Spotify wants to be the Nike of audio. Here's how CEO Daniel Ek plans to do it.
- Spotify's CEO, Daniel Ek, wants his company to be the Nike of audio.
- Speaking on the podcast "Invest like the best," hosted by Patrick O'Shaughnessy, Ek says that the best way to achieve that is with experimentation.
- Ek said to be the major player in the market, a company needs to control roughly 20% of it.
- He said that currently, Nike does that.
- Ek added that the key is to create a culture of experimentation to drive growth, and failure not being a bad thing.
- View Business Insider's homepage for more stories.
Spotify's CEO, Daniel Ek, wants his company to be the Nike of audio. The best way to achieve that: experimentation.
Speaking on the podcast "Invest like the best," hosted by Patrick O'Shaughnessy, Ek talked about how to grow and expand businesses.Ek talked about building scale and said that to be the major player in the market then you would need to control roughly 20% of it.
The Swede used the example of Nike being dominant in sportswear:
"If we look at a company like Nike, and their focus market is sportswear and sports apparel, then they may be the player that is at scale, where having your own stores may work," he said. "Last time I checked, they were about a third of that market."
But Ek said that for Spotify to do that, he would need to conquer audio - to operate at such scale, Spotify would need roughly a billion users.
"Our market is audio, and that's going to be at least a billion, two or three billion people around the world that would want to consume some sort of content like that on a daily or weekly basis," Ek said to O'Shaughnessy.
"To win that market, we would have to be at least a third of that market. Somewhere between 10 or 15 times where we are now of opportunity left. So we're still very early days on this journey," Ek added.Spotify's market cap is about $27 billion and, based on its latest financial report, it has 113 million subscribers and 248 million monthly active users. Ek himself is worth $2.4 billion, according to Forbes.
But for Ek, the best way to expand the 248 million figure to a billion is through experimentation.
"You're going to have to experiment a lot more. Spotify today is a company of 5000 people and earning many billions of dollars every year, and if we're going to keep that growth rate then we're going to have to find a billion or two billion of dollars every year and everyone knows that's very hard from a standing start."
He wants a culture of experimentation to drive innovation: "You can't have a culture of experimentation if you don't allow for failures to happen." Ek talked about how Spotify uses "hack weeks" to develop new ideas to push the app forward.
Ek also used his own example of the Spotify Discover feature, something that did not exist not long ago. He said that developing the discover feature means that more people listen to different content more often and that, in turn, helps to grow the business as artists put their music on the platform to which will be suggested to people.
"We also have many different artists that are working with us," Ek said. "Some have labels, some don't, some are so big that they are almost entities in their own right. Some have huge teams with hundreds of people around them that help do whatever they're doing and make that work."
But for Ek even with this variety, the key is to "find a commonality between them which becomes powerful and galvanize behind it," as he wants more than a million people to be able to live off their art via the platform.
O'Shaughnessy even said that the Discover feature he uses. Ek said that it's great as it gets people listening to at least one new artist or different piece of content a month and that's key to drive growth, as people stay as customers."We can also rediscover things that meant something to you 10 years ago that may even be more profitable."
To listen to the full podcast where Ek talks about a range of topics, including the remastering of "The White Album," H&M, and music in Brazil, click here.