything in the world is sort of a power law, right? Of whether it's music listening, some people listen a little and then some people listen extremely much. Everything is a power law. But I think what is interesting, what Spotify has gained from, if you look at playlisting, for example. Some people playlist a lot. Most people have one playlist, maybe they like songs, maybe two playlists, you know, some indie favorites. Some people have like hundreds of playlists. So sort of the story of Spotify and what we got good at personalization and recommendation in the first place was that we had like, I don't know, 10 billion user playlists, which is people carefully saying this track goes well with this track, goes well with this track. It's an incredibly valuable data set. But to your point, it was heavily skewed.

• 36:48Speaker 01

  It was a few use, not a few millions, but not hundreds of millions, that did a lot of work that benefited the others. Those people saying these tracks go well together meant that the others who weren't that into music, they didn't keep up with the new, with the new releases of the back catalog, they got amazing recommendations from the work of these people. And so I think that's going to be true here as well. And in fact, I know it is true. We see some people engaging a lot, talking to Spotify all the time, saying, no, that's wrong. That's bad. Each piece should be like this. They're doing a lot of work. They're making their Spotify better for themselves. But then we know that someone else who looks very similar to that, but doesn't have the time or knowledge to do all of that, they actually probably want the same thing.

• 37:25Speaker 00

  And they can benefit from the other.

• 37:26Speaker 01

  So they benefit from the others.

• 37:27Speaker 00

  The analogy I had, because everybody's like, oh, you know, everybody's going to be building everything they want. I was like, I don't think they're going to build it all. Tell me if this is a stupid analogy. I'm curious your personal opinion on this. But like, if you even look at like, how easy is it to post to social media? You put a picture, like two buttons and you're done. And it's something like, you know, 90% comes from 1%. And then you have the next 10% do us. And then like 90, 85 or 90% just lurk. They do nothing. But I feel like that's a good representation of humanity with like 90% is not going to or not build anything.

• 37:57Speaker 01

  There is this famous one, 90%, right? 1% creates, 9% curates and 90% consumes.

• 38:02Speaker 00

  Okay.

• 38:03Speaker 01

  Right? Something like that. And I think that's largely true. That's what I mean with the, with the power law. But as I said, that 1% that creates and that 9% that curates, it can be incredibly valuable for the other 9% that consumes.

• 38:15Speaker 00

  And then allows you to do it for them, which I think is what most humans want. Deal is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade. And one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority. A players recognize other A players, which is why top companies like Ramp, Shopify, 11 Labs, Uber and DoorDash all use Deal. Many of the top founders I know have personally invested in Deal after using their product. And what they discovered is that Deal is the best company in the world at building infrastructure for global hiring. Deal will help your business hire, pay and manage any worker anywhere in the world so you can retain the best talent anywhere and spend the rest of your time focusing on what you do best, delivering value to your customers.

• 39:00Speaker 00

  The founder of 11 Labs has a great description of the value Deal can give your company. He said, "We built 11 Labs to break down language and communication barriers. With Deal enabling us to hire and support exceptional talent anywhere, we can accelerate our innovation and bring more voices, stories and ideas to every corner of the world." Deal is trusted by over 40,000 businesses. Learn how they can help your business today by going to deal.com/cenra. That is deal.com forward slash Senra. There's some context I think people need here. So the fourth most listened to on my Spotify app for podcasts was Spotify product story, which you narrated. That came out in 2021, 23, remember?

• 39:43Speaker 01

  Yeah, something like that. Over a couple of years. Came out there.

• 39:45Speaker 00

  Long time ago. And it tells the history, which I think more company, I talk to founders about this all the time, because like you essentially like, why don't we just tell our own company history? And then you interview the people that were there at the time, like Sean Parker's in there, Daniel X there, people that played a role, even if they only played a role for a few years.

• 40:02Speaker 01

  Yeah.

• 40:02Speaker 00

  But the crazy thing is you have entire episodes, I think from 2021 or 2022, dedicated to how you're using AI in Spotify way before, you know, people have been talking about AI for 60 years, but even back then, way less people were talking about it now. Tell me the difference of how you view AI back then in 2021, 2022 to Spotify to today.

• 40:23Speaker 01

  Yeah. So my interest in AI, I think as many, you know, I was always interested in growing up and then I became an engineer and so on in university, which was like in the late 90s. Yeah, I was interested in it. There weren't no networks back then, but you couldn't do anything. Computers were not powerful enough. And then I went into what was called IT, right? And I did my own companies and I started Spotify. And then when I came to Spotify, we already had one of these large data sets of music playlists. And so there were some very talented people there, specifically a guy named Eric Bernad Song, who at the time, this is 2009, was doing machine learning, something called collaborative

• 41:04Speaker 01

  filtering on what was the world's largest Hadoop clusters. And I'm like, this is super cool. Like this scale of data and these algorithms, I hadn't been thinking about it for a long time. So I got very inspired by that, kind of got back into it. And then what happened was DeepMind started doing these reinforcement learning based things. They had this thing called the Deep Q network that started beating Atari games, if you remember that. And it looked like a toy back then, like everything does. But I was, I was so pilled already on, on like the, the idea of how do we actually work as humans from a philosophical point of view. And I didn't have a good answer. No one did. But I had this idea, maybe it is. Maybe it is computational. Because it was the model of the artificial neuron.

• 41:48Speaker 01

  But it was hard to believe in the nineties. With these like deep Q networks from Demis Hassabis and David Silver and the whole DeepMind team. You could see the scaling of like it's handling more and more complex problems. So I got very deep into that. I went home and I started coding again and I did my own sort of recurrent neural networks and LSTMs and GRUs and stuff. Just for fun, you know, during my vacations and evenings and nights. And we kept doing our recommendations problem. Which was sort of old school AI, which was called ML, machine learning. But then when the, what is called the transformer paper came out in, I think, June of 2017. A paper called Attention is All You Need.

• 42:30Speaker 01

  I think I read it like in the first few days and I was completely blown away by it. And I started talking to anyone who wanted to listen. So I was just primed for that, you know, happening. So then we started investing quite aggressively towards this. I think, you know, if you extrapolate it out, if you really believe in that exponential curve, which I've tested a few times. Then eventually, you know, computers would be able to start talking to you in reason. You would be able to talk to computers. We started preparing for that quite early. We bought this company called Sonantik to be able to produce voice. I mean, you can buy voice anywhere on the internet today, but it's quite expensive per minute. So if you want to serve 700 million users with like a few minutes of voice per day, you're going to go bankrupt.

• 43:15Speaker 01

  We bought this company producing voice very, very cheaply with the different technology. Even before the LLMs were smart enough to produce the script for that voice. Because we just bet on, you know, intercepting that curve instead of waiting for it and then, then building for it. So I think it comes from a personal interest in AI and then a bit of luck. Being at a place like Spotify that had access to lots of data. And then when you see it, just, you know, have to bet on it. And I think the interest is a personal interest. Spotify is sort of my excuse to get as close as possible to, to the philosophical side of AI. Sort of what it means to be a human.

• 43:55Speaker 00

  Say more about that.

• 43:57Speaker 01

  Well, I think. You know, you go through life and I was, I was thinking a lot as a kid about things and there were a few problems that, that really like dumbfounded me when I learned about them. One was this notion, I don't remember exactly when, but someone told me, you know, all the atoms in your body or like 99% of them get switched out every seven years. I'm like, yeah, what? Every seven years? What do you mean? So yeah, every seven years are all switched out. But that means I'm not the same person. So if I thought I was my atoms, I thought it was my body.

• 44:38Speaker 01

  Clearly, this is me and you're telling me, I see you in seven years and I'm someone else. So then what am I? If I'm not my atoms, what am I? You know, if you look at a rock, it is its atoms. You look at it, you come back seven years later, same atoms. But in you and I, like your atoms may have been, first of all, most atoms never get destroyed or created, right? They're largely the same, so. So you may have a bunch of Napoleon atoms in your body or something and when you die, it's gonna go to someone else, right? So it's just the construction of those atoms that is you for like a very brief time, right? So I got to that realization that, you know, you're not your atoms, you're the structure of your atoms. And another word for structure is information.

• 45:22Speaker 01

  So then I'm like, okay, so it's the DNA, like DNA is the blueprint and like you arranged atoms in a certain thing, that's you. And then someone said like, no, that's not really it either, because if you think about something for a long time, if you play the piano for a long time, so you think certain patterns, your brain will grow. You're gonna get an overdeveloped musical center. If you're good at languages, your language developers, or the most famous example are cabies in the UK, you know, they have to learn all along them by heart. And when you brain scan them, they have a very overdeveloped 3D center for three dimensional thinking. So clearly, it's not static, what you think about moves those atoms around in new patterns. And it's not even the same atoms, the atoms get switched out over time. So now you're not your atoms, you're not even the structure of the atoms.

• 46:08Speaker 01

  You literally are your thoughts, literally, not as an analogy.

• 46:13Speaker 01

  It's the only thing that is constant is the processing information pattern. Right? Everything like the atoms that do the processing gets switched out. So now I'm like, okay, shit, I'm information processing. And that was kind of a mindfuck. And then I got comfortable with it because I'm like, well, now I can sort of live forever. Because if I'm information processing, I'm thinking in certain ways. That's really what I am. You could have instantiated me with some other atoms, etc. Then if I bring some of that into my kids, if they're thinking a little bit in the same way, like 32% of me is still living in them. Because I am my thoughts and then I transfer my thoughts. And you know, if you're recursive, you say like, well, now transfer them to computer and you get to live forever because you are your thoughts.

• 46:57Speaker 01

  And if that information processing lives there, that was really you. You were not your atoms. So this whole thing of like, we probably are computational beings, things, information processing. I think it was, is what got me into AI in the first place. But then at university-

• 47:13Speaker 00

  Almost two decades ago.

• 47:14Speaker 01

  More than that. In university, in the late 90s, you couldn't do anything with it. The computers were not powerful enough. So when you try to instantiate those ideas, you built a neural network like a few nodes and it slowed their crawl and it was unimpressive. And you're like, nah, that can't be it.

• 47:27Speaker 00

  Okay, so this is interesting. So you've been thinking about this for multiple decades. You had, you had to have this like favorable occurrence of events that now lead you to have, I think you guys have the second largest subscriber base in the world behind Netflix. Am I, am I correct?

• 47:40Speaker 01

  Yes.

• 47:40Speaker 00

  And you have this huge dataset. Now the technology can catch up with the thing you've been taking about since you're in college.

• 47:45Speaker 01

  Yeah, it's a good excuse to get to spend all my day thinking about, learning about these things, working with the best people in the business. You know, I get, I have the fortune of meeting all of these people that, that are changing the world. I get to meet them and talk to them and ask my interesting stupid questions about, you know, things. So it's just a fortunate position to be in, to get to do something that you're passionate about. But I feel very lucky because I can do that, but I can do it in an area where I think it's still good for the world. And I can have impact on, I can steer this towards what I think is a good outcome of AI, like giving back user control, for example.

• 48:22Speaker 00

  I don't want to skip over that because I truly believe we've had enough private conversations. And I know you talked to all the other like people designing products of all the big companies. We talked about this privately in the past and it's just like, yeah, some of them, you know, have made decisions where they know they have optimized or like, hey, we ran this test. This is great for engagement. It's terrible for the mental health and they're like, push it. That's insane to me. That is insane. This is what we were talking about before we started recording was like, I told you, it's like, it sounds silly, but like, I deeply desire a world in which Steve Jobs is still alive because I obviously love technology, but I want the people building this technology that we all use on the scale that we all use it at to like build tools, that's all technology is, that enhance humanity instead

• 49:06Speaker 00

  of trying to replace it or to make you dumber or fatter or just, you know, sucked into your phone and depressed, which I feel is a lot of what's going on now.

• 49:16Speaker 01

  Yeah.

• 49:16Speaker 00

  Which is, I think what you said earlier is like, well, podcasts, we have this thing growing massively that's good for the world, assuming you're listening to the right podcasts and you should be listening to David Sandler and founders, of course, at the same time when these people are like destroying their brains in 15, 20 second, you know, five second, one second scrolling. And it reminded me when you said that earlier, I was like, oh, you go back and read Jeff Bezos's shareholder letters. He talks about why he invented the Kindle. He said the Kindle was an anecdote to short attention spans. He was worried that people weren't going to read anymore.

• 49:45Speaker 01

  I'm deeply impressed by the Kindle, by the way, as a product. And it's not just the technology, like the passive screens and so forth. What people miss is the business model innovation they did. The WhisperSync, where it silently just updates in the background because they bought a certain amount of, you know, mobile data. It's a great product.

• 50:02Speaker 00

  Explain the business model innovation on the Kindle.

• 50:05Speaker 01

  Well, normally you would have to pay for data. So if, you know, if you would have been lazy, which they weren't, you would have said like, here's a Kindle, now go and buy a mobile subscription monthly for that, for the bookstore update. Now, what they did was they signed deals with these carriers. They calculated the average book size and they made a fixed cost deal where all the data sort of forever was included in the price of the hardware. You bought this thing for a one-time cost and it just magically updates. At the time, that was magic. That was good business model innovation on top of all the product innovation, which something I'm very passionate about. I believe that Technology is necessary ingredient for change, but not sufficient. I think you can cause havoc with technology, like piracy.

• 50:48Speaker 01

  But when things really changes, when you take a new technology and marry it with a new, often contrarian business model. This is the Spotify story of access versus versus ownership, for example. Which is, by the way, why I would also love Steve Jobs to be around, but also not, because, you know, he tried to kill us many times.

• 51:06Speaker 00

  It's funny, we had this conversation, so we had Jimmy Iovine on the show earlier. And, you know, Jimmy was in like, top three people I wanted to meet of all time, because I love Defiant Ones, the documentary of him and Dr. Dre.

• 51:16Speaker 01

  Yeah.

• 51:16Speaker 00

  And I've watched it, I don't know, now 10 times or something. And it's weird, because me and Jimmy are friends, and we're like, we live close to each other. Um, and he swears up and down, he's like, "I was gonna kill him." He's just like, "Apple held me back." And I was like, "Jimmy, there's just no way." He's like, "You're like a small part in a huge company that built the great, the most successful consumer product of all time. These were small guys in a tiny, there's like 5 million people in Sweden, something like that, and they had, if Spotify, like, there was, they only had one thing, they had, I always love this idea, it was like, if you had to pick between, this is Josh Kushner's quote, where it's like, if you had to pick the person that's like, uh, the most experienced or the smartest or wants the most, you always bet on the person that wants the most. They had to, if they didn't succeed, they would have died. If Apple Music didn't work out, they would have been fine.

• 52:01Speaker 00

  And I think he said, when he started the fight with you guys, you guys only had like, I don't know, 3 million, or 10 million, or 15 million subscribers. And then you just smoked them.

• 52:08Speaker 01

  A lot of people were very, very scared at the time.

• 52:11Speaker 00

  Cause he was a legend, and he still is, and he's a killer. He's, I mean, dude, still to this day, even though he's retired. I mean, me and Daniel talk about this all the time, because it's just hilarious, because they're obviously close friends, uh, too. And, uh, yeah, he's a, he's formidable individual. But again, I think being on to a bigger company, and again, like, it was just very fascinating.

• 52:33Speaker 01

  But imagine that you're a fairly small Swedish startup, and you think you're good at product, and then the biggest, most respected product company in the world, and the person you see up, look up to the most, Steve Jobs, says that he's coming after you. But not only that, goes and buys and beats music, and brings in Dr. Dre and Jimmy Iovine. It's like, "We're gonna kill you." That's what they literally said in their internal meetings. "They give us six months." It was, uh, those were hard times.

• 52:58Speaker 00

  Yeah.

• 52:58Speaker 01

  We worked very hard.

• 53:01Speaker 01

  But it worked out. There have been a few of those moments.

• 53:03Speaker 00

  There's a great line, though, about this because if you think about Jimmy's experience in the music industry is just fascinating. They tell the story in the, obviously, documentary, you know, starting out sweeping the floor in the record plant and then, you know, becoming an engineer and then a producer and then one of the most successful creators of a new record company and then building products. Like, the guy, the reason I recommend, you know, people studying his stories, because like, the people that can succeed in so many different domains over multiple decades, that's not luck. There's something going on that they know.

• 53:38Speaker 01

  Yeah, you don't get that lucky that many times.

• 53:40Speaker 00

  Yeah.

• 53:40Speaker 01

  For sure.

• 53:41Speaker 00

  So it had to be terrifying from your end. But the one thing, I think, there's a great maxim from Game of Thrones, which I'm obsessed with, and it says, "Those on the margins often come to control the center."

• 53:50Speaker 01

  Yeah.

• 53:50Speaker 00

  And if you think about it, it couldn't have been more marginal than these group of Swedish guys in this tiny country trying to take over and build the company you guys built.

• 53:59Speaker 01

  There were some good, hard reasons for why we didn't get crushed then.

• 54:05Speaker 00

  What do you think they were?

• 54:06Speaker 01

  Well, I think the content side of the business was incredibly worried because if it was only about content and, you know, only about musicians, you had, you know, hip-hop, which is the, you know, has the largest appeal in the US and all these powerful people. But there were some structural reasons. One is, when we created our strategy, we bet on three things, and they were all basically counterpositions to Apple deliberately. One was freemium. We believed that Apple would, if they even did a product, a free product, they would struggle to do advertising.

• 54:38Speaker 00

  Just deviate.

• 54:39Speaker 01

  They tried iAd, but they wanted so much control, it didn't work. So we bet that they wouldn't do a good free tier, and so we focused a lot on freemium and a really good free tier. The second was personalization, because Apple was...

• 54:52Speaker 01

  I would almost say against data at the time. We bet that they would never get good at personalization recommendation. And I, and we believed that was the future. The third was ubiquity. We bet that they were gonna prefer their own products and never get be good on a Samsung TV or an Android phone. So these were our three bets, premium, personalization and ubiquity. And I have to say they pan out really well. We're, you know, they're still struggling on. They, they didn't, they had a free tier for a while, a radio, they pulled it back. Ubiquity, you know, I think they still struggle to be good on non-Apple hardware. And personalization, I wanna say, we're better. So there were real strategic reasons and still are for, for why I think we, we held out.

• 55:37Speaker 01

  But it was also to your point, for us, this was not optional. We either died or we did this. Or I think to your point, I don't know what prior Apple Music was at the time, but it was not more important than the iPhone for sure.

• 55:52Speaker 00

  I found one of my all time favorite quotes when I was reading the book Zero to One. The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places. And they do this by thinking about business from first principles instead of formulas." That is exactly what AppLovin has done with their advertising platform, Axon. Axon connects you with over a billion potential new customers inside mobile games. Axon allows you to capture undivided attention. Axon ads are full screen video ads that are watched for an average of 35 seconds. That is retention that blows other ad platforms out of the water. You can launch on Axon in minutes. You set the goal and Axon achieves it.

• 56:35Speaker 00

  There's no complex setup, no expertise needed, and Axon scales quickly. They can put your ads in front of over a billion potential customers. Other businesses have seen immediate results, have scaled to hundreds of thousands of dollars of spend per day and increased their revenue by millions. So you wanna get started quickly before all your competitors are on Axon. And you can do that by going to axon.ai/cenra. That is Axon. Dot AI forward slash Senra. Everybody's gonna know what Spotify is. I don't think, you know, many people know who you are. You've only done a few podcasts. The one you did with Patrick, I thought was excellent. But I want to go into some of the things that I know about you. I think it's very unusual.

• 57:18Speaker 00

  We talked about like the kind of dangers of some of these social apps. And you have built your own AI agent. Can you explain how you like consume X, for example, what you've built?

• 57:30Speaker 01

  So this is something I'm working on at Spotify. And we released this just a few weeks ago, something called Save to Spotify. When you sit in your code or codex or something, you can just, you know, you can ask these agents to go out and look at information for you, write your podcast script and then generate a podcast. And then we allow you to upload that to Spotify, but privately, right? Because you may put private information in there. Maybe you want to prep for your interview, as I did today. I don't want that to be all over Spotify. So we now support private podcasts or personal podcasts. And so what I do is I use these agents and I take a combination of my personal information. So, you know, documents I have and things I want to prep for.

• 58:14Speaker 01

  And then what I'm interested in based, you know, across my different services, all my interests. Spotify knows my interests pretty well from all my listening. Goes out and looks at what's happening in the world. And then it gives me this, this update that is deeply personal about what's happening in the world that I might be interested in. So it's kind of like a personal algorithm that filters out a lot of of the noise and the crazy that I don't want to hear and just gives me the stuff that I want to hear. This is the kind of user control that I would like to give every user. But it's the kind of user control that you can have now if you're prepared to put in the work. And what's interesting is I didn't expect this, but I found so much music and podcasts through this. Then it's filtered to the people that I'm interested in, that I follow on different social media and so forth.

• 58:59Speaker 01

  So it's the thing that is being talked about among the people I care about. So for example, your episode with Evan Spiegel came up again and again with lots of commentary in my personal podcast saying like this stuff. This is really interesting for you. You should listen to this because there are product wisdoms in there and so forth. I listened to the whole episode, which I really liked, by the way. I'm thinking about stealing his framing of like. You know, we used to have all the ideas but limited resources. Now we have all the ideas and all the resources. I really like that.

• 59:25Speaker 00

  The thing about Evan, you know, people give me shit. They're like, yeah, but look at his market cap. I was like, I don't care about his market cap. I care about that you think he is truly differentiated.

• 59:33Speaker 01

  He is.

• 59:34Speaker 00

  And I spent a bunch of time with him. At the end, I was like, I just want him to win. I don't like, I don't care about his, like, we've figured out. And then everybody's like, oh, but his market is, um, you know, his stock's down eighty percent or something like that. So I just went to ChatGPT. And I was like, how many times did Steve Jobs suffer a seventy-five percent decline, you know? It was like four times. Like, this happens in everybody's career. The kid is young. He's not a kid. The guy is young. Like, let's see, let's, let's see what happens over the next decade.

• 59:59Speaker 01

  Yeah.

• 59:59Speaker 00

  You know, but the fact is, like, he's got a lot of very interesting ideas that no one else has. And he invented a, a, a pattern on social media that a billion people use every day.

• 1:00:06Speaker 01

  He invented several of them, right? The disappearing image, the stories, like all of these.

• 1:00:10Speaker 00

  You think that guy's not interesting to hear talk for an hour? You're fucking crazy.

• 1:00:14Speaker 01

  Of course. No, I, I, I like him. Maybe it's because I'm a product guy. He's a design guy, of course, but I, I like him for sure.

• 1:00:20Speaker 00

  This is one of the most fascinating things about you, and I think it's really, really important to drill down on, and it's really dangerous for people not to do. You are constantly trying to eliminate noise. The idea, even before you, you turned this into an audio, you're essentially taking text and turning it into audio now with the feature you just talked about. But when we talked about this, or maybe I heard you, I think you told me about it, or maybe I heard you talk about it on a podcast, but you were taking it, you could read it, though, before, right? It was like stripping out all like the crazy shit that happens on X, or the people fighting over politics, and it's just like that. What are the people I care about? What are they talking about? That's not going to induce me, like, not going to raise my cortisol levels or make me sad.

• 1:00:55Speaker 01

  So I literally asked my agent, filter for rage bait, filter for, for clickbait, filter for, you know, politics. I just asked, this is the kind of user control that you can have now, that very few people understand that you can have yet, and it's too complicated, but you can have all that control. So what, what I think is, most people kind of know what they want, but, you know, you get captured in the moment. You know, it's like you, you want something and then someone puts candy in front of you, you're going to take that candy. So what is interesting is can you give people the chance to decide their own future ahead of time? This is the idea behind like the taste profiling behind these agents. Like, I'm not better than anyone else. I get captured all the time.

• 1:01:35Speaker 01

  So, so my specific pet peeve is road rage. I'm so fascinated by it. I just go down dark holes of road rage. Because it's the weirdest thing, like these supposedly, you know, fully normal, smart people, they waste their entire lives and go to jail.

• 1:01:48Speaker 00

  Cars and kill kids.

• 1:01:49Speaker 01

  Yes, and then afterwards you realize that no, they were pretty normal people. It's just somehow inside your car, you lose it. So I go down that rabbit hole and I watch hours of road rage. Right. But what I can do now is I can say like, don't show me road rage because I know what's gonna happen. So that that like, what do you call it?

• 1:02:06Speaker 01

  Ahead of time, premeditated.

• 1:02:08Speaker 00

  Yeah, premeditated.

• 1:02:09Speaker 01

  Premeditated media.

• 1:02:10Speaker 00

  Yeah.

• 1:02:10Speaker 01

  Is something that that I think everyone should at least have access to if they want to. It works for me and I think it will work for a lot of people. And I think it's, I think that need is not gonna get less. I think it's gonna get, it's not gonna get smaller. It's gonna get bigger. So I happen to think it's also good business.

• 1:02:27Speaker 00

  Something that just popped to mind when you were speaking just now. I'm very curious, like who influenced, so we're talking about like essentially your information diet, right? And what you're letting into your mind, you talked about, we literally are our thoughts. Like you're crazy to like, let people get into your brain and affect you. And I was talking to Mr. Beast about this yesterday where he's just like, I don't think people should have Instagram. Cause it's just like, it's just making all these young kids like, comparison is the thief of joy. And all they're doing all day long is comparing, you know, somebody else's highlight reel to them. And it's just like very, very bad for you to let that into your brain. One of my favorite things, I think Daniel said it on this podcast last year where, you know, I'm always curious when I get to meet people, especially in things successful people, it's like they, who tells you the truth is a question I always ask, cause it's like very few. A lot of them kind of have like this almost like cloud of sycophants around them.

• 1:03:12Speaker 00

  They're like filtering their knowledge, it's getting into them. And what they'll do is like, they'll seek out people they can trust and they'll tell them the truth. And I think he told the story of you being one of those people for him, for Daniel, because you pulled him aside. You're like, hey, you're running product and you're like, not good at it. You're kind of fucking this up. And his response was, he went home, I think he told his wife, he's like, oh my God, I have to fire this guy. It was you. And then he goes, then he thought about it, he goes, oh, he's right. It's like, he just did me a service.

• 1:03:39Speaker 01

  Very few people are that strong, can take that kind of, but that's why he's successful.

• 1:03:44Speaker 00

  Yes. And so I think this is really important. So who does that for you?

• 1:03:48Speaker 01

  So I do a version of the same thing. This is the, this is back to the thing of long tenure. So I have people on long tenured, but like huge disagreements with them.

• 1:03:58Speaker 01

  And they've realized that when they.

• 1:04:03Speaker 01

  When they talk back to me or they get upset with me, there are no consequences, right? But that takes, that comfort takes a long while to build. You can't expect someone to come in, especially if they come from corporate America, and expect them to like stand up to you. Because usually there are consequences, you just get fired.

• 1:04:19Speaker 00

  Well, yeah, but people don't know, you're a brown belt?

• 1:04:22Speaker 01

  No, no, no, I'm a blue belt.

• 1:04:24Speaker 00

  Oh, a blue belt in jujitsu, so you could also choke them.

• 1:04:26Speaker 01

  There are many people who could choke me out, so that's a risky, risky path to take. It's a tenure. I have a bunch of people around me who, who I, I think and hope feel comfortable saying like, no, you're wrong. I think you're just not understanding this. And, and I think so because they do. And they've learned that, you know, I, I can't always control myself. I'm very passionate about something. I'm like, no, you're wrong. Yeah, that's stupid, blah, blah, blah. And then they know it's not going to be consequences. So they say it anyway. I try to do that more in like one-on-ones or small groups. Sometimes it's a big meeting, someone who has worked for me for a long time feels very, very comfortable. Just says like, no, I think that's a, that's a stupid idea. And I'm like, no, your idea is stupid. And everyone around is like, oh shit. Now everyone is going to get fired.

• 1:05:11Speaker 01

  You know, so you have to build that trust over time. And so I have a version of the, of the same.

• 1:05:16Speaker 00

  Okay, so we, we talked about tenure at the very beginning of this conversation where I never finished a thought. When I was asking Mr. Beast about turnover on his talent, uh, like the, the most talented people in there. And he's just like, there's a value here because the guy that runs his operations has been there. They used to live together. They, he's like, I've spent not 10,000 hours talking to this guy, 30,000 hours where they walks on set. And since he's running his operations, they're running like 10 at a time. Mr. Beast can walk on set and he, like before he'll look up and he, the guy, his name's Tyler, he's like, I already know about this and this is why I made this decision and we're doing this. And oh, you may not like this shot, but we're doing this shot because it allows us to shoot from this angle. And then literally does, nothing has to even come out. It's like they're, they're, what's the, uh, from thing from Star Trek with the Vulcan mind meld?

• 1:05:57Speaker 01

  Yeah, exactly.

• 1:05:58Speaker 00

  Essentially, that's what happens. He's, he's, and he said the greatest thing. He goes, you don't get that in a hundred hours.

• 1:06:03Speaker 01

  So one benefit of tenure is the trust. People keep you honest. Unless you, you know, you become too full of yourself, which is always a risk with success. But the other benefit is the efficiency of like, people know you don't have to give as much context. There are some downsides to tenure, which is opposite of Elon's. You don't get fresh blood as much. And so you need to be careful. Maybe you're just a group of old people eventually. But you have to control for that. So I try to make sure that we also hire some new. But these are the two benefits, just efficiency and trust.

• 1:06:33Speaker 00

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

• 1:07:00Speaker 01

  So it's back to like, you optimize for some things, but then you have to mitigate for the other thing. So if you're optimized for tenure, you have to mitigate for the risk that you don't get fresh blood, that your career ladder is slow. So maybe people are talented, feel like, well, that's going to take 10 years to get up the career ladder. So then you have to create programs for that, to give them exposure.

• 1:07:18Speaker 00

  It took Gustav 18 years to get to CEO.

• 1:07:20Speaker 01

  Yeah, it took 18 years to get CEO. Wow, it's a long time. Finally made it. But, uh, but it is, it is the same principle.

• 1:07:28Speaker 00

  Well, how do you get new talent then? Like, what are you guys doing literally at Spotify? Cause I know you, you have the same idea. You guys have the same idea that, um, Toby from Shopify talked to me about. And my friend Kareem from Ramp do.

• 1:07:39Speaker 01

  Which was another great episode, by the way, that Toby episode.

• 1:07:42Speaker 00

  Yeah, he's, he's the best. Um, but that you guys are fine hiring for spikes.

• 1:07:47Speaker 01

  Yeah.

• 1:07:48Speaker 00

  So how do you, like today, how are you getting in? You're a huge platform, business around, I think it just celebrated 20 year anniversary, right?

• 1:07:55Speaker 01

  Yes, exactly.

• 1:07:56Speaker 00

  How are you getting new, young talent then? How do you think about that?

• 1:07:59Speaker 01

  It's, it's a couple of things. One is, um,

• 1:08:03Speaker 01

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

• 1:08:46Speaker 01

  They know everyone in Spotify across the world, so they can get anything done. So now they're going to start rising much faster. So we have these specific programs to identify the talent and help them accelerate versus like the organic path of them doing something, getting noticed and slowly working their way up. So that's one thing. But then every now and then you also just have to hire a more senior level. Right, so if you look at when AI started happening or was called machine learning back then, I felt that we just weren't strong enough in deep learning specifically. We knew the old school matrix factorization stuff. So we did an acquisition with a company called the Ekonest in Boston just to get very close to MIT. And then we got a bunch of talent in that field and established ourselves.

• 1:09:29Speaker 01

  So sometimes you have to do acquisitions and just get, when it's a completely new skill, something like, you know, if you, if you need to get big in crypto quickly, yeah, you can wait for years for the organization to understand crypto and learn. You may have to acquire or hire at some senior level. You have to mitigate for the problems of tenure. And if I'm going to make some far-fetched analogies, maybe this is one of the challenges that Apple had with machine learning and AI.

• 1:09:57Speaker 00

  So that was serious, so bad.

• 1:09:58Speaker 01

  They were slightly too old to see that. Probably the people in their org knew all about it, were all over it. It was just too late to see it. They should have like gotten someone at a more senior level sooner. So sometimes you have to mitigate for the drawbacks of long tenure as well.

• 1:10:14Speaker 00

  What's the thing that keeps you up at night? Like, what do you think the weakest spot for Spotify is right now?

• 1:10:19Speaker 01

  I think the thing that keeps me up at night is... Not surprising what AI truly means in the limit. I'm pretty sure that media habits are going to change because of AI. And so I don't think it's an option to just sit still. But the way I think about it is, the world moves in macro waves. You get some new technology. It often causes a bunch of havoc. Then there's some new business model that emerges. And then things change. This was the original Spotify. We kind of rode on the microwave of cheap broadband and PCs. Right? And then all of a sudden, they were so ubiquitous and the broadband was so fast. You didn't actually need to own files anymore. You could just stream them. Right? We realized that, build a business model around it.

• 1:11:04Speaker 01

  That became very disruptive to the download industry and so forth. And then you wait a few years, everything looked great. Then the smartphone came along. And now everything changes again. You have people that don't have a computer. We only had a free tier on the computers. We had no free tier. Turns out that while the PC and the internet, the desktop was, had such low latency, you could stream it. If you try to stream a song over cellular back in 2008, it wouldn't even start. It was 20 seconds to start, it would chop. So like, everything changed again. And then we had to adapt to that. And we managed to. We came up with the offline sync business model and the mobile model and so forth. But then you get these periods of stability.

• 1:11:45Speaker 01

  So if I was an analyst and I tried to predict the world between 2015 to 2025, those 10 years. You stick, you know, what will the world be like? I would have done really well to just extrapolate. More mobile, more subscription, more ads, just more of everything. And you would have gotten really close to what happened. But if you would have shifted that 10 years earlier, 2005 to 2015, you would have extrapolated PCs and internet. You would have missed the smartphone. You would have missed everything. You would have missed Uber. You would have missed the entire world. So the question is, which era are we in? Are we in the calm waters of extrapolation or in the macro change? I think we're in one of these, where everything changes.

• 1:12:28Speaker 01

  So I can't tell you what's going to change, but I'm pretty sure that things are going to change. But the way we think of it as a company is, the scariest periods are the periods of change. Guess when Spotify grew the most?

• 1:12:39Speaker 00

  Periods of change.

• 1:12:40Speaker 01

  Periods of change. When things are stable, market share stays stable. You don't eat market share. So when there's change, there's risk you can lose market share. But that is also when you have the most opportunity to eat market share. If you adopt the change. So my principle is just always be first. Be first and adopt it first. Like, the world is going to change. Just accept that and get ahead of the curve. So I think this is a time of great opportunity for us to do new things. But it is also the thing I'm thinking about constantly. What does it actually mean? And what are the right bets? Are there right bets to bet on user control? And these things are, you know, whereas others are going to bet complete opposite of us. So that's what keeps me up at night is we're still in this change. It hasn't finished yet. No one knows exactly where it's going to end up.

• 1:13:23Speaker 01

  They're going to be the Ubers and Airbnbs of this era. And maybe they are open and anthropic, but maybe not. Maybe it hasn't even happened yet.

• 1:13:32Speaker 00

  That's a perfect place to end. Gustav, thanks for doing this, man. Always good to talk to you.

• 1:13:35Speaker 01

  Thank you, man.

• 1:13:36Speaker 00

  Appreciate it, man. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.