Spotify laying off 17% of staff saying company must adopt a leaner way to work

Author Moonshot.news

Published on: 04/12/2023

Streaming music giant Spotify says it must adopt a leaner way to work to ensure “continued profitability and ability to innovate”. The words are CEO Daniel Ek’s in a message to staff informing that the company is laying off 17 % of the staff “Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.”

“The decision to reduce our team size is a hard but crucial step towards forging a stronger, more efficient Spotify for the future. But it also highlights that we need to change how we work.” 

“In Spotify’s early days, our success was hard won. We had limited resources and had to make the most of every asset. Our ingenuity and creativity were what set us apart. As we’ve grown, we’ve moved too far away from this core principle of resourcefulness.” 

“The Spotify of tomorrow must be defined by being relentlessly resourceful in the ways we operate, innovate, and tackle problems. This kind of resourcefulness transcends the basic definition – it’s about preparing for our next phase, where being lean is not just an option but a necessity.”

He says that embracing this leaner structure will also allow the company  to invest profits more strategically back into the business. 

Ek writes that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and performance. 

“We debated making smaller reductions throughout 2024 and 2025. Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives.”

“In 2020 and 2021, we took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing, and new verticals. These investments generally worked, contributing to Spotify’s increased output and the platform’s robust growth this past year.”! 

“However, we now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big.”

He writes that the company still has “too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact. More people need to be focused on delivering for our key stakeholders – creators and consumers. In two words, we have to become relentlessly resourceful.”