Preparing for a Great Meeting: Spotify CEO Daniel Ek

Source:  Wikimedia

The Observer Effect has published a fascinating interview with Daniel Ek, CEO of Spotify.    Ek has a clear and concise take on how to tackle important issues, define his role in the decision-making process, and design effective group meetings.  Here's an excerpt on how he thinks about defining his own role in the decision process in advance of discussions with his team members:

I typically tackle one topic a day which takes a lot of my time. That's my big thing for the day. Before we go into a live team discussion on that particular topic, I invest time to prepare beforehand – reading and talking to members of the team who are either part of the decision-making process or who have insights and context. I sometimes even get external perspectives.

I also think about what my role is at that meeting. Sometimes I'm the approver. Other times, I'm supposed to come with a thoughtful perspective on whether an initiative makes sense or not.   I’ve found that creating this clarity of role for myself is critical. It’s something I challenge my direct reports to think about as they engage with their own teams. I remind them that all meetings are not the same. Even when we are meeting to discuss really, really complicated topics I always ask myself: “What am I going to do in this meeting? What does my involvement really need to be?”

The truth is: it's entirely contextual. I find it crucial to be upfront about everyone’s role in different meetings, I think this is super, super important. Often that's my number one thing: to make sure I know what role I'm playing.

Then, Daniel Ek explains the critical attributes of a highly effective team meeting.   Here's another excerpt from the interview:

A great meeting has three key elements: the desired outcome of the meeting is clear ahead of time; the various options are clear, ideally ahead of time; and the roles of the participants are clear at the time.

I often find that meetings lack one of those elements. Sometimes they lack all those, which is when you have to say, “This is a horrible meeting, let's end it and regroup so it can be more effective for everyone.”

To clarify outcomes, options, and roles ahead of time, we sometimes rely upon a preread. Prereads are a great way to share context so that attendees can quickly get into the meat of the issue and not waste time getting everyone up to speed.

I've always believed that the best leaders think carefully, in advance, about how to structure the decision-making process.  Moreover, they are thoughtful about their own role in that process. Ek does a nice job of articulating the value of this approach from the perspective of a leader running a large, fast-growing organization.  

Can Spotify Grow Its Way to Profitability?

Shira Ovide has written a good column for Bloomberg BusinessWeek regarding Spotify's IPO. In the article, she highlights a crucial difference between the Netflix and Spotify business models. It's a distinction that I've discussed in depth with my students.   It's a wonderful lesson in marginal vs. fixed costs.   Here's an excerpt from Ovide's column:

However much Spotify resembles Netflix in spirit and business approach, the services diverge in a way that makes Spotify’s path to profit significantly trickier. The video streaming company’s programming expenses don’t rise as it lures more subscribers. But as Spotify gets bigger, its streaming music costs increase; it can’t grow its way to profitability. Spotify’s product—35 million songs—costs the company more as more people sign up. 

Ovide does acknowledge that some costs will fall as Spotify continues to grow.  As the company gains more clout, it can negotiate better royalty deals with content providers.  Still, growth alone will not drive strong profits.  Marginal costs will remain positive, unlike Netflix.   Ovide argues that Spotify will have to diversify its revenue streams, as it has begun to do and as its chief financial officer discussed recently.  Ovide raises one other possibility, but she dismisses it as unlikely - that is, could Spotify develop its own content, as Netflix has done.  In other words, could it sign up musicians directly, disintermediating the record labels.  That's a highly risky strategy that could undermine the entire business though.   

The future will be fascinating to watch.  As a Spotify customer, I enjoy the service a great deal.  They clearly have lowered the cost for me to listen to the music that I love.   Will advertisting be a key revenue stream moving forward?  In the past, that has been the path to profitabilty for a number of companies.  Yet the Facebook crisis suggests that people are growing a bit more concerned about what a reliance on advertising can do to online platforms.  The Facebook mess should cause Spotify to tread carefully as it tries to drive new revenue through advertising.  The challenge will be to develop this revenue stream in a responsible manner, and in a way that does not scare off customers who are now waking up to the downside of "free" online platforms.