4 More Questions with Gustav Söderström

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

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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.

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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]

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]

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]

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]

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]

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]

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]

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.

[Tomer]

It comes to reinvention. Even now moving from subscription to subscriptions with ads back to the business model, you can really build both, which in extent you guys had. But they started from subscription, moved into ad.

[Gustav Satterstrom]

Exactly. But it also shows that they're not religious, they're just very strategic about what they do. I think they always have a good plan. So it's probably the competitor I'm the most impressed with. We're actually not competitors, which is nice because I wouldn't want to be a competitor to them. But this is the company I'm probably the most impressed with.

[Tomer]

What's a product you thought would not work but actually surprised you and did work.

[Gustav Satterstrom]

So there's a famous Spotify feature product that the other co president, Alex Nordstrom came up with that neither I nor Danny thought would work. And it was the three for one campaigns that we do where you get, you know, three months for $1. That is actually a Spotify sort of invention that the entire subscription industry now does. It's very successful, it's been adopted everywhere. And I thought it was a terrible idea. I'm like, what is this discount marketing thing? You know, that's not going to work. It's like a staple of the industry now.

[Tomer]

And the insight was the, like, you pay something so it's not for free.

[Gustav Satterstrom]

Yes, you get a commitment, you start paying, but there's also enough value that you actually feel you're getting something. It's also enough time to actually onboard you on the product. It makes you make that leap from free to premium. But the interesting thing is for a while I thought it was Spotify specific, but I see it absolutely everywhere now. You know, whenever someone asks me like for subscription advice, it's like, yeah, try three for one. And they come back and like, wow.

[Tomer]

And lastly, another universe. You can choose whatever you want to be. What would you want to do?

[Gustav Satterstrom]

That's easy. I don't think I have the aptitude, but I know what I would want to do. If the other universe also can give me a bit more iq, I would definitely want to be a physicist. It's just like the most fascinating thing to me when people ask me for career advice, I tell them I have no idea what's going to happen. But if you study physics, I'm pretty sure that the laws of gravity are going to be the same. You'll be fine there.

[Tomer]

Is it quantum that now qubits or is it.

[Gustav Satterstrom]

Yeah, I'm very fascinated about quantum mechanics and quantum computers and so forth, but it's really like just the fundamental physics. Like back to models. I'm interested in models. Like, what are the best models we have? Well, the most predictive model is quantum mechanics. It doesn't explain everything yet we don't have it. You know, how you get gravity in there. But it's very predictive. It's like the best months that we have. I also think it is good career advice because physicists are so broad. What happened when AI happened? Everyone's looking for AI engineers and the world ran out. Then they start hiring physicists because they're good at math. It's very general, so that's probably what I would do. But I've also met some physicists and they're just above my pay grade, so I don't think I'd make it there. I wouldn't do any big contributions, but I would sit and listen to lectures and just be fascinated by the whole thing.

[Tomer]

You know, one of the things I talk about with AI today is that, you know, it cannot create new knowledge. Right. It can only recreate back. But the moment it starts hypothesizing, you know, back to quantum mechanics, then you can have the perfect body for physicists to kind of work through problems with.

[Gustav Satterstrom]

Exactly. I think that's already happening. You know, we saw that with reinforcement learning already back in go, because reinforcement learning is doing these sort of Montecallo rollouts or search that is hypothesizing statistically. And it came up with these like, what is it, move 37 or something? The God move. So 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. I don't think it's as complicated maybe as we make it. And I think, you know, if you see Alphafold, if you see GNOME finding all these potential materials, that's new knowledge. You know, I think Google estimated that they accelerated material sciences with like 300 years worth of research when they built this known model that just sort of predicts materials that should exist and be stable. So I think we already can create new knowledge. And I think that's going to accelerate and it is going to accelerate physics and make it a very, very exciting field.

[Tomer]

I think on that note, again, we started with Pralac, we ended up physics, which is no surprise talking to you. Gustav, this was wonderful. Thank you so much for joining me today. I really enjoyed this conversation, as I always do, and this one was a treat, a special one.

[Gustav Satterstrom]

Likewise. Tamer, always great speaking to you.

[Leah Smart]

That's it for Season one. Don't forget to rate and review us so other listeners can find us as well. We'll be working hard on getting season two of Building One ready for you soon enough.