Spotify to lay off 17% of workforce — examine the full memo CEO Daniel Ek sent to employees

Workforce, 

Around the previous two decades, we’ve put sizeable emphasis on making Spotify into a certainly excellent and sustainable business – one particular developed to attain our goal of getting the world’s leading audio company and one that will consistently push profitability and development into the long run. Although we have designed worthy strides, as I have shared a lot of moments, we continue to have get the job done to do. Economic progress has slowed drastically and funds has become far more expensive. Spotify is not an exception to these realities.

This delivers me to a decision that will mean a major move change for our organization. To align Spotify with our long term ambitions and assure we are suitable-sized for the issues forward, I have built the tricky choice to minimize our complete headcount by around 17% across the corporation. I identify this will influence a number of persons who have produced worthwhile contributions. To be blunt, quite a few sensible, talented and tricky-functioning persons will be departing us.

For all those leaving, we are a improved firm simply because of your dedication and hard function. Thank you for sharing your talents with us. I hope you know that your contributions have impacted a lot more than 50 % a billion folks and tens of millions of artists, creators, and authors around the globe in profound means. 

I recognize that for numerous, a reduction of this measurement will truly feel amazingly big offered the latest constructive earnings report and our functionality. We debated generating more compact reductions through 2024 and 2025. Yet, thinking of the gap in between our economic target condition and our present operational expenses, I resolved that a significant motion to rightsize our fees was the finest solution to achieve our targets. Even though I am convinced this is the ideal motion for our company, I also fully grasp it will be unbelievably distressing for our staff. 

To realize this selection, I consider it is vital to assess Spotify with a clear, goal lens. In 2020 and 2021, we took benefit of the prospect offered by decrease-cost funds and invested noticeably in crew growth, articles enhancement, advertising and marketing, and new verticals. These investments typically worked, contributing to Spotify’s enhanced output and the platform’s robust development this past yr. Having said that, we now find ourselves in a really various natural environment. And despite our endeavours to cut down prices this earlier 12 months, our cost construction for where by we want to be is continue to too massive.

When we look again on 2022 and 2023, it has certainly been spectacular what we have accomplished. But, at the identical time, the actuality is considerably of this output was joined to having far more methods. By most metrics, we were far more effective but much less economical. We need to have to be both of those. Whilst we have performed some perform to mitigate this problem and become far more economical in 2023, we however have a techniques to go prior to we are equally productive and productive. Nowadays, we nonetheless have far too several men and women devoted to supporting perform and even accomplishing function all over the do the job rather than contributing to chances with authentic impression. Additional men and women need to be focused on delivering for our key stakeholders – creators and individuals. In two words, we have to become relentlessly resourceful.

I know you will all be nervous to listen to the next actions about how this procedure will operate. If you are an impacted employee, you will obtain a calendar invite inside the following two several hours from HR for a a person-on-one discussion. These conferences will take position right before the conclusion of the working day on Tuesday, and while Katarina will present extra depth on all of the details, please know the next will implement to all of these bandmates:

• Severance pay: We will start out with a baseline for all workers, with the regular worker acquiring close to 5 months of severance. This will be calculated primarily based on nearby recognize interval requirements and personnel tenure.
• PTO: All accrued and unused vacation will be paid out out to any departing personnel.
• Healthcare: We will go on to address healthcare for staff throughout their severance period of time. 
• Immigration help: For staff whose immigration status is linked with their work, HRBPs are doing work with each individual impacted individual in live performance with our mobility team. 
• Job Assist:  All personnel will be qualified for outplacement services for two months.

For the team that will stay at Spotify, I know this selection will be hard for a lot of. Please know we are centered on managing our impacted colleagues with the respect and compassion they are entitled to.

Wanting Ahead

The selection to lower our group dimensions is a hard but crucial stage toward forging a more robust, additional economical Spotify for the long term. But it also highlights that we have to have to transform how we function. In Spotify’s early days, our results was tough gained. We experienced restricted assets and experienced to make the most of each individual asset. Our ingenuity and creative imagination were being what established us aside. As we have grown, we have moved as well much absent from this main theory of resourcefulness. 

The Spotify of tomorrow ought to be defined by remaining relentlessly resourceful in the means we work, innovate, and tackle problems. This type of resourcefulness transcends the essential definition – it truly is about preparing for our future period, wherever getting lean is not just an option but a requirement.

Embracing this leaner framework will also let us to spend our gains extra strategically back into the enterprise. With a extra targeted method, each individual expenditure and initiative turns into more impactful, featuring better possibilities for achievement. This is not a stage back it really is a strategic reorientation. We are nonetheless fully commited to investing and making daring bets, but now, with a additional focused tactic, making sure Spotify’s ongoing profitability and ability to innovate. Lean does not necessarily mean small ambitions it suggests smarter, additional impactful paths to attain them. 

These days is a challenging but vital day for the corporation. To be quite distinct, my dedication to our mission and perception in our means to achieve it has in no way been more robust. I hope you will be part of me on Wednesday for Unplugged to go over how we move ahead alongside one another. A reduction of this dimensions will make it important to transform the way we get the job done, and we will share considerably much more about what this will suggest in the days and weeks in advance. Just as 2023 marked a new chapter for us, so will 2024 as we build an even much better Spotify. 

– Daniel