AIB Featured Business Leader – Daniel Ek
Described as a serial entrepreneur and technologist, Sweden’s Daniel Ek has achieved a great deal at just 33 years of age. Most notably, Ek is the co-founder and CEO of commercial music streaming service Spotify, as well as previous CEO of uTorrent. Starting his business journey at the young age of 14, Ek started his first company in 1997. He grew up near Stockholm, creating websites for businesses as a teenager, and running web-hosting services from his bedroom. He worked for several online-based organisations before founding his own online marketing firm, Advertigo, which in 2006 was sold to Swedish company TradeDoubler, allowing Ek to establish a relationship with TradeDoubler’s co-founder Martin Lorentzon.
That same year, Ek and Lorentzon established Spotify – a music streaming service that provided an innovative option to listeners, compared to others on the market at the time. Ek’s idea was that people would not be charged for song downloads, instead, he provided two options. The first was that customers could listen to online streaming for free if they were willing to allow advertising. The second was that they could receive the same service but with no advertisements for a small subscription fee per month. Route Note asked Ek which of his early decisions resulted in Spotify’s success, where he explained, “We chose a narrow market to begin with that we knew how to serve well – Sweden. Had we started in the US, there’s no way we would still be around.”
In October 2008, Spotify was officially launched with Ek as the CEO. From the outset however, Ek faced his challenges as the music industry showed little interest for his ideas. They believed that Spotify’s license to stream music resulted in less revenue per song than it got from competitors such as Apple’s iTunes. Ek argued that Spotify discouraged online music piracy by providing a low-cost alternative and that the service would, over time, generate substantial royalties for the music industry. Despite this pushback, the platform quickly grew in popularity and venture capital money began to flow in. In 2012, Spotify offered 18 million songs and boasted more than 20 million monthly active users.
When asked about competitors such as Apple and Amazon, Ek shared the following business lesson.
“I believe in focus. All of the companies you mention have music as a hobby, a very small part of their overall business. We do one thing and try to do it really well. This means we have a company 100% dedicated to finding the right content, personalising it for you and serving it up with partners who are specialized in what they do. The big platform companies don’t generally like partnering. We do. This opens up lots of doors.” – Route Note
This is a great business lesson for all readers as many businesses fail because they try to be too versatile – Ek encourages entrepreneurs to focus on what they know, and perfect it.
These days, Ek is reportedly worth over $400 million, and has been inducted into SUP46’s Swedish Startup Hall of Fame. He has achieved a significant amount for such a young age, and is unlikely to slow down any time soon.
What do you think?
I’m keen to hear what you admire most about his journey – perhaps his background, or his idea to pursue something that already exists, but better? Comment your views below to join the conversation.
This article was written by Laura Hutton on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB. The following sources have been used to prepare this article: Route Note; Spotify; Wikipedia; Stanford; Britannica; The Richest
Image Credit: Route Note