14 DAY TRIAL // After Google, Microsoft, Twitter, and others, Spotify announces a major layoff of its own, as the company has decided to let go 6 percent of its workforce.
In a post focused on how the company needs to improve efficiency, Spotify CEO Daniel Ek explains that despite all the changes that were implemented in the last few months, turning to cost-cutting measures is pretty much the only option.
As a result, Ek explains, Spotify is going for layoffs as well, with all employees to be notified shortly.
“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. 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,” Ek explained in the public memo to employees.
The affected Spotify workers will be provided with 5 months of severance, paid unused vacation, healthcare benefits, and immigration support.
The CEO explains that going for this strategy right now was absolutely necessary, especially as the cost-cutting strategy that the company has been using didn’t produce the expected outcome.
“To offer some perspective on why we are making this decision, in 2022, the growth of Spotify’s OPEX outpaced our revenue growth by 2X. That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap. As you are well aware, over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough,” Ek explained.