← David Senra
David Senra
Gustav Söderström, Spotify
01:13:59
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.
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- [00:03]
David Senra
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?
- [00:17]
Gustav Söderström
Daniel's very big on preparing. You know Daniel, he's not very rationist 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 then month to month. So when it actually came to sort of taking over CEOs, we already knew that part 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. All the stuff that was Daniel's responsibility alone. 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'll work 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 already from the start. I remember when I joined Spotify back in 2008, 2009 and then we were going to go to the US and Daniel knew suck at Meta, then Facebook and we wanted to do this pretty deep integration with him. And I was new on the job at Spotify and then it just said he just go there and talk to Zuck and Net and Facebook at the time and set this up. I'm like, that's a lot of trust for someone who's new. He's always been super delegating. And that is also I think why I've stuck around for almost 18 years. Because you get so much responsibility, you get a new job almost every year. And so this co CEO or co president partnership that he started three years ago was one of those journeys where, where 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.
- [02:27]
David Senra
Say more about that.
- [02:28]
Gustav Söderström
When it comes to organization models in themselves, this is not something I came up with, I think Steven Sinowski has said this a bunch. You just can't win. There's no organizational model. There are many and they all work. Amazon is organized in a certain way. Trillion dollar company. Apple in another way also trillion. Elon does his thing, also produces trillion doll. 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 he's so successful in this type of business. Because if you think about what Spotify is, yes, 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 first music labels and then book publishers and 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 it certainly wasn't through alpha male force. It was through not being threatening, being very logical. He's very humble. But I think maybe most Americans specifically can mistake humbleness for weakness. It's the opposite. He's insanely tenacious, insanely tenacious, 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 that I choose to do differently is Daniel loves to talk in a star pattern, one on one with many people. So he would talk to me about something separate, meeting them with Alex Norstrom about something, the same thing, but from the business angle. And then maybe with PR and finance, he just talked in star pattern. He doesn't like to have meetings, everyone in the room. And that can be frustrating at times. It's like it says something to me, something to Alex. And then Alex and I meet him, this is what we're going to do. And Alex is like, not quite. That's not what he said to me. And so then we go back and we call him out on it, but he likes that store 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 A2 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 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 swimming. We kind of swim together, which is much harder to do than competitive swimming. And when you mess it up, it is ugly to look at, but when you do it well, it's a beautiful thing to look at. So we decided to. Instead of having the usual sort of, 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 going to have our own leadership meetings. We have a single one with all of our SVPs. So we have a single meeting every Tuesday called e team for three hours with all the SVPs of all the internal functions like marketing, ads, subs, but also all the product and technology functions in the same meeting.
- [06:23]
David Senra
How many people are in this meeting?
- [06:24]
Gustav Söderström
It's about 14 people.
- [06:26]
David Senra
Okay.
- [06:27]
Gustav Söderström
What happens is we meet every week to talk through the entire company. So we talk through machine learning problems that are blocking on someone, experience problems where 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 E Team meeting was that previously actually under Daniel's 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 the E Team meeting and we said, you're never allowed to say let's take it offline again. 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 14, 15 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&Ls and balance sheets and we talk about machine learning problems in there. So you have now 14 people that have the full CEO perspective.
- [07:52]
David Senra
Yeah, I was going to 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. So it's like it is kind of relevant.
- [08:11]
Gustav Söderström
It's just a question of timescale. So this thing about the person in experience understanding a lot about the ad stack, it won't seem that relevant right then. But then 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, their 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 you should not sin in a meeting. I hear people saying the second you're in a meeting, you feel it's not fully relevant. Leave.
- [08:50]
David Senra
Elon says this.
- [08:51]
Gustav Söderström
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.
- [09:25]
David Senra
Yeah.
- [09:26]
Gustav Söderström
And because we have a single experience strategy, our strategy is literally a super app. We try to build first music, then podcast and 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 would 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 organization models, you have, you know, you have functional orgs where as the benefit of clear ownership but supposedly hard to cooperate when you want two functions to work together. You have the matrix org, which has the benefit that it optimizes for the use case, but it's unclear even who you're reporting to. Then you have the division based org, like a riot games. 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. So that's what.
- [10:44]
David Senra
Tell me how you think Apple's run then.
- [10:46]
Gustav Söderström
What I think is interesting about Apple is when you look at it from the outside, it's a functional org, right? And functional orgs. I used to work at Yahoo. For a while.
- [10:55]
David Senra
At where?
- [10:55]
Gustav Söderström
At Yahoo. Yeah, 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 SVP, they fought each other to the death and try 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 always 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 Spotify. They have very long tenure at the senior leadership, 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, and then 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 without the tenure. Without the tenure is the key. 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 work. But if you don't have trust in the leadership, I think functional works just dissolve into politics.
- [12:26]
David Senra
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- [12:26]
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- [12:34]
David Senra
And one of the main themes in
- [12:35]
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- [13:21]
David Senra
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- [13:22]
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- [13:31]
David Senra
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, 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 entrepreneur history every time we, we, 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, Oracle is 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 a decade and a half.
- [14:15]
Gustav Söderström
Yeah.
- [14:16]
David Senra
And you take Elon Musk, who again Larry, mentored Elon, says that, you know, one of the few people he goes to for advice, actually Larry Ellison, who says the opposite, he's like, I want fresh blood. I want to keep churning through people as as possible. It's like, oh, it's like Oracle is super successful, Elon.
- [14:29]
Gustav Söderström
Super successful. Exactly. I think this is the whole thing. 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 try to read a lot about organizational principles and models and I think at the time I read a lot of Stephen Sinovsky and 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, well, if we flipped to a matrix org, we'd be great at this. They flip now, they're great at this and terrible at the old thing. You just have to choose dimensions. So what we did at Spotify was we said 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 figure out what's important and then optimize for that and just accept that you're going to be average at the others. One thing we chose to optimize for was the single experience. We're really good at building a single experience that actually does a billion different things. And most people don't even realize that. On the back end it's even more complicated because you have a music business that is a royalty pool. 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 back end, it's insanely complicated.
- [16:10]
David Senra
I'm a huge, obviously I love to read. I read books professionally for 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 back end? He was explaining to me, like, the complexity in the back end too.
- [16:32]
Gustav Söderström
Yeah, it's a very complicated model on the back end.
- [16:34]
David Senra
Especially because you guys are designing this super app, though.
- [16:36]
Gustav Söderström
Exactly. If it was three different apps, you could have, again, you could have had like different teams running in parallel.
- [16:42]
David Senra
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 14 months. Because I, I think of like the best founders usually can explain just a handful of words like what, what their life's mission is. So like we 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 25. He talked about insanely great products when he was dying. Insanely great products. You want to make insanely great products, then you come with me. But 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. I feel your organizing principles. Time well spent.
- [17:28]
Gustav Söderström
If you look at what we focus on and what we optimize for, you have a strategic lens, then you have sort of 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. When the iPhone came out, it felt like distribution was free. People went to the App Store every day and looked for 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. From a strategic point of view. When we were going into podcasts, which was the first second product we did, and we looked at that and said, okay, 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, or is the biggest problem actually getting distribution? And then we looked at in the App Store. And I think there was maybe probably 10, but at least seven really good podcast apps in there, like Overcast and all of these apps. And. And when we looked at their usage, I think Apple Podcast was still like 98 and a half percent. So, like, the problem wasn't that there wasn't a good enough podcast product. The problem was that they didn't get any 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 benefits 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 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, but we do prioritize the consumer experience.
- [19:24]
David Senra
You're 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 lunch. It was 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?
- [19:42]
Gustav Söderström
I felt great about losing to Pia. He's an awesome driver. He was very well deserved.
- [19:46]
David Senra
He's one of my favorite people. I do anything for Prima Materia. I love the entire team there. But the com. This is where I kind of understood your philosophy because we had. I 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 that you can put into Spotify right now that would have people use the app more, would have more retention, maybe bring more users, but it's not good for them.
- [20:36]
Gustav Söderström
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 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 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. 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 for Europe, etc. Rather than just more money. 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 these. You know, the pattern on the Internet already back then was shorter and shorter form content, shorter and shorter attention spans, and it looked like the world was lost, like this is just going to go to hell. But then you looked at podcasts and you said 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 retort and so forth. We said that we think this is actually good for the world. We didn't know how big it was going to be, so we had to take a chance on that. But we thought 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. In Sweden, audiobooks is already a very big thing. We had quite high conviction over the market. So we've kept going into these things that are considered by ourselves and users, time well spent. But we never fully articulated that as a strategy externally. We've only recently started talking about it.
- [23:03]
David Senra
Did you articulate it as a strategy internally, though?
- [23:05]
Gustav Söderström
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. I think time will stand. It's like, that's a low bar. But we've said it again and again. 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 servers 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 Regret comes from. We asked the question, like, how do you feel about the time you spent using Spotify? All of them. 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 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, people regretted almost 60% of the time they spent or more. And these were young people. 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 mistaken in thinking that 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. And so when we look at something, we're talking about fitness now, for example. Why? Because we think very few people regret doing a workout or.
- [25:22]
David Senra
What do you mean you're talking about fitness?
- [25:23]
Gustav Söderström
We just announced some partnerships with a bunch of companies and we're investing in more. You know, three quarters of almost 70% of people on Spotify work out with Spotify. So we're investing more into fitness, into becoming a even better fitness app. So this is one area kind of like, you know, music, podcast, books. We're just investing more in it.
- [25:44]
David Senra
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.
- [25:50]
Gustav Söderström
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 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 running playlist for like an 8 minute mile and I want it to be in my taste, but I want it to be on the downbeat, either 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 we want to be able to do is to first calculate like an 8 minute mile. What does that mean? Well, roughly, if your average Height may be 165 steps per minute or something like that. Okay, now we got to go and find music. And in either 160 or half of that 80, so it's either in every down step or every other down step, you're going to find some music there, but not a lot. So now you want to 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. And then you actually want to overlay commentary on top of it saying like, now you're going to go into the interval part and now you're going to 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 time.
- [27:22]
David Senra
Yeah, no one spends an hour in the gym or an hour in running.
- [27:24]
Gustav Söderström
Now I come out and feel like, oh my God, I got 70% of that. 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 got to figure out what you actually want to spend your life on, Right? And I want to spend my life on doing something that I feel good about personally and that I kind of feel proud of.
- [27:50]
David Senra
You feel good, but, you know, like, the way a human's going to feel good is if what they're doing is actually in service of other people. This is. I know you're into philosophy. This is a humans for yourself thousands of years ago. This is not a new idea. It's something that was true thousands of years ago. It's true today. It'll be true now. Everyone discovers me and Milan, who's sitting over there. I was talking to. He works at Spotify. Right before you came, I was talking to him about this. Cause he's like, you have 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 Founders podcast is my life's work. And the way I feel 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 gonna make fucking podcasts sloppy. 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 great things. And then the point was just like that, knowing that you can do it too, that is good for the world. I feel good doing that. And it's not like a. Like a. I need to make certain it's not tied to anything else other than, like, it's not like, oh, I wouldn't do this if I. Unless I could 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 to the world.
- [29:02]
Gustav Söderström
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 it took me. And some people never.
- [29:11]
David Senra
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 who did something amazing for ideas and insights that we can push down to the next generation of entrepreneurs. And having conversations like this where we talked before, I was like, everybody's like, oh, you know, you asked this perfect question for your audience. Like, I'm having these conversations selfishly, because I just know there's 10 million Davids listening to this that have the same interest, that want to know what is in. You said you're 50, you've been working at. You sold your first startup, then 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?
- [29:54]
Gustav Söderström
It's a different path. It's a very different path.
- [29:56]
David Senra
I want to talk about AI because.
- [29:58]
Gustav Söderström
Can I say something 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.
- [30:21]
David Senra
I have an example of this.
- [30:22]
Gustav Söderström
Yeah.
- [30:22]
David Senra
That I want to talk about.
- [30:23]
Gustav Söderström
Yeah.
- [30:24]
David Senra
So we get obviously all these pitches and don't forget that. Hopefully you don't forget what you're thinking.
- [30:29]
Gustav Söderström
No, no.
- [30:29]
David Senra
But, like, listen, no disrespect, one of my favorite movies is the Godfather. And one of my favorite scenes is where Slotso 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. 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 describe themselves. So, like, we're building a maximum truth seeking machine, and I pull up on my phone, I go to. I'm not going to say the company I type it in and I go, dude, the first thing I see on your website is who's going to 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 that you're building maximum truth seeking machines.
- [31:27]
Gustav Söderström
Yeah, but that's my point. I think almost everyone has to convince themselves of that. So to kind of call bullshit on us then. 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, all podcasts are turning into video podcasts. And so we follow that.
- [31:47]
David Senra
The only reason I do videos because you guys harassed me.
- [31:49]
Gustav Söderström
Exactly. So they are very popular. But there was a problem which was that a lot of people, specifically parents, who felt that they had this time well spent now they started seeing these videos in there that they didn't want to see there. So they felt that their time well spent was going down. And then we are faced with the decision. Video is good for engagement, but these people feel that it's not good for their time well spent. So, so we made the decision, sort of the anti engagement decision, to allow people, anyone to turn off video if they want to and just listen, not just for the kids, but for themselves. And that may mean that we take some engagement hit on that person. So if you're going to have these principles, you kind of have to live with them and they're going to have consequences. Now we still think this is very good business because most of our revenue is from subscribers paying for their experience, 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 going to pay for your engagement or time spent. You're going to 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 going to say, I want to pay for this. So I think when you pay with your own money, that is very, very well aligned with optimizing for what is good for the user. Whereas if in a pure advertising based model, your incentives are clearly to maximize time spent at any cost. So I think it's a luxury for us because most of our revenue come from subscription to not have that pressure. Maybe we lucked into that business model, maybe with some undelivered.
- [33:27]
David Senra
That's what I was going to ask you. There's no way you could have predicted that when you chose a subscription model, but it had to be subscription model based on your very first product, which is music.
- [33:34]
Gustav Söderström
Yes. So now that we see it, we're doubling down on it, and I think it's going to 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, by the way, leads us into AI, which everyone is talking about. And 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 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 news technology. 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 over the algorithm. 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 LLMs. And based on all your listening, this is who we think you are musically. This is the podcast we think 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 biographies. You know, I want to get back into classical music, which is something I've tried, but because I listen to mostly edm, I got mostly edm. So now I can go in and say, 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. It used to be a small population of about 1 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 user research teams that sat with 10 users, trying to understand deeply what they felt and what they did. Then we took those 10 users and tried to apply that 761 million users. What if you could do that deep user research with every single user, all 761 million of them, all the time, because you talk to them. And they talk back in English, high fidelity. They. And the experience just adapts to what they want. So my mission now is to sort of give back control to consumers over these algorithms. And it's contrarian, but I think it's the right bet.
- [35:58]
David Senra
People like you and I will probably want more control. But, like, you have 700 million users, like, what percentage of them do you actually think? I feel like people just want you to do it for them.
- [36:08]
Gustav Söderström
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 parallel. 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 liked songs, maybe two playlists, you know, some indie favorites. Some people have like hundreds of playlists. So sort of the story of Spotify and why we got good at personalization and recommendation in the first place was that we had like, I don't know, 10 billion user playlist, 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. It was a few used, 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 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 that, no, that's wrong, that's bad, you 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 actually probably want
- [37:25]
David Senra
the same thing and they can benefit
- [37:26]
Gustav Söderström
from the other one, so they benefit from the others.
- [37:28]
David Senra
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.
- [37:32]
Gustav Söderström
I don't think they're going to build it all.
- [37:34]
David Senra
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 or 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, 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 build anything.
- [37:57]
Gustav Söderström
There is this famous 1, 9, 90, right? 1% creates, 9% curates and 90% consumes. Okay, right. Something like that. And I think that's largely true. That's what I mean 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 90% that consumes and then allows you
- [38:16]
David Senra
to do it for them, which I think is what most humans want.
- [38:19]
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- [39:31]
David Senra
There's some context I think people need here. So the fourth most listened to on my Spotify wrap for podcasts was Spotify Product Story, which you narrated that came out in 2021, 23, something like that.
- [39:44]
Gustav Söderström
Over a couple of years came out
- [39:45]
David Senra
there long time ago and it tells the history which I think more company. I talk to founders about this all the time because you essentially 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. 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 people have been talking about AI for 60 years. But even back then, way less people are talking about it now. Tell me the difference of how you view AI back then in 2021, 2022 to Spotify to today.
- [40:23]
Gustav Söderström
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 were neural networks back then, but you couldn't do anything. Computers were not powerful enough. And then I went into what was called IT 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 Erik Bernardson, who at the time, this is 2009, was doing machine learning, something called collaborative filtering, on what was the world's largest Hadoop clusters. And I'm like, this is super cool, 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 so pilled already on the idea of how do we actually work as humans from a philosophical point of view? I didn't have a good answer. No one did. But I had this idea that maybe it is, maybe it is computational because it was the model of the artificial neuron. But it was hard to believe in the 90s with these 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 LSTM 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, there was a paper called Attention Is all youl Need. 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 happening. So then we started investing quite aggressively towards this. I think if you extrapolate it out, if you really believe in that exponential curve, which I've tested a few times, then eventually computers would be able to start talking to you and reason and you would be able to talk to computers. We started preparing for that quite early. We bought this company called Synantic 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. We bought this company producing voice very, very cheaply with different technology, Even before the LLMs were smart enough to produce the script for that voice. Because we just bet on intercepting that curve instead of waiting for it and then than 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 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 the philosophical side of AI. Sort of what it means to be a human.
- [43:55]
David Senra
Say more about that.
- [43:57]
Gustav Söderström
Well, I think you go through life and I was thinking a lot as a kid about things and there were a few problems that really dumbfounded me when I learned about them. One was this notion. I don't remember exactly when, but someone told me all the atoms in your body, or 99% of them, get switched out every seven years. I'm like, yeah. Wait, what? Every seven years? What do you mean? So yeah, every seven years they're all switched out, but that means I'm not the same person. So if I thought I was my atoms, I thought I was my body. 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? 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. Your atoms may have been. First of all, most atoms never get destroyed or created. They're largely the same. You may have a bunch of Napoleon atoms in your body or something, and when you die, it's going to go to someone else. It's just the construction of those atoms that is you. For a very brief time, 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. So then I'm like, okay, so it's a DNA, like DNA is the blueprint and like you arrange the 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 going to get an overdeveloped musical center. If you're good at languages, you're language center developers, or the most famous example are cabbies in the uk, they have to learn all of London 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. You literally are your thoughts literally. Not as an analogy. It's the only thing that is constant is the processing information pattern. The atoms that do the processing get switched out. Now I'm like, okay, shit, I'm information processing. That was a mind fuck. Then I got comfortable with it because I'm like, well, now I can 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 stuff, some other atoms, et cetera. 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 if you, Ray Kurzweil, you say, well, now transfer them to computer and you get to live forever because you are your thoughts. 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's what got me into AI in the first place. But then at university Almost two decades ago. 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 or crawled and it was unimpressive. And you're like, no, that can't be it.
- [47:28]
David Senra
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. You guys are the second largest subscriber base in the world behind Netflix, am I correct?
- [47:40]
Gustav Söderström
Yes.
- [47:40]
David Senra
And you have this huge data set. Now the technology can catch up with the thing you've been taking about since you're in college.
- [47:46]
Gustav Söderström
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 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.
- [48:22]
David Senra
I don't want to skip over that because I truly believe we've had enough private conversations. And I know you talk 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. They're 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 it's 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. I want the people building the technology that we all use on the scale that we all use it at to like, build tool tools. And that's all technology is, that enhance humanity instead 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. Yeah, 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 podcast. And you should be listening to David Sundman founders. Of course, at the same time, when these people are like destroying their brains in 15, 22nd, 5 second, 1 second, scrolling. And it reminded me when you said that earlier, I was like, oh, you go back and read Jeff Bezos 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.
- [49:46]
Gustav Söderström
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 whisper sync where it silently just updates in the background because they bought a certain amount of mobile data. It's a great product.
- [50:03]
David Senra
Explain the business model innovation on the Kindle.
- [50:06]
Gustav Söderström
Well, normally you would have to pay for data. 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. There was good business model innovation on top of all the product innovation, which is 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, but when things really change is when you take a new technology and marry it with a new, often contrarian business model. This is the Spotify story of access versus ownership, for example. Which is by the way, why I would also love Steve Jobs to be around, but also not because he tried to kill us many times.
- [51:07]
David Senra
It's funny, we had this conversation. So we had Jimmy Iovine on the show earlier and Jimmy was in top three people I wanted to meet of all time because I love Defiant Ones, the documentary of him and Dr. Dre. 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 live close to each other and he swears up and down he's like I was going to kill him. It's just like Apple held me back. I was like, jimmy, there's just no way. It'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 or something like that. And they had. If Spotify, like, there was. They only had one thing they had. I always love this idea. It's like if you had to pick between. This is Josh Kushner's quote where it's like, if you pick the person that's like the most experienced or the smartest or wants the most, you always bet on the person that wants it 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. 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.
- [52:09]
Gustav Söderström
A lot of people were very, very scared at the time because he was a legend. And he was a legend.
- [52:13]
David Senra
He still is. He's a killer. He's a, I mean, dude to this day, even though he's retired. I mean, me and Daniel talk about this all the time because it's just. It's just hilarious because they're obviously close friends too. And yeah, he's formidable individual, but again, I think being onto a bigger company and again, like, it was just very fascinating.
- [52:33]
Gustav Söderström
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 look up to the most, Steve Jobs, says that he's coming after you. But not only that goes and buys Beats music brings in Dr. Dre and Jimmy Iveen. It's like, we're going to kill you. That's what they literally said in their internal meetings. They gave us six months. Those were hard times. We worked very hard, but it worked out. There have been a few of those moments.
- [53:04]
David Senra
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. Starting out sweeping the floor in the record plant and then becoming an engineer and then a producer and then of the most successful creators of a new record company and then building products like the guy. The reason I recommend people studying his stories because 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.
- [53:38]
Gustav Söderström
Yeah, you don't get that lucky that many times. Yeah, for sure.
- [53:41]
David Senra
So it had to be terrifying from your end. But the one thing I think of this great maximum from Game of Thrones which I'm obsessed with and says those on the margins often come to control the center. 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.
- [54:00]
Gustav Söderström
There were some good hard reasons for why we didn't get crushed on.
- [54:05]
David Senra
What do you think they were?
- [54:06]
Gustav Söderström
Well, I think the content side of the business was incredibly worried because if it was only about content and only about musicians, you had hip hop which 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 counter positions to Apple deliberately. One was freemium. We believe that Apple would if they even did a product, free product, they would struggle to do advertising. They tried the 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 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 Ubiquiti. We bet that they were going to prefer their own products and never get be good on a Samsung TV or an Android phone. So these were our three bets. Freemium, personalization and ubiquiti. And I have to say they panned out really well. They're still struggling on. They had a free tier for a while at radio. They pulled it back. Ubiquiti. I think they still struggle to be good on non Apple hardware and personalization. I want to say we're better. So there were real strategic reasons and still are for why I think we held out. But it was also to your point, for us this was not optional. We either died or we did this
- [55:43]
David Senra
back against the wall. What do you mean?
- [55:44]
Gustav Söderström
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.
- [55:53]
David Senra
I found one of my all time favorite quotes when I was reading the book 0 to 1.
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David Senra
So you, you want to get started
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- [57:06]
David Senra
dot Everybody's going to 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 is very unusual. We talked about like the kind of the 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?
- [57:31]
Gustav Söderström
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 club 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 documents I have and things I want to prep for and then what I'm interested in based across my different services, all my interests. Spotify knows my interest pretty well from all my listening goes out and looks at what's happening in the world and then it gives me 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 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 podcast through this, then it's filtered to the people that I'm interested in that I follow on different social media and so forth. 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 like, 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.
- [59:25]
David Senra
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're thinking, he. He is truly differentiated. 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 figure it out. And then everybody's like, oh, but his market, his. His. You know, his stock's down 80% or something like that. So I just went to ChatGPT and I was like, how many times did Steve jobs suffer a 75% 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 see what happens over the next decade, you know, but the fact is, like, he's got a lot of very, very interesting ideas that no one else has. And he invented a pattern on social media that a billion people use every.
- [60:07]
Gustav Söderström
Invented several of them, right? The disappearing image stories, like, all.
- [60:11]
David Senra
Do you think that guy's not interesting to hear talk for an hour or.
- [60:13]
Gustav Söderström
You're fucking crazy, of course. No, I like him. Maybe it's because I'm a product guy, he's a design guy. So close. But I like him for sure.
- [60:21]
David Senra
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 turn this into an audio. You're essentially taking text and turning 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. Maybe I heard you talk about 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, it's not going to raise my cortisol levels or make me sad.
- [60:55]
Gustav Söderström
So I literally ask my agent, filter for rage, bait filter 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 I think is most people kind of know what they want, but you get captured in the moment. It's like 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 the taste profile and behind these agents. I'm not better than anyone else. I get captured all the time. 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. These supposedly fully normal, smart people, they waste their entire lives and go to jail.
- [61:48]
David Senra
They shoot into cars and kill kids.
- [61:50]
Gustav Söderström
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 going to happen. So that, like, what do you call it ahead of time? Premeditated.
- [62:08]
David Senra
Yeah, premeditated.
- [62:09]
Gustav Söderström
Premeditated media.
- [62:10]
David Senra
Yeah.
- [62:11]
Gustav Söderström
Is something 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 that need is not going to get less. I think it's going to get. It's not going to get smaller, it's going to get bigger. So I happen to think it's also good business.
- [62:28]
David Senra
Something that just popped to mind when you were speaking just now. I'm very curious, like, who influenced. So we're talking about 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 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 because it's like, it's just making all these young kids, like, comparison is a 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. People. It's like, they. Who tells you the truth is a question I always ask because it's like, very few. A lot of them kind of have, like, this almost like cloud of sycophants around them. They're, like, filtering their knowledge that'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 and you're like, hey, you're running product. And you're like, not good at it. And 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 know, and then he goes. Then he thought about it. He goes, oh, he's right. It's like, he just did me a service.
- [63:40]
Gustav Söderström
Very few people are that strong, can take that kind of. But that's why he's successful.
- [63:44]
David Senra
Yes.
- [63:45]
Gustav Söderström
Right.
- [63:45]
David Senra
And so I think this is really important. So who does that for you?
- [63:48]
Gustav Söderström
So I do a version of the same thing. This is back to the thing of long tenure. So I have people who are long tenured but, like, huge disagreements with them, and they've realized that when they talk back to me or they get upset with me, there are no consequences. But 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 stand up to you, because usually there are consequences. You just get fired.
- [64:20]
David Senra
Oh, yeah. But people don't know you're a brown belt.
- [64:23]
Gustav Söderström
No, no, no. I'm a blue belt.
- [64:24]
David Senra
Oh, blue belt and jiu jitsu. So you could also choke them.
- [64:27]
Gustav Söderström
There are many people who could choke me out. So that's a risky path to take. It's the tenure. I have a bunch of people around me who I think and hope feel comfortable saying, no, you're wrong. I think you're just not understanding this. And I think so, because they do. And they've learned that I can't always control myself. I'm very passionate about something. I'm like, no, you're wrong. 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 one on ones or small groups. Sometimes there'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. You know, so you have to build that trust over time. So I have a version of the. Of the same. Okay.
- [65:17]
David Senra
So 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. Like, 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, 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 nothing has to even come out. It's like they're. They're. What's the thing from Star Trek with the Vulcan mind meld?
- [65:58]
Gustav Söderström
Exactly.
- [65:59]
David Senra
That's what happens.
- [66:00]
Gustav Söderström
He.
- [66:00]
David Senra
And he said the greatest thing he Goes, you don't get that in 100 hours.
- [66:03]
Gustav Söderström
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 this 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. So 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.
- [66:34]
David Senra
The group of old people you have to be very, very careful with. Think about 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 Cavill, 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, reject these new ideas.
- [67:00]
Gustav Söderström
So it's back to like, you optimize for some things, but then you have to mitigate for the other things. 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.
- [67:18]
David Senra
It took Gustav 18 years to get to CEO.
- [67:20]
Gustav Söderström
Yeah, took 18 years to get CEO. Wow. It's a long time. Finally made it. But. But it is, it is the same principle.
- [67:28]
David Senra
Well, how do you get new talent then? Like, what are you guys doing literally at Spotify? Because I know you, you have the same idea. You guys have the same idea that Toby from Shopify talked to me about and my friend Kareem from Ramp dude,
- [67:40]
Gustav Söderström
which was another great episode, by the way, that told me. Episode.
- [67:42]
David Senra
Yeah, he's. He's the best. But that you guys are fine hiring for Spikes.
- [67:48]
Gustav Söderström
Yeah.
- [67:48]
David Senra
So how do you like today? How are you getting in your huge platform business around for. I think it's just celebrated 20 year anniversary, right?
- [67:55]
Gustav Söderström
Yes, exactly.
- [67:56]
David Senra
How are you getting new young talent then? How do you think about that?
- [68:00]
Gustav Söderström
It's, it's a couple of things. One is you get junior talent and then we have this rising stars program. We literally identify, ask managers to identify like 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 where they go out into the different markets like India, us, 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 MBA program where you learn business, technology, product and you build relationships across the org. So now these people come out 12 months later, 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 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 the more senior level. So if you look at when AI started happening or what 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 of a company called the Econest in Boston just to get very close to mit and then we had a bunch of talents in that field and establish ourselves. So sometimes you have to do acquisitions and just get when it's a completely new skill. Something like if you need to get big in crypto quickly, you can wait for years for the organization to understand crypto 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. On average they were slightly too old to see that. Probably people in their org knew all about it, were all over, was too late to see it. They should have just gotten someone at a more senior level sooner. So sometimes you have to mitigate for the drawbacks of long tenure as well.
- [70:15]
David Senra
What's the thing that keeps you up at night? What do you think the weakest spot for Spotify is right now?
- [70:19]
Gustav Söderström
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 microwaves. 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. 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. We realized that we built a business model around it that became very disruptive to the, 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 had such low latency that you could stream it. If you try to stream a song over cellular back in 2008, it wouldn't even start. It would 20 seconds to start and it would chop. So 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. So if I was an analyst and I tried to predict the world between 2015 to 2025, those 10 years, just 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 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 borders of extrapolation or in the macro change? I think we're one of these where everything changes. 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.
- [72:40]
David Senra
Periods of change.
- [72:40]
Gustav Söderström
Periods of change. When things are stable, market share, stay 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 the right bets to bet on user control and these things, 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. They're going to be the Ubers and Airbnbs of this era, and maybe they are open, anthropic, but maybe not. Maybe it hasn't even happened yet.
- [73:33]
David Senra
That's a perfect place to end. Gustav, thanks for doing this, man. Always good to talk to you.
- [73:36]
Gustav Söderström
Thank you, man.
- [73:36]
David Senra
Appreciate it, man. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening
- [73:40]
Sponsor/Ad Voice
and leave a review.
- [73:42]
David Senra
And make sure you listen to my other podcast founders.
- [73:44]
Sponsor/Ad Voice
For almost a decade, I've obsessively read
- [73:46]
David Senra
over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work.
- [73:52]
Sponsor/Ad Voice
Most of the guests you hear on
- [73:53]
David Senra
this show first found me through founders.