Spotify to put off 17% of workers, CEO Daniel Ek says

Group, 

During the last two years, we have put important emphasis on constructing Spotify into a really nice and sustainable enterprise – one designed to realize our objective of being the world’s main audio firm and one that may constantly drive profitability and development into the long run. Whereas we have made worthy strides, as I’ve shared many instances, we nonetheless have work to do. Financial development has slowed dramatically and capital has change into dearer. Spotify just isn’t an exception to those realities.

This brings me to a call that may imply a big step change for our firm. To align Spotify with our future objectives and guarantee we’re right-sized for the challenges forward, I’ve made the tough determination to scale back our complete headcount by roughly 17% throughout the corporate. I acknowledge this can impression various people who’ve made worthwhile contributions. To be blunt, many sensible, proficient and hard-working individuals can be departing us.

For these leaving, we’re a greater firm due to your dedication and arduous work. Thanks for sharing your skills with us. I hope you realize that your contributions have impacted greater than half a billion individuals and hundreds of thousands of artists, creators, and authors all over the world in profound methods. 

I notice that for a lot of, a discount of this dimension will really feel surprisingly massive given the current constructive earnings report and our efficiency. We debated making smaller reductions all through 2024 and 2025. But, contemplating the hole between our monetary objective state and our present operational prices, I made a decision {that a} substantial motion to rightsize our prices was the most suitable choice to perform our targets. Whereas I’m satisfied that is the suitable motion for our firm, I additionally perceive it is going to be extremely painful for our crew. 

To grasp this determination, I believe you will need to assess Spotify with a transparent, goal lens. In 2020 and 2021, we took benefit of the chance introduced by lower-cost capital and invested considerably in crew growth, content material enhancement, advertising and marketing, and new verticals. These investments usually labored, contributing to Spotify’s elevated output and the platform’s strong development this previous yr. Nevertheless, we now discover ourselves in a really completely different setting. And regardless of our efforts to scale back prices this previous yr, our price construction for the place we must be continues to be too massive.

Once we look again on 2022 and 2023, it has really been spectacular what now we have achieved. However, on the similar time, the fact is way of this output was linked to having extra assets. By most metrics, we have been extra productive however much less environment friendly. We must be each. Whereas now we have executed some work to mitigate this problem and change into extra environment friendly in 2023, we nonetheless have a methods to go earlier than we’re each productive and environment friendly. At the moment, we nonetheless have too many individuals devoted to supporting work and even doing work across the work fairly than contributing to alternatives with actual impression. Extra individuals must be targeted on delivering for our key stakeholders – creators and customers. In two phrases, now we have to change into relentlessly resourceful.

I do know you’ll all be troubled to listen to the subsequent steps about how this course of will work. In case you are an impacted worker, you’ll obtain a calendar invite throughout the subsequent two hours from HR for a one-on-one dialog. These conferences will happen earlier than the tip of the day on Tuesday, and whereas Katarina will present extra element on all the specifics, please know the next will apply to all of those bandmates:

• Severance pay: We’ll begin with a baseline for all workers, with the typical worker receiving roughly 5 months of severance. This can be calculated based mostly on native discover interval necessities and worker tenure.
• PTO: All accrued and unused trip can be paid out to any departing worker.
• Healthcare: We’ll proceed to cowl healthcare for workers throughout their severance interval. 
• Immigration assist: For workers whose immigration standing is related with their employment, HRBPs are working with every impacted particular person in live performance with our mobility crew. 
• Profession Help:  All workers can be eligible for outplacement providers for 2 months.

For the crew that may stay at Spotify, I do know this determination can be tough for a lot of. Please know we’re targeted on treating our impacted colleagues with the respect and compassion they deserve.

Wanting Forward

The choice to scale back our crew dimension is a tough however essential step in direction of forging a stronger, extra environment friendly Spotify for the long run. Nevertheless it additionally highlights that we have to change how we work. In Spotify’s early days, our success was arduous gained. We had restricted assets and needed to take advantage of each asset. Our ingenuity and creativity have been what set us aside. As we have grown, we have moved too far-off from this core precept of resourcefulness. 

The Spotify of tomorrow have to be outlined by being relentlessly resourceful within the methods we function, innovate, and sort out issues. This sort of resourcefulness transcends the essential definition – it is about making ready for our subsequent part, the place being lean isn’t just an possibility however a necessity.

Embracing this leaner construction may also permit us to speculate our income extra strategically again into the enterprise. With a extra focused method, each funding and initiative turns into extra impactful, providing larger alternatives for fulfillment. This isn’t a step again; it is a strategic reorientation. We’re nonetheless dedicated to investing and making daring bets, however now, with a extra targeted method, making certain Spotify’s continued profitability and skill to innovate. Lean does not imply small ambitions; it means smarter, extra impactful paths to realize them. 

At the moment is a tough however necessary day for the corporate. To be very clear, my dedication to our mission and perception in our means to realize it has by no means been stronger. I hope you’ll be a part of me on Wednesday for Unplugged to debate how we transfer ahead collectively. A discount of this dimension will make it vital to vary the best way we work, and we are going to share far more about what this can imply within the days and weeks forward. Simply as 2023 marked a brand new chapter for us, so will 2024 as we construct an excellent stronger Spotify. 

– Daniel