"Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.”
“Many smart people will have to leave us”
This is how Spotify CEO and founder Daniel Ek begins the blog post, and he unsurprisingly brings bad news and what he refers to as a big step for the company: they have to cut the number of positions by 17 percent across the company. The service will have almost 10,000 employees.
I realize that this will affect a number of people who have made valuable contributions. To put it bluntly, many smart, talented and hard-working people will leave us.
Daniel Ek, CEO, Spotify
Spotify is making bigger cuts now than smaller cuts next year
Ek admits that the cuts will be considered "surprisingly large", not least because the company has recently delivered positive financial results. According to the boss, the company internally discussed making smaller cuts in 2024 and in 2025 – Ek writes: “I decided that a significant action to adjust our costs was the best option to achieve our goals. While I am convinced that this is the right course of action for our company, I also understand that it will be incredibly painful for our team.”
Ek explains that in 2020 and 2021 the company managed to raise cheap capital and that they invested a lot in new hires, more content and marketing. In the main, this worked, explains Ek, but that the situation is now "completely different" and that they have not been able to cut costs this year as much as they wanted.
While he praises the teams, Ek believes that there are too many employees in support functions, and too few people who contribute to the actual work:
“While we have done some work to mitigate this challenge and become more efficient by 2023, we still have a way to go before we are both productive and efficient. Today, we still have too many people dedicating themselves to supporting work and even doing work around work rather than contributing to opportunities with real impact. More people need to be focused on delivering for our most important stakeholders – creators and consumers. In two words: we must become relentlessly resourceful.”