This text initially appeared on Enterprise Insider.
Spotify is shedding about 17% of its workforce — or about 1500 staff.
The music streaming large mentioned in a weblog put up Monday saying the cuts that “being lean is not only an choice however a necessity.”
CEO Daniel Ek despatched an e-mail to his staff Monday with the identical memo shared within the weblog put up. The e-mail was despatched at 1:01 a.m. ET, in keeping with a time stamp on the e-mail reviewed by Enterprise Insider. That’s 7:01 a.m. native time in Stockholm, Sweden, the place Spotify is headquartered.
“Financial progress has slowed dramatically and capital has change into costlier,” Ek mentioned within the e-mail and weblog put up. “Spotify shouldn’t be an exception to those realities.”
The memo mentioned staff would obtain a calendar invite from HR inside two hours for one-on-one conversations and that conferences would happen earlier than the top of the working day on Tuesday.
“To be blunt, many good, proficient and hard-working individuals shall be departing us,” Ek mentioned within the memo.
Spotify’s chief human assets officer, Katarina Berg, shared an FAQ doc on the corporate’s inside platform Office minutes after Ek’s e-mail, two staff instructed Enterprise Insider.
A screenshot of the doc, shared with BI, confirmed it mentioned that folks laid off have been chosen based mostly on: “a mixture of things together with however not restricted to organizational design, resembling duplication of roles, streamlining layers to make sure effectivity, and optimizing our group for the following chapter of Spotify.”
The corporate didn’t specify what departments and groups have been impacted by the layoffs, or throughout which geographical places the cuts would occur. Spotify has workplaces throughout Europe, in addition to within the US, Canada, Mexico, Israel, and India.
Spotify mentioned in its FAQ doc that “finally, it was a Management choice” as to who would lose their job.
It comes after Spotify axed about 600 staff in January after which an additional 200 in June.
Two Spotify staff, who didn’t want to be recognized, instructed BI that some staff anticipated the additional layoffs have been looming.
The corporate shared a weblog put up in September titled “Unlocking Inner Mobility”, which mentioned that inside mobility could be “taking the next precedence.” The employees mentioned it signaled the cuts have been to come back.
“There was additionally an inside memo about bettering gadget safety and particularly strict procedures round locking down laptops as soon as staff go away the corporate a number of weeks in the past,” one employee instructed BI.
The inner memo titled “Introducing new locking gadgets coverage,” despatched by its IT division on Office, additionally indicated the layoffs have been coming, they mentioned.
Spotify declined to remark additional when contacted by BI.
Learn the total e-mail that Ek despatched to staff:
Crew,
During the last two years, we have put important emphasis on constructing Spotify into a very nice and sustainable enterprise – one designed to realize our objective of being the world’s main audio firm and one that can constantly drive profitability and progress into the longer term. Whereas we have made worthy strides, as I’ve shared many instances, we nonetheless have work to do. Financial progress has slowed dramatically and capital has change into costlier. Spotify shouldn’t be an exception to those realities.
This brings me to a call that can imply a major step change for our firm. To align Spotify with our future objectives and guarantee we’re right-sized for the challenges forward, I’ve made the tough choice to cut back our complete headcount by roughly 17% throughout the corporate. I acknowledge this may influence a variety of people who’ve made invaluable contributions. To be blunt, many good, proficient and hard-working individuals shall be departing us.
For these leaving, we’re a greater firm due to your dedication and arduous work. Thanks for sharing your abilities with us. I hope you realize that your contributions have impacted greater than half a billion individuals and thousands and thousands of artists, creators, and authors around the globe in profound methods.
I understand that for a lot of, a discount of this measurement will really feel surprisingly giant given the current optimistic earnings report and our efficiency. We debated making smaller reductions all through 2024 and 2025. But, contemplating the hole between our monetary objective state and our present operational prices, I made a decision {that a} substantial motion to rightsize our prices was the most suitable choice to perform our goals. Whereas I’m satisfied that is the suitable motion for our firm, I additionally perceive it is going to be extremely painful for our crew.
To know this choice, I feel it is very important assess Spotify with a transparent, goal lens. In 2020 and 2021, we took benefit of the chance offered by lower-cost capital and invested considerably in crew growth, content material enhancement, advertising and marketing, and new verticals. These investments typically labored, contributing to Spotify’s elevated output and the platform’s sturdy progress this previous yr. Nevertheless, we now discover ourselves in a really totally different setting. And regardless of our efforts to cut back prices this previous yr, our value construction for the place we should be continues to be too huge.
Once we look again on 2022 and 2023, it has really been spectacular what we now have achieved. However, on the similar time, the truth is far of this output was linked to having extra assets. By most metrics, we have been extra productive however much less environment friendly. We should be each. Whereas we now have executed some work to mitigate this problem and change into extra environment friendly in 2023, we nonetheless have a methods to go earlier than we’re each productive and environment friendly. Immediately, we nonetheless have too many individuals devoted to supporting work and even doing work across the work slightly than contributing to alternatives with actual influence. Extra individuals should be centered on delivering for our key stakeholders – creators and customers. In two phrases, we now have to change into relentlessly resourceful.
I do know you’ll all be concerned to listen to the following steps about how this course of will work. In case you are an impacted worker, you’ll obtain a calendar invite throughout the subsequent two hours from HR for a one-on-one dialog. These conferences will happen earlier than the top of the day on Tuesday, and whereas Katarina will present extra element on the entire specifics, please know the next will apply to all of those bandmates:
Severance pay: We’ll begin with a baseline for all staff, with the typical worker receiving roughly 5 months of severance. This shall be calculated based mostly on native discover interval necessities and worker tenure.
PTO: All accrued and unused trip shall be paid out to any departing worker.
Healthcare: We’ll proceed to cowl healthcare for workers throughout their severance interval.
Immigration help: For workers whose immigration standing is linked with their employment, HRBPs are working with every impacted particular person in live performance with our mobility crew.
Profession Assist: All staff shall be eligible for outplacement companies for 2 months.
For the crew that can stay at Spotify, I do know this choice shall be tough for a lot of. Please know we’re centered on treating our impacted colleagues with the respect and compassion they deserve.
Trying Forward
The choice to cut back our crew measurement is a tough however essential step in the direction of forging a stronger, extra environment friendly Spotify for the longer term. But it surely additionally highlights that we have to change how we work. In Spotify’s early days, our success was arduous received. We had restricted assets and needed to benefit from each asset. Our ingenuity and creativity have been what set us aside. As we have grown, we have moved too far-off from this core precept of resourcefulness.
The Spotify of tomorrow have to be outlined by being relentlessly resourceful within the methods we function, innovate, and sort out issues. This type of resourcefulness transcends the essential definition – it is about making ready for our subsequent part, the place being lean is not only an choice however a necessity.
Embracing this leaner construction will even enable us to take a position our earnings extra strategically again into the enterprise. With a extra focused method, each funding and initiative turns into extra impactful, providing larger alternatives for achievement. This isn’t a step again; it is a strategic reorientation. We’re nonetheless dedicated to investing and making daring bets, however now, with a extra centered method, making certain Spotify’s continued profitability and talent to innovate. Lean doesn’t suggest small ambitions; it means smarter, extra impactful paths to realize them.
Immediately is a tough however vital day for the corporate. To be very clear, my dedication to our mission and perception in our skill to realize it has by no means been stronger. I hope you’ll be a part of me on Wednesday for Unplugged to debate how we transfer ahead collectively. A discount of this measurement will make it vital to alter the best way we work, and we are going to share rather more about what this may imply within the days and weeks forward. Simply as 2023 marked a brand new chapter for us, so will 2024 as we construct a fair stronger Spotify.
– Daniel
