The Spotify Play Read online

  “Why aren’t we growing faster?” he wrote in a one-line email to one of his associates as early results from the partnership began to appear.

  His mantra at this time was “harder, better, faster, stronger,” four words lifted from Daft Punk that he would often use to sign off his emails. The young Swede was a demanding CEO known for hounding his top executives, appearing to never run out of follow-up questions. He occasionally would tell off individual staff members in front of their peers, as if to demonstrate his power. One senior staff member would recall how a friendlier Daniel approached a colleague after a meeting, asking them not to take his public scolding personally.

  Back in the spring of 2011, Daniel had head hunted a growth specialist who lived up to his exacting standards. Alex Norström was a thirty-three-year-old hip-hop and R&B fan who had previously helped the Swedish fashion brand Acne with their e-commerce. He had recently left a senior position at King.com, whose mobile games reached tens of millions of users each month. His former gaming studio would become known as the inventors of Candy Crush, an addictive game that would dominate the mobile gaming charts for years to come. Alex’s new colleagues at Spotify saw him as a manager who both worked and played hard, was eager to rise through the ranks and sometimes made jokes at other people’s expense. Some would describe his management style as “American.” He would, at times, push people to greater heights and call out poor performance.

  Daniel had given Alex a clear task: bring Spotify to one hundred million users. The figure was ten times what the company had at the end of 2011. Alex Norström became Spotify’s Head of Growth, a title that came with its own team and, crucially, its own small squad of developers.

  Obsessed with growing quickly, Daniel gave this new team free rein and rarely interfered in their work. His growth team was built on the same model Mark Zuckerberg had used at Facebook. They had three goals: acquire new users, get them to activate their accounts, and turn them into frequent users. Their work centered around three buzzwords—“acquisition,” “activation,” and “retention”—that, if successfully executed, could make Spotify a dominant force in the music world.

  Alex and his team would constantly devise new growth hacks to reach their aggressively set goals. They prompted all users who had connected Spotify to Facebook to invite all of their friends to join the music service. Alex kept a constant eye on the numbers. Metrics such as “second-day retention”—the extent to which a new user returned to Spotify on day two—would prove especially important.

  Above all, Alex fixated on the number of daily and monthly listeners. The higher the daily number, the more engaged the users had become, and the more likely it seemed that they would eventually become paying subscribers. Like thousands of other third-party apps, Spotify could now access slices of Facebook’s user data. Several years would pass before that exchange became the subject of widespread criticism.

  During the fall of 2011, Spotify was gaining tens of thousands of new users every day, but the intake from Facebook appeared to be of relatively low quality, including a large share of passive listeners. Alex and his team would eventually start recruiting in other ways. Their efforts centered around marketing campaigns through both Facebook and Google where Spotify would effectively pay a price for every new user. As long as the cost of attracting a new user was lower than the expected revenue from the same user over time—his or her “lifetime value”—Alex had no reason to take his foot off the gas.

  Another way to grow was to expand into new territories. During 2011, Daniel brought Spotify to Austria, Belgium, and Switzerland. The following year, ahead of a much-anticipated launch in Germany, he finally scrapped the rule that required new users to sign up via Facebook. That requirement would have been a problem in the German market, where Facebook was nowhere near as popular as in Sweden or the UK.

  By September 2012, Facebook had been removed as the sole entry point in all other markets too. That year, Spotify brought its services to Australia and New Zealand. The international expansion was led by the young business and marketing graduate Axel Bard Bringéus who, like Alex Norström, had spent a few years at King.com. During Spotify’s rapid global rollout, he would often find himself waking up in a taxi, wondering whether he was on his way to or from an airport.

  Rocket Man

  By mid-2012, Spotify had reached twelve countries and fifteen million active users. Daniel Ek now split his time between Stockholm and New York, where he had a second home in lower Manhattan. While in Sweden, he would arrive at the office at ten a.m. and stay until at least seven p.m. “An early New York time zone,” as he described his own schedule.

  At home, about twenty minutes’ walk from the office, he would log on to his computer again. Work would usually keep him busy until two or three in the morning, around the time his contacts in Silicon Valley were getting ready to call it a day.

  Daniel was now fully focused on the bigger picture. His Chief Finance Officer, Peter Sterky, had stepped in as acting CEO. That allowed Daniel to focus on his strengths: the company’s vision and matters that lay at least six months into the future. In Stockholm, he worked on product development; in New York, on deals with the music industry. On average, Spotify was now hiring one new employee every day. Within their first week, newcomers might be expected to guide even fresher recruits around their new office. Neither Daniel nor Martin Lorentzon were early risers. On a typical day, the headquarters would clear out only after midnight, and not fill up until mid-morning the next day.

  During the summer of 2012, Spotify’s employees moved into the Jarla House, a few blocks down Birger Jarlsgatan. The music startup leased floors seven, eight, nine, and eleven in the recently renovated office building. Soon Spotify’s main offices had all the attributes of a startup company, with colorful furniture, graffiti art on the walls, a video game corner, and a ping-pong room. The canteen on the eleventh floor overlooked the characteristic metal roofs of central Stockholm. Martin would joke that they needed to “smoke out” the neighbors so Spotify could take over the whole building.

  Many employees were now having the time of their lives. For some, the trips abroad were becoming frequent. In New York, they would stay at boutique hotels like The Standard, a glittering building that rose up over the Meatpacking District on concrete suspensions. Others booked rooms at the Dream Downtown on West 16th Street. They worked hard, ate well, and partied at night. Some of them ended up in each other’s rooms. There was no company policy against sleeping with coworkers. After all, this was a tech company in the music world, and Spotify’s fresh venture funding had things looking pretty rock ’n’ roll. Business and pleasure would frequently mix. Even the company’s chairman, Martin Lorentzon, slept with several employees over the years, three sources would claim.

  Spotify’s travel budgets were generous. If a company offsite at a Soho House location was scheduled for Monday, it wasn’t unheard of for employees to check in the Friday before, all on the company’s dime. Some would even routinely upgrade their flights abroad to business class, and expense the cost. Eventually, the finance team mandated that business class would only be accepted for flights longer than eight hours, as one frequent traveler would recall.

  The venture capital from Yuri Milner’s DST Global had given Spotify a fresh range of options. For the first time, Daniel was able to recruit executives from some of the world’s largest tech companies. Many Spotify employees would recall how a new layer of mid-level managers, often Americans, were ushered in far too quickly, and with decidedly mixed results.

  Several early staff members recalled their new bosses fighting for months over territory instead of pursuing their goals. But with a billion-dollar valuation, Daniel now had to answer to new owners and transform his homespun Swedish startup into a competitive, international tech firm. He found he had to accept collateral damage within the organization.

  Some of the new executives—such as the much-liked Chief Revenue Officer, Jeff Levick, who h
ad previously spent time at AOL and Google—would remain at Spotify for years to come. Others did not stay as long. The company’s new Chief Marketing Officer, Teymour Farman-Farmaian, another Google veteran, left after about a year. He had a management style that some staffers found overly confrontational, as three people would recall. Farman-Farmaian himself would later put any friction down to growing pains at a “hyperscaling” company. He had been placed, he said, between Daniel and staff members who had previously enjoyed direct access to their CEO.

  For new employees, Spotify could feel like a free and spontaneous work environment, with no clear hierarchy. New recruits sometimes found room to push out their predecessors. Several sources point to the arrival of the new marketing VP Erin Clift as leading to the departure of the internally admired Sophia Bendz, who had built hype around Spotify’s beta product in the early years and remained a key figure in marketing. To the dismay of several employees, Sophia returned after maternity leave only to find her role marginalized. (Such demotions are taboo in Sweden, which has one of the most generous parental-leave systems in the world.) Critics within the company accused Daniel of pandering to investors, too concerned about the optics to reprimand or fire high-profile recruits.

  “With American money come American executives, and things are often never the same again,” as one person who spent years in the Stockholm startup scene would put it.

  Throughout the years, Spotify was a place ridden with intense internal rivalries. Some would describe the atmosphere as downright Darwinistic. Daniel Ek would rarely mediate in a conflict, opting instead to let his subordinates duke it out themselves. Instead, his focus was on the grand chessboard, where he would map out new ideas and growth targets wild enough to seem fanciful to some of his colleagues.

  “When it comes to team leadership and deciding on specifics, he doesn’t always deliver,” as one employee would put it.

  Perhaps Daniel lacked interest in office politics because he was always looking a few years ahead. One of his highest priorities was to keep recruiting the sharpest minds available. People with strong resumes needed to be headhunted, whether or not they slotted easily into the corporate culture. “Come join the band,” as the company’s HR department would put it. For Daniel, a little organized confusion did not cloud the bigger picture. His goal was to make Spotify huge.

  “I am quite simply rather naïve. Maybe that is why I dare to try to achieve what is impossible,” he said in an appearance on Swedish public radio in the summer of 2012. “Then—and this might not be very Swedish—I want to do something that can really change the world, even if it’s in a very small way.”

  Those who had come to know Daniel Ek would rarely describe him as naïve. If anything, he might sometimes appear fairly calculated in his decision making. His friends and associates had become accustomed to his endless ambitions and would often praise his tendency to constantly challenge the status quo.

  Eventually, the rest of the world would echo their praises. One of his many accolades hung framed on his office wall. It was a remake of the album art from Pink Floyd’s classic Dark Side of the Moon, where rays of light travel through a prism and create a color spectrum on the other side. In this version, the light passes not through a prism, but through the bald head of Daniel Ek. The illustration had appeared in Bloomberg BusinessWeek.

  Daniel had seen how Facebook’s mind-boggling growth had made Mark Zuckerberg virtually immortal. He was therefore focused solely on one thing: how many active users Spotify could rack up every month. As long as his streaming service became a global sensation, petty workplace conflicts and internal rivalries didn’t matter.

  I’m Coming Out

  In 2012, Daniel Ek began to properly introduce himself to the Swedish public. In March, he sat for a primetime talk show interview on Swedish Television, charming the audience with stories of buzzing servers in his Rågsved apartment and his file-sharing habits as a young man. The host, Fredrik Skavlan, asked about his public appearances in the US, where the audience was used to Steve Jobs’s immaculate performances.

  “It doesn’t come naturally to me. After all, I started as a programmer,” Daniel Ek replied.

  A few months later, the Spotify founder appeared on the beloved summertime radio show Sommar i P1, where celebrities and public figures play songs and speak openly about their lives for ninety minutes straight.

  “I have my lows, just like everyone else, when I feel down and above all inadequate,” he said during the show.

  Before entering the studio, the staff had shown him around the massive record archive kept at Swedish Radio’s colossal Broadcasting House, on the outskirts of central Stockholm. Its roughly four million physical recordings made an impression on Daniel, who was taken aback by its sheer size. One of his hosts would later recall how the entrepreneur browsed the records in amazement, an experience he later addressed on air.

  “This record archive was the image I used when I tried to explain what it was we wanted to build. Just imagine everything that’s in this archive—only on your phone,” he said.

  In his carefully scripted radio performance he mentioned his family, growing up in Rågsved, and his first few assignments in the technology industry. This radio show was where Daniel first described his time as a confused young man in search of an identity, during which he bought a red sports car and, for a short period, fell into a depression. He also relayed how he spent his teenage years pulling “virtual pranks” in various hacker chat rooms and how he, much later, found that he and Sean Parker must have been part of the same online circles as teens.

  “At some point then, we realized that we had both been hanging out in the same chat rooms and talked to each other. Most likely something about taking over the world. That’s how we were,” Daniel said. He also offered some banter on the music industry, describing how he once witnessed a famous drummer trash his manager’s office in New York.

  Six years had now passed since he, as a twenty-three-year-old, had started Spotify with Martin Lorentzon. They now had 600 employees, enough for some of the reception staff not to know who he was.

  “A couple of months ago I was almost denied entrance,” he said during the radio show.

  The Swede now had met many of his idols. He mentioned U2’s frontman Bono and lingered on a particular anecdote about the singer-songwriter Neil Young. Daniel had just arrived in San Francisco, feeling dazed after trips to London, Singapore, and New York in quick succession. Neil Young stopped outside his hotel in a white Cadillac.

  “He picked me up and we drove around for nearly two hours talking about music. Sometimes it feels like I’m living in a fairy tale,” Daniel told the listeners. Neil Young himself would emerge as a fledgling entrepreneur in the music space. In 2012, he launched a prototype of his own triangular, portable PonoPlayer. An accompanying streaming service would follow a few years later.

  During his radio appearance, Daniel also mentioned how he had lunch at the Beverly Hilton Hotel on February 11, 2012, the day before the Grammy Awards in Los Angeles. He was accompanied by Neil Young and the legendary record executive Clive Davis, father of the music lawyer Fred Davis, who helped Spotify during the early years. Clive had served as Whitney Houston’s mentor for nearly thirty years. Now, she was due as the guest of honor at his annual pre-party ahead of the awards ceremony the following day. At one point during the lunch, Clive Davis answered his phone and quickly left the table.

  “Neither I nor Neil Young understood exactly what had happened,” Daniel recounts on the program. Soon, they saw paramedics run by. Whitney Houston had passed away in a different part of the same hotel. Clive Davis’s pre-party turned into a wake, where those closest to the star gave in memoriam speeches and spoke openly of their grief.

  Daniel could now move freely through the power structures of the music industry. During the same trip to Los Angeles, he posed for a photograph at an event hosted by Universal CEO Lucian Grainge, one of his main antagonists in
the messy negotiations that led up to Spotify entering the US. Said to be uncomfortable at industry events, Ek was willing to show up and pay his respects to one of the industry’s most powerful people. Several other well-known faces had made it to the same party, such as the rapper Ludacris and the Universal executive Jimmy Iovine.

  By this time, Daniel had parted ways with his girlfriend, Charlotte Ågren. While he had been committed to their relationship, he was often several time zones away. Things are said to have ended amicably in early 2011. Around the same time, Daniel left London and moved back to Stockholm.

  During the past winter, the Spotify founder had taken some much-needed time off, traveling to the south of Brazil with Shakil Khan, among others. According to the gossip site Gawker, Mark Zuckerberg and Sean Parker had both flown south to join the fun. They would appear to have left Florianopolis with colorful memories.

  During the spring of 2012, Daniel had begun exploring his options as a single man. Several people would recall that he dated a Spotify employee who held a junior role at the company. Both warm and kind, the pair were said to have a natural chemistry. They would sometimes head home together after going out for drinks after work with a larger group.

  Tellingly, much of their interaction was said to have occurred online. That was partly because Daniel travelled a lot, but also because the virtual Daniel had a different swagger about him. In person, the now twenty-nine-year-old CEO still gave a quiet and shy impression. But online, he was charming, funny, and brimming with the confidence befitting a world-famous entrepreneur. Despite his age, fame, and riches, Daniel would still only feel truly uninhibited in front of a computer. In that sense, not much had changed since he flirted with girls in high school over ICQ.

  After the secretive fling, Daniel threw himself into a relationship with another woman. He would give her a shoutout in his radio program that summer.