6% of Spotify staff laid off, new co-Presidents named as Ostroff exits
CEO Daniel Ek confirmed Monday that Spotify had joined the growing number of tech companies laying off workers.
In a letter to staff, EK said that the layoffs were ained at “improving efficiency,” with 6% of Spotify’s workforce being laid off.
That would mean about 600 of an estimated 9800 Spotify staffers have been let go. The average employee will receive about 5 months of severance pay. [Read Ek’s full letter to Spotify staff here.]
While efficiency is often used as the reason for layoffs, uncertain economic headwinds and a gutted stock valuation are also driving Ek’s decision-making. Spotify’s market cap has fallen from $69B in February of 2021 to $18.9B last Friday.
“a challenging macro environment”
Like many other tech companies, Spotify grew too big too fast,
In 2022, the growth of Spotify’s operating expenses outpaced revenue growth by 2X. “That would have been unsustainable long-term in any climate,” wrote Ek. “but with a challenging macro environment, it would be even more difficult to close the gap.”
Major Executive Restructuring
While touting Spotify’s accomplishments, EK wrote, “We still spend far too much time syncing on slightly different strategies, which slows us down. And in a challenging economic environment, efficiency takes on greater importance. So, in an effort to drive more efficiency, control costs, and speed up decision-making, I have decided to restructure our organization.”
In a significant operational shift, EK has rearranged Spotify under two newly aimed co-presidents, Alex Norström and Gustav Söderström. Former Spotify Chief R&D Officer (CPO/CTO) Söderström will now serve as Chief Product Officer, and former Chief Freemium Business Officer Norström is elevated to Chief Business Officer.
Chief Content and Advertising Officer Dawn Ostroff is also voluntarily exiting Spotify as part of the restructuring. “Because of her efforts, Spotify grew our podcast content by 40x, drove significant innovation in the medium, and became the leading music and podcast service in many markets,” wrote Ek.