4 More Questions with Gustav Söderström - Building One with Tomer Cohen

Summary

Building One with Tomer Cohen

Episode 4: More Questions with Gustav Söderström

Release Date: July 16, 2024
Host: Tomer Cohen, Chief Product Officer at LinkedIn
Guest: Gustav Söderström, Co-President of Spotify

In the fourth episode of Building One with Tomer Cohen, Tomer engages in an insightful conversation with Gustav Söderström, the Co-President of Spotify. Building on their previous deep dive, this episode uncovers additional layers of Gustav's approach to product leadership, strategic thinking, and personal interests that shape his professional journey. The discussion offers valuable lessons for aspiring product leaders and enthusiasts eager to understand the nuances of building impactful products in a competitive landscape.

1. Gustav's Rapid Learning Techniques

At the outset, Tomer probes into Gustav’s methods for acquiring knowledge swiftly and effectively—a crucial skill in the fast-paced tech industry.

Quote:
“One is podcasts and audiobooks and normal books. A lot of fantastic educators on YouTube. And then the trick I do is I sort of abuse my position a little bit and I take some of the smartest people in the company in a certain area, and I get to ask the smartest people questions about AI or marketing or business or something.”
— Gustav Söderström [01:02]

Gustav emphasizes a multi-faceted approach to learning, combining traditional resources like books and audiobooks with leveraging the expertise within his organization. By engaging in one-on-one sessions with subject matter experts, he ensures a deep and practical understanding of complex topics, from artificial intelligence to marketing strategies.

2. Strategic Insights from Competitors

Tomer shifts the conversation to Gustav’s perspective on competitors and how Spotify navigates its strategic landscape.

Quote:
“I tend to focus a lot on competitors to understand kind of what we should not do. I think a risk is that you accidentally step right in the way of a much bigger competitor.”
— Gustav Söderström [02:03]

Gustav discusses his approach to competitor analysis—not to mimic, but to identify pitfalls and strategic positions where Spotify can differentiate itself. He shares how Spotify ventured into the background music niche, avoiding direct competition with YouTube’s foreground on-demand service. This strategic differentiation created a "blue ocean" of opportunity, catering to user behavior that favored background listening.

He further delves into business model learnings from Netflix, praising their strategic reinvention and disciplined focus:

Quote:
“They completely stayed away from that thing. They seem very strategic. Incredible company.”
— Gustav Söderström [04:38]

Gustav admires Netflix’s ability to pivot from DVD rentals to a subscription-based streaming model, highlighting their strategic foresight and disciplined execution as key factors in their sustained success.

3. Unexpected Product Success: The $1 Three-Month Campaign

Exploring product innovation, Tomer asks about a Spotify initiative that initially seemed dubious but turned out to be a game-changer.

Quote:
“I thought it was a terrible idea. I'm like, what is this discount marketing thing? You know, that's not going to work.”
— Gustav Söderström [04:58]

Gustav recounts Spotify’s “three for one” campaign, offering three months of service for $1. Despite initial skepticism, this promotion became widely adopted across the subscription industry. The success lay in balancing customer commitment with perceived value, effectively transitioning users from free to premium tiers.

Quote:
“You get a commitment, you start paying, but there's also enough value that you actually feel you're getting something.”
— Gustav Söderström [05:33]

This strategy not only incentivized sign-ups but also provided ample time for onboarding, ensuring users fully experienced Spotify’s value proposition, thereby increasing conversion rates.

4. A Hypothetical Leap into Physics and the Role of AI in Knowledge Creation

In a lighthearted yet profound segment, Tomer asks Gustav about his dream profession in an alternate universe.

Quote:
“If the other universe also can give me a bit more IQ, I would definitely want to be a physicist.”
— Gustav Söderström [06:05]

Gustav expresses a deep fascination with physics, particularly quantum mechanics and quantum computing. He appreciates the fundamental models and their predictive power, acknowledging the potential of AI to enhance scientific discovery.

The conversation evolves into a discussion on AI’s capability to generate new knowledge:

Quote:
“I think it's entirely possible to create new knowledge. I think it's maybe a little bit overestimated how good we are at it.”
— Gustav Söderström [07:34]

Gustav believes AI technologies, such as reinforcement learning and predictive models like AlphaFold, are already contributing to unprecedented advancements in fields like material science and physics. He envisions AI as a catalyst that will further accelerate innovation and discovery.

Conclusion

The episode wraps up with mutual appreciation between Tomer and Gustav, highlighting the enriching nature of their dialogue.

Quote:
“Tomer, always great speaking to you.”
— Gustav Söderström [08:43]

Gustav Söderström’s insights offer a blend of strategic acumen, innovative thinking, and a passion for learning that underpins his leadership at Spotify. This episode serves as a valuable resource for product leaders and enthusiasts seeking to glean lessons from one of the industry's foremost minds.

Note: This summary excludes non-content sections such as advertisements, intros, and outros referenced at the beginning and end of the transcript.

Transcript

Leah Smart (0:00)

From LinkedIn news, I'm Leah Smart, host of Everyday Better, an award winning podcast dedicated to personal development. Join me every week for captivating stories and research to find more fulfillment in your work and personal life. Listen to Everyday better on the LinkedIn podcast network, Apple Podcasts, or wherever you get your podcasts.

Tomer (0:18)

Hi, it's Tomer. Last week we dove deep into building with Gustav Satterstrom, the co president of Spotify. We uncovered so much from the culture of building within a challenging ecosystem to to Gustav's unique product principles, to how AI will change not just how we make apps, but also how we relate to them. And in this episode, we follow up with even more learnings as we get to know Gustav a little bit better. So you like to go deep and you were in a way, forced to go broad, but now you kind of see the benefit of that. And I'm curious, how do you learn? Because I think in your job you, you need to learn not just really well and deep, but you also need to learn fast. Like what, what is your practice to learning very fast?

Gustav Satterstrom (1:02)

One is podcasts and audiobooks and normal books. A lot of fantastic educators on YouTube. And then the trick I do is I sort of abuse my position a little bit and I take some of the smartest people in the company in a certain area, and I get to ask the smartest people questions about AI or marketing or business or something. So I actually try to leverage the fact that we have so many smart people here. When I've read about something and I'm like, I wonder if this is how it works or I wonder if this is true, I usually set up time with someone and say, like, is this actually how it works? How does it actually work? So that access to super smart people, I think is a benefit of the job.

Tomer (1:36)

So you start with access to information generally, and then you do like a one on one session with somebody to go deeper.

Gustav Satterstrom (1:42)

Yeah. You know, many courses are still open. You can even do some of the programming assignments, you know, remotely. But if I have ideas or thoughts, I tend to discuss them, like debate with smart people, both inside the company, sometimes outside the company, like yourself, for example.

Tomer (1:55)

And I'm sure everybody would love to talk to you because they can learn so much from you as well. What is one thing that you felt was really important you learned from a competitor?

Gustav Satterstrom (2:03)

I tend to focus a lot on competitors, actually, which is a little bit counter to what people say you should do. But I tend to focus a lot on competitors to understand kind of what we should not do. I think a risk is that you accidentally step right in the way of a much bigger competitor. You know, you go after Google on ads, for example. Does that really make sense? The best in the world. So I try to understand competitors and what they're good at. Sometimes to borrow from them, I think you should borrow with pride. If they do something great, you shouldn't think too highly of yourself. Just understand like, yes, there are many smart people in the world, so I'm just going to borrow that. But mostly it's actually to not borrow ideas, but rather to make sure that you understand what you're stepping into. And I think of it as a strategic map. So for example, when Spotify started with our free tier, there was already YouTube free, which was foreground on demand with video. It was very popular. If we had gone in there and tried to compete with them, it would have been hard. But what we saw in our data was that people using Spotify in the background about 90% of the time. So we instead chose a different license where you couldn't even play on demand in the foreground, but you could play in shuffle mode unlimited in the background. So it kind of went to a different place. And we actually found all this background listening. There was a blue ocean instead of the foreground, sort of red ocean. So that's learning from competitors and understanding what they do. I think in terms of learning specifically about business models, it's been from Netflix and that's to a large extent because our former CFO, Ben McCarthy was the CFO from Netflix and Ted Sarandos is on our board. That was very valuable to me because it's something that I didn't know anything about, like the amortization game and amortizing fixed cost investments. It's a very different, fascinating business model that they've absolutely killed. I also respect them so much for daring to switch from their initial sort of DVD hack that they found that was sort of almost a loophole to like going straight into this fixed cost model, mapping that in between sending out the DVDs as a complementary service to the actual main thing that was a dvd and then up leveling that. They're incredibly strategic. I would say by far this is the company I'm the most impressed with when it comes to strategy. They've said no to a ton of stuff. Sometimes you feel like, oh, they're not doing this, they're not doing that, or slow. And then you see like, oh, that was the right thing to do. They completely stayed away from that thing. They seem very strategic Incredible company when.