The Men Who Saved The Music Industry With Spotify
How would you feel if you were rejected by Google at the age of 16?
Angry? Inspired? Maybe even motivated to show those bosses what they missed out on?
But who gets hired by Google at the age of 16 anyway?
Daniel Ek, one of the founders of Spotify would have made history. Fortunately, for every music fan in the world, he switched career preferences and followed his dreams and eternal love for music.
For a second there, he even thought it would be easy - just like he thought building another search engine like Google would be a piece of cake. But he and his co-founder Martin have witnessed, lived, and overcame the two sides of every entrepreneur story - the rise and fall - only in reverse.
Read their story here:
The Not-So Rocky Start
With some people, you just know that they are going to make something spectacular in their lifetime. In most cases, that’s discovered during childhood.
Daniel wasn’t an exception. He was born in 1983, in Stockholm, Sweden in a pretty modest family. His father was a mechanic and his mother was a childminder.
However, there was nothing average about the musical talents his grandparents possessed. Daniel’s grandfather was a jazz pianist and his grandmother was an opera singer, making them the cornerstone of Daniel’s love for music.
But the road back to his roots wasn’t a smooth ride.
He considered himself a geek while growing up, a kid who was fascinated by technology and music. By the age of 14, he learned C++, a programming language quite popular for the late ‘90s. He continued to work on his programming skills by learning HTML, CGI programming, all while still going to school. As smart as he was, Daniel used his knowledge to make money.
First, he built home pages for local people, as home pages were ‘a big deal’ in the ‘90s. His first price was $100 for a home page, but he developed a concept afterward - for every next deal, he would charge more than what he did the last time.
He ended up charging even $5000 for a page or a website - all while still going to high-school!
But, the word got around, the Internet got a lot more popular and Daniel already had too much on his plate. So he developed a plan: he started to teach his classmates how to write code and how to use Photoshop - basically, any skill that he could later on use and profit from it! With the money he had, it wasn’t hard for him to convince his classmates about his mission - he used material bribes like games, or iPods, cell phones, anything to get them to learn faster. He even had people write his homework for him - his system was flawless!
He ended up making $50,000 a month, more than what his mother and father earned combined!
The 22-Year Old Millionaire
Daniel was the type of person who wasn’t afraid to take a risk. After successfully teaching nearly 25 classmates about the art of programming, he continued with his next goal - a server owner. He bought dozens of servers, just for the sake of it - he thought it was fun to have servers in his wardrobe.
However, the IRS didn’t agree with him about the fun part - they sent him a letter addressing the excessive amount of money he’s been making and not paying any taxes on it. It was right there that Daniel realized that he had to make all of his work legal and start a company.
By this time, he was already a high-school graduate and the early 2000s were the perfect years for starting an online business. Daniel was on that train and he founded an SEO/SEM company, inspired by the very best - Google. But with the IRS letter and the amount of money he owed to the Swedish IRS, he was not scared for his own future, but for the future of his employees.
He had to lay off many of his employees and that wasn’t easy on him personally. This chain of events led him to change the course of his life.
By 2006, Daniel had launched multiple companies and sold them all, becoming a millionaire at the age of 22! One acquisition that made all the difference in his life was the sale of his company Advertigo, an online advertising company. Advertigo was acquired by Tradedoubler in 2006, a company owned by Martin Lorentzon - his future best-friend and co-founder of Spotify.
This acquisition brought them together and made them realize they had more in common than they thought!
Two Millionaires and One Revolutionary Idea
Daniel and Martin became close friends and it wasn’t really a surprise. They were both young and millionaires - Daniel was 23 and Martin was 35, and to be a millionaire at that age comes with its own perks, but also troubles.
Daniel realized that even with all the money in his bank account, he still wasn’t happy. The fact that he put in such a great amount of work to reach financial stability and freedom and still not being happy with it, was devastating for him and he went through a few depressive episodes. Something similar happened to Martin too, and that’s where their bond became even stronger.
They started to see each other more often and started to think about the ancient old question - what truly mattered to them? For Daniel, there were two things: music and technology. For Martin, the idea didn’t matter as much as the goal - he wanted less material satisfaction and more soul happiness.
The two of them had multiple brainstorming sessions in Daniel’s apartment in one Stockholm suburb, trying to combine the idea of music and technology together. During that time, to get additional inspiration, they wanted to listen to some music. Unfortunately, or luckily for them, there weren’t many free music streaming services available in 2005 - legal ones, at least. Napster was there but it wasn’t legal, and iTunes was pretty great, but expensive as well.
Daniel and Martin had an idea - what about music streaming services that’s available for everyone and legal at the same time?
The idea was born - the only thing missing was the name.
Spotify was a result during a misheard brainstorm name session, but as Daniel and Martin explain it, it comes from “spot” and “identify”.
The stage was set - the missing piece was the concept.
Here’s where things got tricky.
Building A Legal Music Streaming Service - Not As Easy As It Sounds!
Daniel and Martin weren’t worried about the money. They were millionaires and also, smart and not delusional - they knew no one would like to invest in their music business idea.
But the nerve-racking part was getting the music licenses from the companies that owned the rights to the music. This entire process was so hard, Daniel actually had to sleep in front of the building to make sure that his ideas are heard by the people who have the power to give him what he needs. Talk about persistence!
The entire process took 2 years until the duo got what they needed, but it was only due to the fact that they started the company in Europe - the USA was an entirely different experience. They built the platform in 8 months and in April 2007, they had the first beta version. The official launch happened on October 7, 2008!
Daniel’s strategy to gain subscribers was simple - he contacted all the music bloggers he knew in Sweden. Luckily for him, they loved Spotify!
During the same month of their launching, Spotify was able to raise a Series A round of $21.8 million from multiple capital investors!
In March 2009, just 6 months after their official launch, Spotify registered one million subscribers! That same year in August the Series B round of investments happened - this time, Spotify raised $50 million! It gained so much popularity, that even Mark Zuckerberg used his Facebook account to promote it with the words “ Spotify is so good!” It was all the media coverage Spotify needed at the time and made the rest of the trip smooth sailing.
Spotify became such a big deal, it even got the attention of former Napster CEO, Sean Parker. He was so enamored by the idea that in February 2010, he even invested in it - with his $11.6 million!
Spotify launched on USA soil in July 2011 and their success was inevitable from this point on. Nowadays, they have 320 million monthly active users and that number will only grow as more and more countries make Spotify available.
However, one thing is clear - Daniel and Martin managed to make their goals a reality - creating something not just for the money, but for the greater cause too. It wasn’t easy, but following his childhood dream of combining music and technology turned out awesome for Daniel in the end.