Spotify layoffs: CEO Daniel Ek cuts 17% of bloated workforce

The most important layoffs within the platform’s 15-year historical past come simply weeks after it posted a surprise profit for the third quarter.

Billionaire founder and CEO Daniel Ek blamed the 17% discount to its estimated 9,000 headcount on a company that had grow to be too bloated and inefficient to prosper amid the darkening financial clouds. 

“We nonetheless have too many individuals devoted to supporting work and even doing work across the work, quite than contributing to alternatives with actual affect,” he wrote in a employees memo published on Monday, including staff affected will obtain roughly 5 months of severance. 

For his workforce, the yr ends very like it started.

In January Spotify introduced a round of layoffs for six% of its employees, later following that up with a smaller, more targeted headcount discount at its high-profile podcasting division. 

Ek stated his group had debated spreading the ache over the following two years however in the end selected to swallow the bitter capsule unexpectedly.

Given the place the corporate wanted to be to hit its monetary targets, he argued it was the one prudent plan of action.

“I made a decision {that a} substantial motion to rightsize our prices was the best choice to perform our aims,” he stated, taking private possession of the layoffs. 

The CEO pitched the transfer as a “strategic reorientation” again to Spotify’s roots as a scrappy startup, when restricted assets compelled it to battle relentlessly for every success.

“Our ingenuity and creativity have been what set us aside,” he claimed. “As we’ve grown, we’ve moved too distant from this core precept of resourcefulness.” 

$1 billion gamble in podcasting fails to repay

Stockholm-based Spotify stays the worldwide chief in audio streaming, with 574 million month-to-month energetic customers, a determine that features 226 million premium subscribers who pay further to benefit from the service ad-free.

However the firm faces elevated competitors from deep-pocketed U.S. tech giants Apple, Amazon and YouTube, a subsidiary of Google, that may afford to overspend on their respective digital streaming platforms. 

To keep up its lead as music subscriber progress started to peak, Spotify pivoted to make a high-stakes wager on progress within the podcasting phase. 

It splashed out round $1 billion to nab unique offers with celebrities like Joe Rogan, Barack Obama and Kim Kardashian however many failed to pay off for Ek and his traders. This summer a distinguished $20 million cope with Prince Harry and spouse Meghan Markle ended acrimoniously.

Whereas Spotify’s income base did develop, the CEO admitted on Monday rewards have been solely proportional to the quantity invested. 

Now that the times of straightforward cash are over following the current bout of excessive inflation, it was time to place an finish to this opportunistic gamble and rein in inefficient spending. 

“Financial progress has slowed dramatically and capital has grow to be dearer. Spotify just isn’t an exception to those realities.” 

The audio streamer isn’t the one profitable Swedish export to rethink its strategy to staffing. On Monday, the buy-now-pay-later fintech Klarna advised UK every day The Telegraph it might freeze hiring and enhance the quantity of labor that might be finished by ChatGPT.

Spotify was contacted for remark however declined to remark additional.

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