Spotify is joining the growing list of big tech companies to announce some layoffs in a challenging economic context. Today, Spotify CEO Daniel Ek announced that the company will be laying 6% of its staff, which represents approximately 600 employees.
In a memo to employees, the Spotify CEO took full responsibility for this decision after Spotify made “a considerable effort to rein-in costs” in the last few months. According to Ek, the growth of the company’s operating expenses outpaced the company’s revenue growth by 2X last year, and it was no longer sustainable to maintain a status quo.
“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us,” Ek wrote. “In hindsight, I was too ambitious in investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6% across the company. I take full accountability for the moves that got us here today.”
As part of this restructuring, Spotify is also making some management changes. Dawn Ostroff, the chief content officer and advertising business officer of Spotify who was responsible for growing Spotify’s podcasts and audio advertising business will be leaving the company.
In the past couple of weeks, Amazon, Meta, Google, and Microsoft all announced that they were laying off over 10,000 employees. As Ek explained, big tech companies are all returning to pre-pandemic levels of activity, and the uncertain macroeconomic environment is also posing some unexpected challenges for all organizations.
“My focus now is on ensuring that every employee is treated fairly as they depart,” the Spotify CEO said today. Ek is also looking positively at the company’s pipeline for 2023, and he ended this memo by teasing “a steady stream of innovations unlike anything we have introduced in the last several years.”