Earlier in the present day, CEO Daniel Ek shared the next notice concerning the firm’s organizational modifications with all Spotify staff.
Team,
As we are saying in our Band Manifesto, change is the one fixed. For this motive, I proceed to reiterate that velocity is probably the most defensible technique a enterprise can have. But velocity alone isn’t sufficient. We should additionally function with effectivity. It’s these two issues collectively that can gas our long-term success. With this in thoughts, I’ve some vital information to share in the present day.
While we’ve got made nice progress in enhancing velocity in the previous few years, we haven’t targeted as a lot on enhancing effectivity. We nonetheless spend far an excessive amount of time syncing on barely completely different methods, which slows us down. And in a difficult financial atmosphere, effectivity takes on larger significance. So, in an effort to drive extra effectivity, management prices, and velocity up decision-making, I’ve determined to restructure our group.
To begin, we’re essentially altering how we function on the prime. To do that, I can be centralizing nearly all of our engineering and product work below Gustav as Chief Product Officer and the enterprise areas below Alex as Chief Business Officer. I’m pleased to say that Gustav and Alex, who’ve been with Spotify for a very long time and have executed nice work, can be main these groups as co-presidents, successfully serving to me run the corporate day-to-day. They’ll let you know extra about what this implies within the coming days, however I’m assured that with their management, we’ll be capable to obtain nice issues for Spotify.
Personally, these modifications will enable me to get again to the half the place I do my finest work—spending extra time engaged on the way forward for Spotify—and I can’t wait to share extra about all of the issues we’ve got coming.
As part of this transformation, Dawn Ostroff has determined to depart Spotify. Dawn has made an amazing mark not solely on Spotify, however on the audio business total. Because of her efforts, Spotify grew our podcast content material by 40x, drove vital innovation within the medium and have become the main music and podcast service in lots of markets. These investments in audio supplied new alternatives for music and podcast creators and in addition drove new curiosity within the potential of Spotify’s audio promoting. Thanks to her work, Spotify was in a position to innovate on the adverts format itself and greater than double the income of our promoting enterprise to €1.5 billion. We are enormously grateful for the pivotal position she has performed and want her a lot success. In the close to time period, Dawn will assume the position of senior advisor to assist facilitate this transition. Alex will tackle the accountability for the content material, promoting and licensing work going ahead and also you’ll hear extra from him on that.
The must turn out to be extra environment friendly
That brings me to the second replace. As a part of this effort, and to carry our prices extra in line, we’ve made the tough however essential choice to cut back our variety of staff.
Over the following a number of hours, one-on-one conversations will happen with all impacted staff. And whereas I consider this choice is correct for Spotify, I perceive that with our historic give attention to development, lots of you’ll view this as a shift in our tradition. But as we evolve and develop as a enterprise, so should our manner of working whereas nonetheless staying true to our core values.
To supply some perspective on why we’re making this choice, in 2022, the expansion of Spotify’s OPEX outpaced our income development by 2X. That would have been unsustainable long-term in any local weather, however with a difficult macro atmosphere, it could be much more tough to shut the hole. As you’re nicely conscious, over the previous few months we’ve made a substantial effort to rein-in prices, but it surely merely hasn’t been sufficient. So whereas it’s clear this path is the appropriate one for Spotify, it doesn’t make it any simpler—particularly as we take into consideration the numerous contributions these colleagues have made.
Like many different leaders, I hoped to maintain the robust tailwinds from the pandemic and believed that our broad international enterprise and decrease threat to the impression of a slowdown in adverts would insulate us. In hindsight, I used to be too bold in investing forward of our income development. And because of this, in the present day, we’re decreasing our worker base by about 6% throughout the corporate. I take full accountability for the strikes that bought us right here in the present day.
My focus now could be on making certain that each worker is handled pretty as they depart. While Katarina will present extra element on all the specifics across the methods we’re dedicated to supporting these gifted bandmates, the next will apply to all impacted staff:
- Severance pay: We will begin with a baseline for all staff with the common worker receiving roughly 5 months of severance. This can be calculated primarily based on native discover interval necessities and worker tenure.
- PTO: All accrued and unused trip can be paid out to any departing worker.
- Healthcare: We will proceed to cowl healthcare for workers throughout their severance interval.
- Immigration help: For staff whose immigration standing is related with their employment, HRBPs are working with every impacted particular person in live performance with our mobility crew.
- Career Support: All staff can be eligible for outplacement companies for two months.
What’s Next
In nearly all respects, we achieved what we got down to do in 2022 and our total enterprise continues to carry out properly. But 2023 marks a brand new chapter. It’s my perception that due to these robust choices, we can be higher positioned for the long run. We have bold targets and nothing has modified in our dedication to attaining them.
We’ve come a good distance in our efforts to construct a complete platform for creators of all ranges, however there’s nonetheless a lot to be executed. To actually turn out to be the go-to vacation spot for creators, we have to hold enhancing our instruments and expertise, discover new methods to assist creators interact with their audiences, develop their careers, and monetize their work.
In truth, taking a look at our roadmap, with the modifications we’re making and what we’ve got deliberate to share at our upcoming Stream On occasion, I’m assured that 2023 can be a 12 months the place shoppers and creators will see a gradual stream of improvements not like something we’ve got launched within the final a number of years. I’ll share extra about these thrilling developments within the coming weeks.
Finally, I hope you’ll be a part of me tomorrow for Unplugged.
And once more, for these of you who’re leaving, I thanks for every little thing you’ve executed for Spotify and want you each future success.
– Daniel