David Senra: So I texted Daniel Ek this morning. I was like, "Hey, I'm recording with Gustav. You've known him for two decades. Tell me what I should ask him." And he goes, "Ask him to tell you how he prepared for the CEO role. We did something quite unusual." Can you describe what happened?

Gustav Söderström: Daniel is very big on preparing. You know Daniel, he's not very rash in his decisions, and so this was one of those decisions as well that I think grew with him for a long time. So, already about three years ago, he asked me and Alex Norström to step up and become co-presidents and sort of start to run the day-to-day of Spotify for him. He was still the CEO. And so he's been gradually giving us more and more rope to run the business day-to-day and week-to-week, and then month-to-month.

Gustav Söderström: So when it actually came to sort of taking over as CEOs, we already knew that part by heart, and we had run it for three years, the full P&L and balance sheet, and so forth. And then there was still a lot of new stuff to learn, all the stuff that was Daniel's responsibility alone, like PR, government, being the public face of the company. But we were very well prepared for taking over the business. I think that's unique with Daniel.

Gustav Söderström: I worked for Daniel for almost 18 years, and I don't think I'll work for anyone except Daniel again. I've had both great bosses and not-so-great bosses. Daniel is the great one, and he's incredibly delegating already from the start.

Gustav Söderström: I remember when I joined Spotify, was back in 2008, 2009, and then we were going to go to the US, and Daniel knew Zuck at Meta, then Facebook, and we wanted to do this pretty deep integration with him.

Gustav Söderström: And yeah, I was new on the job at Spotify, and Daniel just said, "Can you just go there and talk to Zuck and Meta or Facebook at the time and set this up?" I'm like, "That's a lot of trust for someone who's new." So he's always been super delegating, and that is also, I think, why I've stuck around for almost 18 years because you get so much responsibility.

David Senra: Mm-hmm.

Gustav Söderström: It's like you get a new job almost every year. And so this co-CEO or co-president partnership that he started three years ago was one of those journeys where Alex and I got to step up and try taking on the full business. We actually changed completely how we run the company from the way Daniel runs it.

David Senra: Say more about that.

Gustav Söderström: When it comes to organization models in themselves, this is not something I came up with. I think Steven Sinofsky said this a bunch. You just can't win. There is no organizational model. There are many, and they all work. Like Amazon is organized in a certain way, trillion-dollar company. Apple, in another way, also trillion. Elon does his thing, also produces trillion-dollar companies. So there is no right way. You just have to pick one that fits your personality.

Gustav Söderström: So I actually think organizations are quite based on personalities, and Daniel has a very specific personality, I think. He is not the typical sort of... I mean, you know him well, but he's not the typical sort of alpha male founder, which I think is one of the reasons why he's so successful in this type of business.

Gustav Söderström: Because if you think about what Spotify is, yes, it's a technology company doing sort of hardcore technology innovation, but it's also a media company working in an industry with a bunch of first music labels and then book publishers and podcast publishers. Some of these very, very big personalities in the media business, as you can imagine.

Gustav Söderström: So, he needed to be able to both rally a team and build world-class technology, but also get all of these people with the big personalities to work together and get to do something that they didn't want to do individually and not as a group. And I still don't understand exactly how he managed to get all of these people to do sort of what he wanted, but it certainly wasn't through alpha male force. It was through not being threatening, being very logical.

Gustav Söderström: He's very humble, but I think maybe most Americans specifically can mistake humbleness for weakness. It's the opposite. He's insanely tenacious, insanely tenacious, just never gives up. So he has a very specific leadership style, and that shaped the company. And as I said, there are a bunch of incredible advantages to his leadership style.

Gustav Söderström: One thing that I think that I do choose to do differently is, Daniel loves to talk in a star pattern, one-on-one with many people. So he would talk to me about something, separate meeting, then with Alex Norström about something, the same thing, but from the business angle, and then maybe with PR and finance. He just talked in a star pattern. He doesn't like to have meetings, everyone in the room, and that can be frustrating at times.

Gustav Söderström: It's like he says something to me, something to Alex, and then Alex and I meet. I'm like, "This is what we're going to do," and Alex is like, "Not quite. That's not what he said to me." And so then we go back, and we call him out on it. But he likes that star pattern. Alex and I chose to do something very different. We chose to synchronize the whole company. And so, you can think about Spotify as sort of a two-function org. I run product and technology by and large. Alex runs sort of business and content by and large.

Gustav Söderström: But instead of sort of doing the divide and conquer, which is a good idea, you divide and conquer because it's more effective, but it has the cost that you're unsynchronized. So instead of doing the divide and conquer in separate swim lanes, we do this thing, which I've called synchronized swimming, where we kind of swim together. Which is much harder to do than competitive swimming. And when you mess it up, it is ugly to look at. But when you do it well, it's a beautiful thing to look at.

Gustav Söderström: So we decided to, instead of having the usual sort of, I meet with my direct reports, and we talk about product and technology. He meets with his and talks about business and content, and then our people meet in the org somewhere, and they fight it out, which is how most companies work. We chose to say, "We're not going to have our own leadership meetings. We have a single one with all of our SVPs."

Gustav Söderström: So we have a single meeting every Tuesday called E-team for three hours with all the SVPs of all the internal functions, like marketing, ads, subs, but also all the product and technology functions in the same meeting.

David Senra: How many people are in this meeting?

Gustav Söderström: It's about 14 people.

David Senra: Okay.

Gustav Söderström: What happens is, we meet every week to talk through the entire company. So we talk through machine learning problems that are blocking on someone, experience problems where we want to ship this music video feature, and so forth. But often that music video feature is blocked, maybe on a licensing discussion that sits in Alex's org.

Gustav Söderström: So the whole reason for the E-team meeting was that previously, actually under Daniel's sort of tenure, we were in so many meetings where someone said, "Well, I'm blocked on that person in that org, and that person is not in the meeting." So people said, "Let's take it offline." And we got so tired of hearing this phrase, "Let's take it offline," that we did E-team meeting, and we said, "You're never allowed to say, 'Let's take it offline again.'

Gustav Söderström: Everyone that represents all functions should be in this one meeting, so that when you say 'I'm blocked on licensing,' well, licensing is right there across the table. Now let's talk it out in real time."

Gustav Söderström: So we changed how the company operates, and we have this synchronized operating model that is expensive in time. You have 14, 15 people times 3 hours per week. That's a lot of leadership time, and the conversations are not relevant for everyone at every time. Sometimes we talk a lot about content that may be not that relevant, or ad strategy that may not be that relevant to someone in the personalization org.

Gustav Söderström: But the cool thing is, we talk about everything. We talk about P&Ls and balance sheets, and we talk about machine learning problems in there. So you have now 14 people that have the full CEO perspective.

David Senra: Yeah, I was going to say, you used the word not relevant. I just finished reading Kelly Johnson's autobiography. He's the one that did Skunk Works inside Lockheed. And his whole thing was like no separation between any department. Like engineering, designing, manufacturing, it's all the same thing. We're all working together. We all want the same context, the same shared base of knowledge.

Gustav Söderström: Yeah.

David Senra: So it's like it is kind of relevant.

Gustav Söderström: It's just a question of timescale. So, this thing about the person in experience understanding a lot about the ad stack, it won't seem that relevant right then. But then the fact that this person understands how we make money is going to affect their product decisions in the future when they build a product.

David Senra: Right.

Gustav Söderström: Because guess what? There are ads in the product. So now they're not going to make decisions that go against our monetization strategy. So it is very relevant. It's just relevant on a longer timescale. So, I think of it as investment. But it is contrarian. I think many people would say you should not sit in a meeting. I hear people saying, "The second you're in a meeting, you feel it's not fully relevant, leave."

David Senra: Elon says this.

Gustav Söderström: Elon says this, right?

David Senra: Yeah.

Gustav Söderström: And like I said, he's not wrong. He's built some of the most successful companies on Earth. It's just different approaches. We've chosen this approach. So we have a very senior group that has a complete perspective of the company, and I think that's right for our company because there's so many dependencies between licensors and relationships we have and contracts we have and how we can build a product and all of these things. It's very hard to divide and conquer a product like Spotify.

Gustav Söderström: And I think there's this truth out there that eventually your org chart shows up in your product.

David Senra: Yeah.

Gustav Söderström: And because we have a single experience strategy, our strategy is literally a super app. We try to build first music, then podcast, then books, and more things into a single product. I think our biggest risk is to ship the org chart. So if we divided it and said, "Everyone just run in parallel," I think it will feel very good for about six months. Then the experience will just start crumbling because you're externalizing all that complexity to the user instead of taking the fight internally and coming up with a single experience.

Gustav Söderström: So, in terms of organizational models, you have functional orgs, where it has the benefit of clear ownership, but supposedly hard to cooperate when you want two functions to work together. You have the matrix org, which has the benefit that it optimizes for sort of the use case, but it's unclear even who you're reporting to. Then you have sort of the division-based org, like a "Riot Games," you're organized by game.

David Senra: Mm-hmm.

Gustav Söderström: You break out the technology platform into its own org. Amazon is actually kind of a gaming org, like divisional with a strong platform underneath. And so on that scale, I've chosen to be actually very close to Apple because I think they cracked the problem of building something that is very, very complex underneath the surface, like insanely complex, and it still feels like it was built sort of by a single person for a single person. So that's what I want with Spotify.

David Senra: So tell me how you think Apple is run, then.

Gustav Söderström: What I think is interesting about Apple is, when I look at it from the outside, it's a functional org, right? And functional orgs... I used to work at Yahoo for a while.

David Senra: At where?

Gustav Söderström: At Yahoo.

David Senra: Yahoo.

Gustav Söderström: I sold one of my companies there. And I thought I didn't learn anything there, but I learned a lot about what not to do. It was a completely messed-up company back then as well. I think it had four CEOs in two and a half years or something. But all the EVPs, they fought each other to the death and tried to hide information from each other. So, supposedly, on paper, I think Apple should not be very well positioned to be able to build that kind of product.

Gustav Söderström: I always marveled at why aren't those functional leads just fighting each other? That's what usually happens. The only answer I've come to, as I've spoken to people there, is that it actually has to do with tenure of leadership, which is one of the principles I've also tried to internalize at Spotify. So they have very long tenure at the senior leadership, which means that these functional leads have found a way to work together to synchronize. So sometimes it's the hardware function that innovates and takes the lead, and then software and services follow, and sometimes it's a software function that takes the lead, and they follow.

Gustav Söderström: That only works if you have super high trust in the leadership, which I think stems all the way back from Steve Jobs, and they managed to keep that. But in theory, I think functional orgs tend to dissolve into politics.

David Senra: Without the tenure?

Gustav Söderström: Without the tenure.

David Senra: You think the tenure's the key.

Gustav Söderström: So at Spotify, most of the people that work for me, many have worked for me for 14, 15 years. I think the average is maybe 7, 8 years. And then it works to have a functional org. But if you don't have trust in the leadership, I think functional orgs just dissolve into politics.

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David Senra: This speaks to your previous statement that there's not one right way to do it. There's multiple different ways. I just had this conversation with MrBeast, and we talked about this. And because I was like very curious, especially in media, your top creative talent is so hard to manage and to integrate, to keep. I was like, "Do you have a lot of turnover on..." I'm not talking about the people on the production, I mean your actual, your top five most talented people.

Gustav Söderström: Yeah.

David Senra: Are there's a lot of turnover there? And he's a huge fan of Founders, and so we talk about entrepreneur history every time we speak. And I was like, what's interesting to me is you take Larry Ellison, who he believed that one of the secrets to success of Oracle is the fact that they kept, I think he said, the core kernel of the product team together for two decades or something like that, or maybe a decade and a half.

Gustav Söderström: Yeah.

David Senra: And you take Elon Musk, who again, Larry mentored. Elon says that one of the few people he goes to for advice is actually Larry Ellison, who says the opposite. He's like, "I want fresh blood. I wanna keep turning through people as possible."

Gustav Söderström: Exactly.

David Senra: It's like Oracle's super successful, Elon's super successful.

Gustav Söderström: Exactly. I think this is the whole thing. You can't win. You can only not lose as much. So the way I think about it, you have a bunch of organizational principles, and as I said, as I joined Spotify and had to like... When I was at Yahoo, I said I never want to work in a big org.

David Senra: Yeah.

Gustav Söderström: I joined Spotify when it was like 30-something. I never expected it to get to thousands. Eventually, I had to do the big org thing, and then I tried to read a lot about organizational principles and models, and I think at the time I read a lot of Steven Sinofsky.

David Senra: Yeah.

Gustav Söderström: I think the thesis is, you can't win. There is no right org. And companies, they sit with one type of org, and then you're going to be good at something and terrible at something. People look at the terrible thing and say, "Well, if we flipped to like a matrix org, we'd be great at this." They flip, now they're great at this and terrible at the old thing. You just have to choose dimensions.

Gustav Söderström: So, what we did at Spotify was we said, "We have to choose..." The best outcome is that you're optimized for the thing that is important for the company, and you suck at the thing that is not as important. The worst outcome is you're really good at the non-important thing, and you suck at the important thing.

David Senra: Mm-hmm.

Gustav Söderström: So, figure out what's important and then optimize for that and just accept that you're going to be average at the others. And so one thing we chose to optimize for was the single experience.

Gustav Söderström: We were really good at building a single experience that actually does a billion different things, and most people don't even realize that on the back end, it's even more complicated because you have a music business that is a royalty pool. So it's percentages out of a fixed pool. Music business that has a very different structure, podcast business that has ads. So when you click something in Spotify, it triggers all kinds of different business models. Like on the back end, it's insanely complicated.

David Senra: I'm a huge... I obviously love to read. I read books professionally for a living, but I also have hundreds of audiobooks on Audible. And I remember asking Daniel, I was like, "How the hell?" Why did no one think, oh, I like this book, just press play, and it goes, instead of like a five-minute. Audible's like, okay, listen for five minutes, and I have to do the credits like awkward. And I was like, "How the hell did you do that on the back end?" He was explaining to me the complexity on the back end, too.

Gustav Söderström: Yeah. It's a very complicated model on the back end. And so...

David Senra: Especially because you guys are designing this super app though.

Gustav Söderström: Exactly.

David Senra: Let me...

Gustav Söderström: If it was three different apps, again, you could have had different teams running in parallel.

David Senra: So you're optimizing for a single experience. I feel you have an organizing principle, like a North Star, and this is why I spend so much time, and I really admire. I've been to Stockholm, I think, four times in the last 14 months. Because I think of the best founders usually can explain just a handful of words, what their life's mission is. So like, you mentioned Apple, let's talk about Steve Jobs. Steve Jobs did it in three words. He said insanely great products.

David Senra: You could hear him when he was 25, he talked about insanely great products when he was dying, insanely great products.

Gustav Söderström: Yeah.

David Senra: You want to make insanely great products, then you come with me, but you knew what was important to him.

Gustav Söderström: Yeah.

David Senra: And I feel, I don't know if you guys do this internally, but I've talked to Alex and Daniel, and you a bunch. I feel your organizing principle is time well spent.

Gustav Söderström: If you look at what we focus on and what we optimize for, you have a strategic lens, then you have sort of a business lens and an emotional lens. So the strategic lens is really that we saw a long time ago that the biggest challenge in the world is going to be distribution. When the iPhone came out, it felt like distribution was free. People went to the App Store every day and looked for what's the top charting free and paid app. That stopped working. There was a lot of distribution through Facebook with all the install ads. That all went away.

Gustav Söderström: So from a strategic point of view, when we were going into podcasts, which was the first, second product we did, we looked at that and said, "Again, it's all a trade-off." We could do a separate app. It would be easier for us as an org because we can divide the org, and people can run in parallel, and so forth. But is that the biggest problem, to design the experience, or is the biggest problem actually getting distribution?

Gustav Söderström: And then we looked at in the App Store, and I think there was maybe there's probably 10, but at least 7 really good podcast apps in there, like Overcast and all of these apps. And when we looked at their usage, I think Apple Podcasts was still like 98.5%.

David Senra: All of them.

Gustav Söderström: So the problem wasn't that there wasn't a good enough podcast product. The problem was that they didn't get any distribution. So we chose to take the pain of doing a single app with all the complexity comes with that for the benefit of reaching what was then already 300 and something million users, maybe. But it was much harder. We chose pain and cost somewhere to get benefit somewhere else, and we said, "It's just software. It should be able to adapt to the use case," right? Which was contrarian at the time. And then with audiobooks, we did the same thing.

Gustav Söderström: So, there was a strategic lens to that. The second thing we care deeply about is when we have to prioritize, we do prioritize the user over ourselves, over publishers and labels.

David Senra: But this is...

Gustav Söderström: We do prioritize the consumer experience.

David Senra: You saying we prioritize the user over ourselves is super important. So a few months ago, we were racing cars together in Sweden. And then we took a break from racing cars, and we had lunch. It was me, you, Daniel, and Pia, who works at Prima Materia. One, I know you're super competitive. How did you feel about losing the racing to a girl, by the way?

Gustav Söderström: I felt great about losing to Pia. She's an awesome driver. It was very well deserved.

David Senra: She's one of my favorite people. I'd do anything for Prima Materia. I love the entire team there. This is where I kind of understood your philosophy because I also previously had multiple conversations, and we had this really long lunch one time. But this is what I think you guys are special in the technology industry, and why I like spending time. And Spotify's what? Out of whatever your favorite AI chatbot, like chat app, it's like what's the best apps on your phone? Like Spotify's in the top two for anybody that uses it. But it's that.

Gustav Söderström: Yeah.

David Senra: We talked at lunch. You knew there's dark engagement patterns, and you can put into Spotify right now that would have people use the app more, would have more retention, maybe bring more users, but it's not good for them.

Gustav Söderström: Yeah.

Gustav Söderström: Yeah. So this is our guiding principle. Like, what does it mean to care about the user? You can care about the user experience, but if you really care about the user in some deeper way, it would be how they feel about what you do. And what happened with Spotify is you can say that we lucked into it because we started in music. Music is, by most people, considered almost an unequivocal good.

Gustav Söderström: Maybe there's bad music somewhere, but very few people feel that music is a bad thing for the world. And it also happens to have a very large TAM. There is almost no one that doesn't listen to music. It's like bigger than social networking, right?

David Senra: Yeah.

Gustav Söderström: Not everyone does social networking, but everyone does music. So, we started in this space, which was very positive for the world, and I think that was a deliberate decision from Daniel. He was passionate about music. He wanted to do something that was meaningful. I don't think it was luck because if you look at the things he's doing now, it's in that same space of being good for the world and for Europe, et cetera, rather than just more money.

David Senra: Yeah.

Gustav Söderström: So I don't think it was an accident. But still, you could say we lucked into it. But then we realized that this is important. We're bringing a lot of joy. So when we looked at what to do next, we looked at podcasts, and we saw this thing where there was this... The pattern on the internet already back then was shorter and shorter form content, shorter and shorter attention spans, and it looked like the world was lost. Like, it's just going to go to hell.

Gustav Söderström: But then you looked at podcasts, and you said, "No, at the same time, there are these very long, deep discussions where people speak in full sentences, get to explain full ideas. They don't necessarily get attacked. They get to retort and so forth." We said that we think this is actually good for the world. We didn't know how big it was going to be, so we had to take a chance on that. But we thought it was a business opportunity and good for the world. That's our lens. So we went into that, and we built podcasts into Spotify, and it was the same thing with audiobooks.

Gustav Söderström: We think that books is one of the most important things that happen in the world, and I'm very passionate about books, but it's also a good business opportunity. And we were fortunate to be in Sweden, that for some reason, tends to be pretty advanced in media habits. In Sweden, audiobooks is already a very big thing, so we had quite high conviction over the market.

Gustav Söderström: So we've kept going into these things that are considered by ourselves and users time well spent. But we never fully articulated that as a strategy externally. We've only recently started talking about it.

David Senra: Did you articulate it as a strategy internally, though?

Gustav Söderström: For a long time, we've had a strategy called No Regrets, but we largely haven't said that externally. And I don't know if No Regrets is the best branding.

David Senra: I think time well spent is better though.

Gustav Söderström: It's like that's a low bar. But we've said it again and again, like, is this really no regrets? What that comes from is interesting. We surveyed our users through a third party anonymously. We do that all the time. Someone comes and asks you, "What do you think of these media services?" without saying who they represent, so you get the truth. That's how we understand how we're doing versus competitors and so forth. So we had them survey across all the big media platforms, and this is where the No Regret come from. We asked the question like, "How do you feel about the time you spent?"

David Senra: Using Spotify?

Gustav Söderström: All of them.

David Senra: Okay.

Gustav Söderström: The time you spend on Spotify, YouTube, Apple Music, Amazon, TikTok, all of them.

David Senra: Okay.

Gustav Söderström: Just understand how you felt about it. But then we also asked the opposite question, "How much of your time did you regret afterwards?" And what was interesting was when we got that survey back, there were two things that surprised me. One didn't surprise me so much.

Gustav Söderström: We were actually the lowest regret content sort of on the internet in terms of the platforms we asked for, or if you flip it around, some of the time, most well spent on the internet. With Gen Z saying that they value almost 90% of the time they spend, they feel very good about it afterwards. So that was good, but what surprised me was the opposite, without naming which ones.

Gustav Söderström: On many of the big platforms, people regretted almost 60% of the time they spent or more, and these were young people. And what shocked me was, before I saw that survey, I knew that these were insanely high engagement platforms, but I kind of mistakenly thought that they were there because they wanted to be there.

David Senra: Mm.

Gustav Söderström: I'm like, "They're probably enjoying it." Turns out when you ask them, they're like, "No, I'm trapped. I feel horrible about the time I spent." So I was mistaken in thinking that they were there, and they loved the time. It's just very, very captivating. So then we decided, okay, we've had this as a saying internally for some time, let's just make it an actual strategy to be some of the most time well spent on the internet. And so when we look at something, we're talking about fitness now, for example. Why? Because we think very few people regret doing a workout or being fit.

David Senra: What do you mean you're talking about fitness?

Gustav Söderström: We just announced some partnerships with a bunch of companies, and we're investing in more three-quarters of... almost 70% of people on Spotify work out with Spotify. So we're investing more into fitness, into becoming an even better fitness app. So, this is one area, kind of like music, podcast, books. We're just investing more in it.

David Senra: What would that look like? My partner, Rob, was running through Central Park this morning listening to Spotify, so he was exercising while using your app.

Gustav Söderström: Okay, so this is going to come out in a few weeks. So I'll tell you kind of what we're going to talk about at Investor Day.

David Senra: Okay.

Gustav Söderström: I'm a runner. I'm passionate about running, and we see a lot of people running with Spotify, and they make their own playlists. One of the things I want to be possible, that is going to be possible very soon, is that you go into Spotify, you just tell Spotify, this is one of the good use cases of AI, I think.

Gustav Söderström: You say to Spotify, "I want running playlists for an eight-minute mile, and I want it to be in my taste, but I want it to be on the downbeat, either on both my feet or just one of my feet." Right? "And I want you to update it weekly." This is a pretty complicated task. So then what we want to be able to do is to first calculate an eight-minute mile. What does that mean?

Gustav Söderström: Well, roughly, if you're average height, maybe 165 steps per minute or something like that. Okay, now we got to go and find music in either 160 or half of that, 80, so it's either on every down step or every other down step. Okay, you're going to find some music there, but not a lot. So now you want to look a bit broader, and then you actually want to speed them up or slow them down to exactly 160 or exactly 80, and then you actually want to mix them together with perfect beat match transitions. Right?

Gustav Söderström: And then you actually want to overlay commentary on top of it, saying "Now you're going to go into the interval part, and now you're going to slow down," and so forth. So these are the kinds of experience that we're building. This is what I mean with going deeper into fitness. That's one of those No Regrets area or time well spent area.

David Senra: Yeah, no one spends an hour in the gym or an hour in running, like "Oh, f***."

Gustav Söderström: No, you come out and feel like, "Oh my God, I regret 70% of that."

David Senra: No.

Gustav Söderström: You don't. So it's been our guiding principle. And what I think is interesting about it is, I'm 50, I've done a lot of interesting things in my life. You got to figure out what you actually want to spend your life on, right? And I want to spend my life doing something that I feel good about personally and that I kind of feel proud of.

David Senra: You feel good, but the way a human's going to feel good is if what they're doing is actually in service of other people. I know you're into philosophy. Humans figured this out thousands of years ago. This is not a new idea. It's something that was true thousands of years ago. It's true today. It'll be true thousands of years from now.

Gustav Söderström: Everyone discovers it.

David Senra: Me and Milan, who's sitting over there, was talking to... He works at Spotify. Right before you came, I was talking to him about this, because he's just like, "You have two different podcasts on the business charts right now." And I was like, listen, this new show, I'm addicted to doing it. I can't sleep. I get wired from these conversations. I'm doing it selfishly. It's another form of education, but I really feel that Founder's podcast is my life's work. And the way I feel when I put that out, I know it's good for the world.

Gustav Söderström: Exactly.

David Senra: I know these conversations are good for the world. I was like, I'm not going to make f***ing podcast slop. I want it to be entertaining, but at the core, it's like I want you to be inspired and educated by these people that have accomplished great things. And then the point was just knowing that you can do it too.

Gustav Söderström: Yeah.

David Senra: That is good for the world. I feel good doing that, and it's not like, "I need to make certain..." It's not tied to anything else other than, like... It's not like, "Oh, I wouldn't do this unless I can make X dollars." I don't give a shit about that. The money will take care of itself. I care about putting out good things for the world.

Gustav Söderström: And I think to your point, everyone gets there, and every philosopher in history got there. The question is just how late in life do you get there? I think you got there a lot earlier than me. And some people never get there.

David Senra: It took me 32 years to find my path and another five and a half of f***ing struggling until it actually could sustain me.

Gustav Söderström: Yeah.

Gustav Söderström: Yeah.

David Senra: And then now it's just like I wake up every day, it's like I have no doubts what I'm doing.

David Senra: It's like I'm going to build... again, I'm mining these old books of somebody who did something amazing for ideas and insights that we can push down to the next generation of entrepreneurs.

Gustav Söderström: Yeah.

David Senra: And we're having a conversation just like this, where we talked before. Everybody's like, "Oh, you ask this perfect question for your audience." Like, I'm having this conversation selfishly, because I just know there's 10 million Davids listening to this that have the same interests, that want to know what is in...

Gustav Söderström: Yeah.

Gustav Söderström: Yeah

David Senra: You just said you're 50. You've been working at... You sold your first startup, then you work... You have such a singular life experience. This is what me and Daniel were talking about earlier, who the hell sells their startup, works at a big company for 18 years, then becomes CEO?

Gustav Söderström: It's a different path.

David Senra: It's a very different path.

Gustav Söderström: It's an unusual path.

David Senra: I want to talk about AI because...

Gustav Söderström: Can I say something on the previous thing first?

David Senra: Go for it. You're where I want.

Gustav Söderström: What I think is interesting with this time well spent is these things are sort of easy to say. I think everyone convinces themselves that they're doing good for the world, even the ones who don't, because I think it's very hard to be honest with yourself, totally honest, and saying, "I'm not actually doing anything good for the world." Very few people do that. They convince themselves.

David Senra: Oh, I have an example of this that I want to talk about.

Gustav Söderström: Yeah.

Gustav Söderström: Yeah.

David Senra: So, we get obviously all these pitches, and hopefully you don't forget where you're thinking.

Gustav Söderström: No, no. Go for it.

David Senra: But listen, no disrespect. One of my favorite movies is "The Godfather." And one of my favorite scenes is where Sollozzo goes to meet Marlon Brando. And Marlon's like, "Hey, it's none of my business how another man makes his living, but I can't get involved in that because you're dealing drugs to kids, and it's just not interesting to me." And so, I feel the same way. One of my principles I teach my kids is, rule number two is mind your own business.

David Senra: But I had somebody pitch me. They're like, "We want to do a deep partnership as one of the prediction markets," and I'm on the phone with them, and I didn't know anything about them. But the way they describe themselves, so like, "We're building a maximum truth-seeking machine." And I pull up on my phone, I go to... I'm not going to say the company. I type it in, and I go, "Dude, the first thing I see on your website is who's going to win the coin flip for the New England Patriots game. If you're just saying we want to f***ing gamble and make a ton of money, I respect that.

Gustav Söderström: Yeah.

David Senra: But don't give me this other bullshit that you're building maximum truth-seeking machines."

Gustav Söderström: Yeah, but that's my point. I think almost everyone has to convince themselves of that. So, to kind of call bullshit on us then, does it actually mean anything to do this? Well, it means that you have to stay away from some things. So one decision that we did recently was, you know how all podcasts are turning into video podcasts, and so we followed that.

David Senra: The only reason I do video is because you guys harass me.

Gustav Söderström: Exactly. So they are very popular. But there was a problem, which was that a lot of people, specifically parents, who felt that they had this time well spent. Now they started seeing these videos in there that they didn't want to see there, right? So they felt that their time well spent was going down. And then you're faced with a decision, like video is good for engagement, but these people feel that it's not good for their time well spent.

Gustav Söderström: So we made the decision, sort of the anti-engagement decision, to allow people, anyone to turn off video if they want to, and just listen, not just for the kids, but for themselves. That may mean that we take some engagement hit on that person. So if you're going to have these principles, you kind of have to live with them, and they're going to have consequences.

Gustav Söderström: Now, we still think this is very good business, because most of our revenue is from subscribers paying for their experience, almost 90% of the revenue. And I think that what you pay for when you vote with your wallet every month, you're not going to pay for your engagement or time spent. You're going to pay for the value you feel, right?

Gustav Söderström: If you feel that this was time well spent, if you feel that this was high value, you're going to say, "I want to pay for this." So I think when you pay with your own money, that is very, very well aligned with optimizing for what is good for the user. Whereas, in a pure advertising-based model, your incentives are clearly to maximize time spent at any cost. So, I think it's a luxury for us because most of our revenue come from subscription to not have that pressure. Maybe we lucked into that business model, maybe it was semi-deliberate.

David Senra: That's what I was going to ask you. There's no way you could have predicted that when you chose the subscription model, but it had to be subscription model based on your very first product, which is music.

Gustav Söderström: Yes. So now that we see it, we're doubling down on it. And I think it's going to be the right bet for Spotify. I think people are getting more and more aware of how their time is getting captured and how they have less and less control over their life. This, by the way, so leads us into AI, which everyone is talking about. And there's a lot of negativity around AI now, which I understand, and for good reasons.

Gustav Söderström: There is a promise for generative AI to be the most addictive algorithm you have ever heard of, because now it can understand you so deeply. There is potential for darkness over there, right? But what I'm trying to say, what we're trying to say is like, there is, but it's a dual-use technology. You could choose to do something else with generative AI. And so what we're choosing to do, for example, is to give back users control over the algorithm.

Gustav Söderström: So the other thing you can do is, which we're doing, so you can say, "Hey, David, here's who we think you are, using LLMs, and based on all your listening, this is who we think you are musically. This is the podcast we think you're interested in. These are the audiobooks that we think you're interested in." Then we can put a box where you can say, "No, you're wrong. Maybe that's what I do, but it's not what I want to be. I want even more biographies. I want to get back into classical music," which is something I've tried.

Gustav Söderström: But because I listen to mostly EDM. So now I can go in and say now I want to be, I want to have classical music, and now I get classical music. The best way I think to describe generative AI is that, finally, computers understand English. Like it used to be a small population of about one million developers on GitHub who could talk to computers. Now we all can. And so I think consumer companies could and should give everyone access to talk to them in plain English.

Gustav Söderström: So it means that at Spotify, we used to have these user research teams that sat with 10 users trying to understand deeply what they felt and what they did. Then we took those 10 users and tried to apply that to 761 million users. What if you could do that deep user research with every single user, all 761 million of them, all the time? Because you talk to them, and they talk back in English, high fidelity, and the experience just adapts to what they want.

Gustav Söderström: So my mission now is to sort of give back control to consumers over these algorithms. And it's contrarian, but I think it's the right bet.

David Senra: People like you and I will probably want more control. But you have 700 million users, what percentage of them do you actually think... I feel like people just want you to do it for them.

Gustav Söderström: No, you're not wrong. I think everything in the world is sort of a power law, right? Whether it's music listening, some people listen a little, and then some people listen extremely much. Everything is a power law. But I think what is interesting, what Spotify has gained from, if you look at playlisting, for example, some people playlist a lot. Most people have one playlist, maybe they're liked songs, maybe two playlists, some indie favorites. Some people have hundreds of playlists.

Gustav Söderström: So, sort of the story of Spotify and why we got good at personalization and recommendation in the first place was that we had, I don't know, 10 billion user playlists, which is people carefully saying, "This track goes well with this track, goes well with this track." It's an incredibly valuable data set. But to your point, it was heavily skewed. It was a few users, not a few, millions, but not hundreds of millions, that did a lot of work that benefited the others.

Gustav Söderström: Those people saying these tracks go well together meant that the others who weren't that into music, they didn't keep up with the new releases of the back catalog. They got amazing recommendations from the work of these people. And so, I think that's going to be true here as well. And in fact, I know it is true. We see some people engaging a lot, talking to Spotify all the time, saying that, "No, that's wrong, that's bad. It should be like this." They're doing a lot of work. They're making their Spotify better for themselves.

Gustav Söderström: But then we know that someone else who looks very similar to that, but doesn't have the time or knowledge to do all of that, actually probably wants the same thing.

David Senra: And they can benefit from the others.

Gustav Söderström: So, they benefit from the others.

David Senra: The analogy I had because everybody's like, "Oh, everybody's going to be building everything they want." And I was like, I don't think they're going to build it all.

Gustav Söderström: I don't think everyone's going to...

David Senra: Tell me if this is a stupid analogy. I'm curious about your personal opinion on this. But if you even look at how easy it is to post to social media? You put a picture, two buttons, and you're done.

Gustav Söderström: Incredibly.

David Senra: And it's something like 90% comes from one person, and then you have the next 10% do others, and then like 85% or 90% just lurk. They do nothing, but...

Gustav Söderström: It's a power law.

Gustav Söderström: Exactly.

David Senra: I feel like that's a good representation of humanity, where 90% are not going to build anything.

Gustav Söderström: Yeah.

Gustav Söderström: Yeah.

Gustav Söderström: There is this famous 1/9/90, right? 1% creates, 9% curates, and 90% consumes.

David Senra: Okay.

Gustav Söderström: Right? Something like that. And I think that's largely true. That's what I mean by the power law. But as I said, that 1% that creates and that 9% that curates, they can be incredibly valuable for the other 90% that consumes.

David Senra: And then allows you to do it for them which I think is what most humans want.

Gustav Söderström: Yes.

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David Senra: There's some context, I think, people need here. So, the fourth most listened-to podcast on my Spotify Wrapped for podcast was Spotify: A Product Story, which you narrated.

Gustav Söderström: Oh, really?

David Senra: That came out in 2021, '23, you remember?

Gustav Söderström: Yeah, something like that. Over a couple of years. Came out there.

David Senra: Long time ago.

Gustav Söderström: Long time ago.

David Senra: And it tells the history, which I think more companies... I talk to founders about this all the time, because you essentially are like, "Why don't we just tell our own company history?" And then you interview the people that were there at the time, like Sean Parker's in there, Daniel Ek's there, people that played a role, even if they only played a role for a few years.

Gustav Söderström: Yeah.

Gustav Söderström: Yeah.

David Senra: But the crazy thing is, you have entire episodes, I think from 2021 or 2022, dedicated to how you're using AI in Spotify way before. People have been talking about AI for 60 years, but even back then, way less people were talking about it than now. Tell me the difference in how you view AI back then in 2021, 2022, to Spotify, to today.

Gustav Söderström: Yeah. So my interest in AI, I think, as many... I was always interested growing up, and then I became an engineer and so on. In university, which was like in the late 90s, yeah, I was interested in it. There were neural networks back then, but you couldn't do anything, as computers were not powerful enough. And then I went into what was called IT, right? And I did my own companies, and I started Spotify. And then when I came to Spotify, we already had one of these large datasets of music playlists.

Gustav Söderström: And so, there were some very talented people there, specifically a guy named Erik Bernhardsson, who, at the time, this is 2009, was doing machine learning, something called collaborative filtering on what was the world's largest Hadoop clusters. And I'm like, "This is super cool." This scale of data and these algorithms, I haven't been thinking about it for a long time. So, I got very inspired by that, kind of got back into it.

Gustav Söderström: And then what happened was DeepMind started doing these reinforcement learning-based things. They had this thing called the Deep Q-Network that started beating Atari games, if you remember that.

David Senra: Mm.

Gustav Söderström: And it looked like a toy back then, like everything does. But I was so pilled already on the idea of how do we actually work as humans from a philosophical point of view? And I didn't have a good answer. No one did. But I had this idea that maybe it is computational, because it was the model of the artificial neuron. But it was hard to believe in the 90s.

Gustav Söderström: With these Deep Q-Networks from Demis Hassabis and David Silver, and the whole DeepMind team, you could see the scaling, like it's handling more and more complex problems. So, I got very deep into that. I went home, and I started coding again, and I did my own sort of recurrent neural networks, and LSTM, and GRUs, and stuff, just for fun during my vacations and evenings and nights.

Gustav Söderström: And we kept doing our recommendations problem, which was sort of old-school AI, which was called ML, machine learning. But then, when what is called the Transformer Paper came out in, I think, June of 2017. It was a paper called Attention Is All You Need. I think I read it in the first few days, and I was completely blown away by it, and I started talking to anyone who wanted to listen. So, I was just primed for that happening.

Gustav Söderström: So then, we started investing quite aggressively towards this. I think if you extrapolate it out, if you really believe in that exponential curve, which I've tested a few times, then eventually computers would be able to start talking to you and reasoning, and you would be able to talk to computers. We started preparing for that quite early. We bought this company called Sonantic to be able to produce voice.

Gustav Söderström: I mean, you can buy voice anywhere on the internet today, but it's quite expensive per minute. So, if you want to serve 700 million users with a few minutes of voice per day, you're going to go bankrupt. So, we bought this company producing voice very, very cheaply with a different technology, even before the LLMs were smart enough to produce the script for that voice, because we just bet on intercepting that curve instead of waiting for it and then building for it.

Gustav Söderström: So, I think it comes from a personal interest in AI, and then a bit of luck being at a place like Spotify that had access to lots of data. And then when you see it, you just have to bet on it. And I think the interest is a personal interest. Spotify is sort of my excuse to get as close as possible to the philosophical side of AI and sort of what it means to be a human.

David Senra: Say more about that.

Gustav Söderström: Well, I think you go through life, and I was thinking a lot as a kid about things, and there were a few problems that really dumbfounded me when I learned about them. One was this notion, I don't remember exactly when, but someone told me all the atoms in your body, or 99% of them, get switched out every seven years.

Gustav Söderström: And I'm like, "Yeah. Wait, what? Every seven years? What do you mean?" They're like, "Yeah, every seven years, they're all switched out." But that means I'm not the same person. So, if I thought I was my atoms, I thought I was my body; clearly this is me, and you're telling me. So, I see you in seven years, and I'm someone else.

David Senra: Mm-hmm.

Gustav Söderström: So then what am I? If I'm not my atoms, what am I? If you look at a rock, it is its atoms. You look at it, you come back seven years later, same atoms. But in you and me, your atoms may have been... First of all, most atoms never get destroyed or created, right? They're largely the same, so you may have a bunch of Napoleon atoms in your body or something, and when you die, it's going to go to someone else, right?

Gustav Söderström: So, it's just the construction of those atoms that is you for a very brief time, right? So, I got to that realization that you're not your atoms; you're the structure of your atoms. And another word for structure is information. So then, I'm like, "Okay, so it's the DNA." DNA is the blueprint, and you arrange the atoms in a certain... And that's you.

Gustav Söderström: And then someone said, "No, that's not really it either," because if you think about something for a long time, if you play the piano for a long time, so you think certain patterns, your brain will grow. You're going to get an overdeveloped musical center. If you're good at languages, your language center develops. The most famous example is cabbies in the UK. They have to learn all of London by heart, and when you brain scan them, they have a very overdeveloped center for three-dimensional thinking.

Gustav Söderström: So clearly, it's not static. What you think about moves those atoms around in new patterns, and it's not even the same atoms. The atoms get switched out over time. So now, you're not your atoms. You're not even the structure of the atoms. You literally are your thoughts. Literally, not as an analogy. It's the only thing that is constant is the processing information pattern, right? The atoms that do the processing get switched out.

Gustav Söderström: So now, I'm like, "Okay, shit, I'm information processing." And that was kind of a mind f***. And then I got comfortable with it because I'm like, "Well, now I can sort of live forever because if I'm information processing, I'm thinking in certain ways. That's really what I am. You could have instantiated me with some other atoms, et cetera. Then, if I bring some of that into my kids, if they're thinking a little bit in the same way, like 32% of me is still living in them because I am my thoughts, and then I transfer my thoughts.

Gustav Söderström: And if you're Ray Kurzweil, you say, "Well, now transfer them to a computer, and you get to live forever because you are your thoughts. And if that information processing lives there, that was really you. You were not your atoms." So, this whole thing of we probably are computational beings, information processing, I think, is what got me into AI in the first place. But then at university...

David Senra: Almost two decades ago.

Gustav Söderström: More than that. In university, in the late 90s, you couldn't do anything with it. The computers were not powerful enough. So, when you tried to instantiate those ideas, you built a neural network with a few nodes, and it slowed to a crawl, and it was unimpressive, and you're like, "Nah, that can't be it."

David Senra: Okay, so this is interesting. So, you've been thinking about this for multiple decades. You had to have this favorable occurrence of events that now lead you to have... I think you guys are the second-largest subscriber base in the world behind Netflix. Am I correct?

Gustav Söderström: Yes.

David Senra: And you have this huge data set. Now the technology can catch up with the thing you've been thinking about since you're in college.

Gustav Söderström: Yeah. It's a good excuse to get to spend all my day thinking about, learning about these things, and working with the best people in the business. I have the fortune of meeting all of these people that are changing the world. I get to meet them and talk to them and ask my interesting, stupid questions about things. So, it's just a fortunate position to be in to get to do something that you're passionate about.

Gustav Söderström: But I feel very lucky because I can do that, but I can do it in an area where I think it's still good for the world, and I can steer this towards what I think is a good outcome of AI, like giving back user control, for example.

David Senra: I don't want to skip over that because I truly believe we've had enough private conversations, and I know you talk to all the other people designing products with all the big companies. We talked about this privately in the past, and it's just like, yeah, some of them have made decisions where they know they have optimized. They're like, "Hey, we ran this test. This is great for engagement. It's terrible for mental health," and they're pushing. That's insane to me. That is insane.

David Senra: This is what we were talking about before we started recording. I told you, it sounds silly, but I deeply desire a world in which Steve Jobs is still alive because I obviously love technology. But I want the people building the technology that we all use on the scale that we all use it at to build tools, and that's all technology is, that enhance humanity instead of trying to replace it, or to make you dumber or fatter or just sucked into your phone and depressed, which I feel is a lot of what's going on now.

Gustav Söderström: Yeah.

David Senra: Which is, I think, what you said earlier was like, well, podcasts, we have this thing growing massively that's good for the world, assuming you're listening to the right podcast, and you should be listening to David Senra and Founders, of course. At the same time, when these people are destroying their brains in 15, 20-second, 5-second, 1-second scrolling. And it reminded me when you said that earlier; I was like, oh, if you go back and read Jeff Bezos' shareholder letters, he talks about why he invented the Kindle. He said the Kindle was an antidote to short attention spans. He was worried that people weren't going to read anymore.

Gustav Söderström: Yeah. I'm deeply impressed by the Kindle, by the way, as a product. And it's not just the technology, like the passive screens, and so forth. What people miss is the business model innovation they did. The WhisperSync, where it silently just updates in the background, because they bought a certain amount of mobile data. It's a great product.

David Senra: Explain the business model innovation on the Kindle.

Gustav Söderström: Well, normally, you would have to pay for data, so if you would've been lazy, which they weren't, you would've said, "Here's a Kindle. Now go and buy a mobile subscription monthly for that, for the books to update." Now, what they did was they signed deals with these carriers. They calculated the average book size, and they made a fixed-cost deal where all the data, sort of forever, was included in the price of the hardware. You bought this thing for a one-time cost, and it just magically updates. At the time, that was magic.

Gustav Söderström: There was good business model innovation on top of all the product innovation, which is something I'm very passionate about. I believe that technology is a necessary ingredient for change, but not sufficient. I think you can cause havoc with technology, like piracy, but when things really change is when you take a new technology and marry it with a new, often contrarian business model.

Gustav Söderström: This is the Spotify story of access versus ownership, for example, which is, by the way, why I would also love Steve Jobs to be around, but also not, because he tried to kill us many times.

David Senra: It's funny; we had this conversation, so we had Jimmy Iovine on the show earlier. And Jimmy was in the top three people I wanted to meet of all time because I love "Defiant Ones," the documentary of him and Dr. Dre.

Gustav Söderström: Yeah.

David Senra: And I've watched it, I don't know, now 10 times or something. And it's weird because me and Jimmy are friends, and we live close to each other. And he swears up and down; he's like, "I was going to kill him." He's just like, "Apple held me back." And I was like, "Jimmy, there's just no way." He's like, "You're a small part in a huge company that built the most successful consumer product of all time." These were small guys in a tiny... There's like 5 million people in Sweden, something like that? They only had one thing.

David Senra: I always love this idea. It was like, if you had to pick between, this is Josh Kushner's quote, where it's like, "If you had to pick the person that's the most experienced or the smartest or wants it the most, you always bet on the person that wants it the most." If they didn't succeed, they would've died. If Apple Music didn't work out, they would've been fine. And I think he said when he started the fight with you guys, you guys only had, I don't know, 3 million or 10 million or 15 million subscribers.

Gustav Söderström: Yeah, we were tiny.

David Senra: And then you just smoked them.

Gustav Söderström: A lot of people were very, very scared at the time.

David Senra: Because he was a legend, and he still is.

Gustav Söderström: He was a legend.

David Senra: He's a killer. I mean, dude, to this day, even though he's retired.

Gustav Söderström: He's the best.

David Senra: I mean, me and Daniel talk about this all the time because it's just hilarious, because they're obviously close friends too. And yeah, he's a formidable individual. But again, I think being onto a bigger company, and again, it was just very fascinating.

Gustav Söderström: Yeah.

Gustav Söderström: But imagine that you're a fairly small Swedish startup, and you think you're good at product, and then the biggest, most respected product company in the world, and the person you look up to the most, Steve Jobs, says that he's coming after you. But not only that, he goes and buys Beats Music and brings in Dr. Dre and Jimmy Iovine. It's like, "We're going to kill you." That's what they literally said in their internal meetings. "They gave us six months." Those were hard times.

David Senra: Yeah.

Gustav Söderström: We worked very hard. But it worked out. There have been a few of those moments.

David Senra: There's a great line, though, about this because, if you think about it, Jimmy is experienced in the music industry; it's just fascinating. They tell the story in the, obviously, documentary, starting out sweeping the floor in the record plant, and then becoming an engineer, and then a producer, and then one of the most successful creators of a new record company, and then building products.

David Senra: The reason I recommend people studying his story is because the people that can succeed in so many different domains, over multiple decades, that's not luck.

Gustav Söderström: Yeah.

David Senra: There's something going on that they know.

Gustav Söderström: 100%. Yeah, you don't get that lucky that many times.

David Senra: Yeah.

Gustav Söderström: For sure.

David Senra: So, it had to be terrifying from your end. But the one thing I think there's a great maxim from "Game of Thrones," which I'm obsessed with, and it says, "Those on the margins often come to control the center."

Gustav Söderström: Yeah.

David Senra: And if you think about it, it couldn't have been more marginal than this group of Swedish guys in this tiny country trying to take over and build the company you guys built.

Gustav Söderström: There were some good, hard reasons for why we didn't get crushed then.

David Senra: What do you think they were?

Gustav Söderström: Well, I think the content side of the business was incredibly worried because if it was only about content and only about musicians, you had hip-hop, which has the largest appeal in the US, and all these powerful people. But there were some structural reasons. One is, when we created our strategy, we bet on three things, and they were all basically counterpositions to Apple deliberately. One was freemium.

Gustav Söderström: We believe that Apple would, if they even did a free product, they would struggle to do advertising.

David Senra: Just hated ads?

Gustav Söderström: They tried the iAd, but they wanted so much control that it didn't work. So, we bet that they wouldn't do a good free tier, and so we focused a lot on freemium and a really good free tier. The second was personalization. Because Apple was, I would almost say, against data at the time, we bet that they would never get good at personalization and recommendation. And we believed that was the future. The third was ubiquity. We bet that they were going to prefer their own products and never be good on a Samsung TV or an Android phone.

Gustav Söderström: So, these were our three bets: freemium, personalization, and ubiquity. And I have to say they panned out really well. They're still struggling on... They had a free tier for a while at radio. They pulled it back. Ubiquity, I think, they still struggle to be good on non-Apple hardware. And personalization, I want to say we're better.

Gustav Söderström: So, there were real strategic reasons, and still are, for why I think we held out. But it was also, to your point, for us, this was not optional. We either died or we did this, right?

David Senra: You're burning the boats. They're back against the wall. What are you going to do?

Gustav Söderström: Or, I think to your point, I don't know what prior Apple Music was at the time, but it was not more important than the iPhone, for sure.

David Senra: I found one of my all-time favorite quotes when I was reading the book "Zero to One." The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas." That is exactly what AppLovin has done with their advertising platform, Axon. Axon connects you with over a billion potential new customers inside mobile games. Axon allows you to capture undivided attention.

David Senra: Axon ads are full-screen video ads that are watched for an average of 35 seconds. That is retention that blows other ad platforms out of the water. You can launch on Axon in minutes. You set the goal, and Axon achieves it. There's no complex setup, no expertise needed, and Axon scales quickly. They can put your ads in front of over a billion potential customers.

David Senra: Other businesses have seen immediate results, have scaled to hundreds of thousands of dollars of spend per day, and increased their revenue by millions. So, you want to get started quickly before all your competitors are on Axon, and you can do that by going to axon.ai/senra. That is axon.ai/senra.

David Senra: Everybody's going to know what Spotify is. I don't think many people know who you are. You've only done a few podcasts. The one you did with Patrick, I thought, was excellent. But I want to go into some of the things that I know about you that I think are very unusual. We talked about the kind of the dangers of some of these social apps, and you have built your own AI agent. Can you explain how you consume "X," for example, what you've built?

Gustav Söderström: So this is something I'm working on at Spotify, and we released this just a few weeks ago: something called Save to Spotify. When you sit in your code or Codex or something, you can ask these agents to go out and look at information for you, write your podcast script, and then generate a podcast. And then we allow you to upload that to Spotify, but privately, right? Because you may put private information in there. Maybe you want to prep for your interview as I did today.

Gustav Söderström: I don't want that to be all over Spotify. So, we now support private podcasts or personal podcasts. And so, what I do is I use these agents, and I take a combination of my personal information, so documents I have and things I want to prep for, and then what I'm interested in across my different services, all my interests. Spotify knows my interests pretty well from all my listening.

Gustav Söderström: It goes out and looks up what's happening in the world, and then it gives me this update that is deeply personal about what's happening in the world that I might be interested in. So, it's kind of like a personal algorithm that filters out a lot of the noise and the crazy that I don't want to hear, and just gives me the stuff that I want to hear. This is the kind of user control that I would like to give every user, but it's the kind of user control that you can have now if you're prepared to put in the work.

Gustav Söderström: And what's interesting is, I didn't expect this, but I found so much music and podcasts through this. Then it's filtered to the people that I'm interested in, that I follow on different social media, and so forth. So, it's the thing that is being talked about among the people I care about. So, for example, your episode with Evan Spiegel came up again and again, with lots of commentary in my personal podcast, saying this stuff: this is really interesting for you. You should listen to this, because there is product wisdom in there and so forth. I listened to the whole episode, which I really liked, by the way.

Gustav Söderström: I'm thinking about stealing his framing of, we used to have all the ideas but limited resources. Now we have all the ideas and all the resources. I really like that.

David Senra: Yeah. The thing about Evan people give me shit. They're like, "Yeah, but look at his market cap." I was like, I don't care about his market cap.

Gustav Söderström: No.

David Senra: I care about that you think he is truly differentiated.

Gustav Söderström: He is different.

David Senra: And I spent a bunch of time with him. At the end, I was like, I just want him to win. I don't care about his... We can figure it out. And then everybody's like, "Oh, but his stock's down 80%," or something like that. So, I just went to ChatGPT, and I was like, how many times did Steve Jobs suffer a 75% decline? It was like four times. This happens in everybody's career. The kid is young. He's not a kid.

Gustav Söderström: Mm-hmm.

Gustav Söderström: Yeah.

Gustav Söderström: Yeah.

David Senra: The guy is young.

Gustav Söderström: Yeah

David Senra: Let's see what happens over the next decade.

Gustav Söderström: Yeah.

David Senra: But the fact is, he's got a lot of very, very interesting ideas that no one else has. And he invented a pattern on social media that a billion people use every day.

Gustav Söderström: He invented several of them, right?

David Senra: Yes.

Gustav Söderström: The disappearing image, the stories, all these things.

David Senra: You think that guy's not interesting to hear talk for an hour? You're f***ing crazy.

Gustav Söderström: Of course. No, I like him. Maybe it's because I'm a product guy. Design guys are close, but I like him for sure.

David Senra: This is one of the most fascinating things about you, and I think it's really, really important to drill down on, and it's really dangerous for people not to do. You are constantly trying to eliminate noise. Even before you turned this into an audio, you're essentially taking text and turning it into audio now with the feature you just talked about. But when we talked about this, or maybe I heard you... I think you told me about it, or maybe I heard you talk about it on a podcast. You could read it, though, before, right?

David Senra: It was like stripping out all the crazy shit that happens on X, or the people fighting over politics, and it's just like that. What are the people I care about? What are they talking about?

Gustav Söderström: Yeah.

Gustav Söderström: Exactly, so...

David Senra: That's not going to induce me, like, it's not going to raise my cortisol levels or make me sad.

Gustav Söderström: So, I literally ask my agent to filter for rage bait, filter for clickbait, filter for politics. This is the kind of user control that you can have now that very few people understand that you can have yet, and it's too complicated, but you can have all that control. So, what I think is most people kind of know what they want, but you get captured in the moment. It's like you want something, and then someone puts candy in front of you; you're going to take that candy.

Gustav Söderström: So, what is interesting is, can you give people the chance to decide their own future ahead of time? This is the idea behind the taste profile and behind these agents. I'm not better than anyone else. I get captured all the time. So, my specific pet peeve is road rage. I'm so fascinated by it. I just go down dark holes of road rage, because it's the weirdest thing. These supposedly fully normal, smart people, they waste their entire lives and go to jail.

David Senra: They shoot into cars and kill kids.

Gustav Söderström: Yes.

David Senra: Like, it's disgusting.

Gustav Söderström: And then afterwards, you realize that, no, they were pretty normal people. It's just somehow inside your car, you lose it. So, I go down that rabbit hole, and I watch hours of road rage, right? But what I can do now is I can say, "Don't show me road rage," because I know what's going to happen. So that's like, what do you call it? Ahead of time, premeditated.

David Senra: Yeah, premeditated.

Gustav Söderström: Premeditated media is something that I think everyone should at least have access to if they want to.

David Senra: Yeah.

Gustav Söderström: It works for me, and I think it will work for a lot of people, and I think that need is not going to get less. It's not going to get smaller. It's going to get bigger. So, I happen to think it's also good business.

David Senra: Something just popped into mind when you were speaking just now. I'm very curious who influenced... So, we're talking about essentially your information diet, right? And what you're letting into your mind, you talked about, we literally are our thoughts.

Gustav Söderström: Yeah.

David Senra: Like, you're crazy to let people get into your brain and affect you. And I was talking to MrBeast about this yesterday, where he's just like, "I don't think people should have Instagram," because it's just making all these young kids comparison is the thief of joy, and all they're doing all day long is comparing somebody else's highlight reel to them, and it's just very, very bad for you to let that into your brain.

David Senra: One of my favorite things, I think Daniel said it on this podcast last year, where I'm always curious when I get to meet people, especially very insanely successful people. It's like, "Who tells you the truth?" is a question I always ask because it's very few. A lot of them kind of have this almost cloud of sycophants around them that are filtering their knowledge that's getting into them.

Gustav Söderström: Yeah.

Gustav Söderström: Yeah.

David Senra: And what they'll do is they'll seek out people they can trust, and that will tell them the truth. And I think he told the story of you being one of those people for him, for Daniel, because you pulled him aside, and you're like, "Hey, you're running product, and you're not good at it. You're kind of f***ing this up." And his response was, he went home; I think he told his wife. He's like, "Oh my God, I have to fire this guy; it was you." Then he thought about it; he goes, "Oh, he's right. It's like he just did me a service."

Gustav Söderström: Very few people are that strong can take that kind of... But that's why he's successful.

David Senra: Yes.

David Senra: Yes.

Gustav Söderström: Right?

David Senra: And so, I think this is really important. So, who does that for you?

Gustav Söderström: So, I do a version of the same thing. This is back to the thing of long tenure. So, I have people who are long-tenured. I've had huge disagreements with them. And they've realized that when they talk back to me, or they get upset with me, there are no consequences, right? But that comfort takes a long while to build.

Gustav Söderström: You can't expect someone to come in, especially if they've come from corporate America, and expect them to stand up to you, because usually, there are consequences. You just get fired. So, I've built...

David Senra: Oh yeah, but people don't know, you're a brown belt?

Gustav Söderström: No, no, no. I'm a blue belt.

David Senra: Oh, blue belt in jiu-jitsu, so you could also choke them.

Gustav Söderström: There are many people who could choke me out, so that's a risky path to take.

David Senra: Yeah.

Gustav Söderström: It's the tenure. I have a bunch of people around me who I think and hope feel comfortable saying, "No, you're wrong. I think you're just not understanding this." And I think so because they do. And they've learned that I can't always control myself. I'm very passionate about something. I'm like, "No, you're wrong. That's stupid," blah, blah, blah. And then they know it's not going to be consequences, so they say it anyway. I try to do that more in one-on-ones or small groups. Sometimes there's a big meeting.

Gustav Söderström: Someone who has worked with me for a long time feels very comfortable; just says, "No, I think that's a stupid idea." And I'm like, "No, your idea is stupid." And everyone around is like, "Oh, shit. Now everyone is going to get fired." So, you have to build that trust over time. And so, I have a version of the same.

David Senra: Okay, so we talked about tenure at the very beginning of this conversation, where I never finished a thought when I was asking MrBeast about turnover on his talent team, the most talented people in there. And he's just like, "There's a value here," because the guy that runs his operations has been there. They used to live together. He's like, "I've spent, not 10,000 hours talking to this guy, 30,000 hours," where they walk on set, and since he's running his operations, they're running like 10 at a time.

David Senra: MrBeast can walk on set, and before he looks up, the guy, his name's Tyler, he's like, "I already know about this, and this is why I made this decision, and we're doing this.

Gustav Söderström: Yeah.

David Senra: And oh, you may not like this shot, but we're doing this shot because it allows us to shoot from this angle." And then literally nothing has to even come out. It's like they're... What's the thing from "Star Trek" with the Vulcan mind meld, I think it was called?

Gustav Söderström: Yeah.

Gustav Söderström: Yeah, exactly.

David Senra: So see, that's what happens.

Gustav Söderström: Yeah.

David Senra: And he said the greatest thing. He goes, "You don't get that in 100 hours."

Gustav Söderström: So, one benefit of tenure is the trust. People keep you honest, unless you become too full of yourself, which is always a risk with success. But the other benefit is just the efficiency of people know. You don't have to give as much context. There are some downsides to tenure, which is the opposite of Elon's. You don't get fresh blood as much, and so you need to be careful. Maybe you're just a group of old people eventually. Right? So, you have to control for that. So, I try to make sure that we also hire some new people, but these are the two benefits, just efficiency and trust.

David Senra: The group of old people, you have to be very, very careful with. Think about the most talented people that Walt Disney had. It was these nine guys, these animators. I think they used to call them the old men after Walt died. And I just talked to Ed Catmull, the founder of Pixar.

Gustav Söderström: Mm-hmm.

David Senra: And they're going in there; he's a young technologist trying to pitch them, "Here's a new way to animate." And Walt's dead. These guys are old. There's no fresh blood. They're like, "The computers will never be able to do the stuff that you're talking about." It's like they reject it.

Gustav Söderström: Yeah.

David Senra: It's very human nature to just reject these new ideas.

Gustav Söderström: Yeah.

Gustav Söderström: So, it's back to you to optimize for some things, but then you have to mitigate for the other things. So if you're optimized for tenure, you have to mitigate for the risk that you don't get fresh blood, that your career ladder is slow. So, maybe people who are talented feel like, well, that's going to take 10 years to get up the career ladder. So then you have to create programs for that to give them exposure.

David Senra: It took Gustav 18 years to get to the CEO .

Gustav Söderström: Yeah. It took 18 years to get CEO. Wow, it's a long time. Finally made it. But it is the same principle.

David Senra: Well, how do you get new talent then? What are you guys doing literally at Spotify? Because I know you have the same idea. You guys have the same idea that Tobi from Shopify talked to me about, and my friend Karim from Ramp does.

Gustav Söderström: Yeah. That was another great episode, by the way, the Tobi episode.

David Senra: Yeah, he's the best.

Gustav Söderström: Yeah.

David Senra: But that you guys are fine hiring for spikes.

Gustav Söderström: Yeah.

David Senra: Today, how are you getting your huge platform business around for... I think it just celebrated 20-year anniversary, right?

Gustav Söderström: Yes. Exactly.

David Senra: Yeah. How are you getting new young talent then? How do you think about that?

Gustav Söderström: So, it's a couple of things. One is that you get junior talent, and then we have this Rising Stars program. We literally ask managers to identify, like, these are rising stars. So then we have a program for them every year. It's like maybe 20, 30 people. And so they get to go on this program where they go out into the different markets, like India, the US, Germany, etc., and learn about the different problems in different markets.

Gustav Söderström: Then they go and sit with Alex and talk to him; then they sit with me. It's literally this internal MBA program where you learn business, technology, product, and you build relationships across the org. Right. So now, these people come out 12 months later, they know everyone in Spotify across the world, so they can get anything done. So now they're going to start rising much faster.

Gustav Söderström: So, we have these specific programs to identify the talent and help them accelerate versus the organic path of them doing something, getting noticed, and slowly working their way up. So, that's one thing. But then every now and then, you also just have to hire at the more senior level, right? So, if you look at when AI started happening, or it was called machine learning back then, I felt that we just weren't strong enough in deep learning specifically. We knew the old-school matrix factorization stuff.

Gustav Söderström: So, we did an acquisition of a company called The Echo Nest in Boston, just to get very close to MIT. And then we had a bunch of talent in that field and established ourselves. So sometimes you have to do acquisitions and just get when it's a completely new skill. Something like, if you need to get big in crypto quickly, yeah, you can wait for years for the organization to understand crypto and learn. You may have to acquire or hire at some senior level.

Gustav Söderström: You have to mitigate for the problems of tenure. And if I'm going to make some far-fetched analogies, maybe this is one of the challenges that Apple had with machine learning and AI on average.

David Senra: Is that what Siri is so bad?

Gustav Söderström: They were slightly too old to see that. Probably, people in their org knew all about it and were all over it. It was just too late to see it. They should have just gotten someone at a more senior level sooner. So, sometimes you have to mitigate the drawbacks of long tenure as well.

David Senra: What's the thing that keeps you up at night? What do you think the weakest spot for Spotify is right now?

Gustav Söderström: I think the thing that keeps me up at night is not surprising: what AI truly means in the limit. I'm pretty sure that media habits are going to change because of AI. And so, I don't think it's an option to just sit still. But the way I think about it is the world moves in macro waves. You get some new technology, it often causes a bunch of havoc. Then there's some new business model that emerges, and then things change, right? This was the original Spotify. We kind of rode on the macro wave of cheap broadband and PCs, right?

Gustav Söderström: And then all of a sudden, they were so ubiquitous, and the broadband was so fast you didn't actually need to own files anymore. You could just stream them, right? We realized that. We built a business model around it. That became very disruptive to the download industry and so forth. And then you wait a few years, everything looked great. Then the smartphone came along, and now everything changes again. You have people that don't have a computer.

Gustav Söderström: We only had a free tier on the computers. We had no free tier. Turns out that while the PC and the internet, the desktop had such low latency that you could stream it, if you tried to stream a song over cellular back in 2008, it wouldn't even start. It was 20 seconds to start, and it would choke. So, everything changed again, and then we had to adapt to that. And we managed to. We came up with the offline sync business model, and the mobile model, and so forth.

Gustav Söderström: But then you get these periods of stability. So, if I were an analyst, and I tried to predict the world between 2015 to 2025, those 10 years, just what would the world be like? I would have done really well to just extrapolate. More mobile, more subscriptions, more ads, just more of everything, and you would have gotten really close to what happened.

Gustav Söderström: But if you would have shifted that 10 years earlier, from 2005 to 2015, you would have extrapolated PCs and the internet. You would have missed the smartphone. You would have missed everything. You would have missed Uber. You would have missed the entire world. So the question is, which era are we in? Are we in the calm waters of extrapolation or in the macro change? I think we're in one of these where everything changes.

Gustav Söderström: So, I can't tell you what's going to change, but I'm pretty sure that things are going to change. But the way we think of it as a company is that the scariest periods are the periods of change. Guess when Spotify grew the most?

David Senra: Periods of change.

Gustav Söderström: Periods of change. When things are stable, market share stays stable. You don't eat market share. So, when there's change, there's risk you can lose market share, but that is also when you have the most opportunity to eat market share if you adopt the change. So, my principle is just always be first. Be first and adopt it first. Like, the world is going to change. Just accept that and get ahead of the curve. So, I think this is a time of great opportunity for us to do new things, but it is also the thing I'm thinking about constantly. What does it actually mean, and what are the right bets?

Gustav Söderström: Are the right bets to bet on user control, and these things are, whereas others are going to bet the complete opposite of us. So, that's what keeps me up at night, is we're still in this change. It hasn't finished yet. No one knows exactly where it's going to end up. They're going to be the Ubers and Airbnbs of this era. And maybe they are OpenAI and Anthropic, but maybe not. Maybe it hasn't even happened yet.

David Senra: That's a perfect place to end. Gustav, thanks for doing this, man. Always good to talk to you.

Gustav Söderström: Thank you, man.

David Senra: Appreciate it, man.

David Senra: I hope you enjoyed this episode. Please remember to subscribe wherever you're listening, and leave a review, and make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders.