Wednesday, February 19, 2025

April 4, 2018

How 35-Year-Old Daniel Ek Turned Spotify Into A R300 Billion Business

"Music, makes the people, come together" sings Madonna. It has also made Spotify founder Daniel Ek a billionaire many times over.

When Spotify was founded in 2008, not many knew what to do to fix music’s declining revenue.

Illegal downloads were stealing money from the artists, and there was a sense that the trend couldn’t be turned around.

But the music-streaming service changed that, and has made its founder, Daniel Ek, a billionaire, reports The Telegraph:

A millionaire at just 23 year, Swedish entrepreneur Ek already seemed set for life. The computer whizz kid had cashed in on one of his first ventures and in 2006 was rich enough to consider an early retirement.

But soon he had started work on a venture that would shake up the failing music industry, create a new breed of music company and force the sector to wake up to the impact, and potential, of the digital age.

Spotify now has 157 million users, and more than 70 million paying subscribers – including me. It has built a music force that has double the paying members of Apple, perhaps because it adds more than 20 000 songs every day.

In a 2010 interview, Ek said his company would soon be worth “tens of billions”, and that he would “never be interested in selling”:

In his letter to investors published this week, Ek credited his childhood with giving him a passion for music and technology. Growing up in Rågsved, Sweden, at 14 Ek began his first business as a teenager out of his bedroom charging $100 (£71) a go to build websites, according to a profile by Pando.

A university dropout, Ek worked for several tech companies before founding an advertising company called Advertigo, which he sold for more than $1m in 2006. As a millionaire in his early twenties, Ek lived life of parties and even considered an early retirement, yet just months later he was working on plans for Spotify.

Ek’s own love of music is broad, with early favourites including Led Zeppelin and the Beatles, but his own personal Spotify shows tastes varying into hip-hop, RnB, dance and spanning the decades.

In the mid-2000s, iTunes was coming to dominate paid-for digital music, but still could not compare in ease of use to many pirated music sites. Ek grew up on file-shared music in the Napster generation and Sean Parker, the founder of Napster, was an early Spotify investor.

Ek hoped to bring easy the user experience that pirated music had created, while turning the music business into a 21st century industry and bringing music from around the world to listeners.

As of yesterday, Ek is worth $3 billion.

In case you missed it, Ek made his billions when his company launched a direct listing on the New York Stock exchange yesterday, reports MyBroadband:

Spotify Technology SA’s shares — sold via a direct listing rather than a traditional IPO — finally opened well after midday at $165.90 apiece in New York, with 5.6 million shares changing hands at that initial price, according to data compiled by Bloomberg.

They closed about 10 percent below the opening price, at $149.01 each, valuing the startup at almost $27 billion.

With plans to invest the money into the future of the company, Ek said in a note to employees: “It’s the day after, and the following day that matters”, and signed off with lyrics from Daft Punk:

“Harder, better, faster, stronger.”

Tough life.

[source:telegraph]