In a memo to staff, CEO Daniel Ek said the company had expanded its workforce and offerings significantly throughout 2020 and 2021, thanks to lower-cost capital, but is now bumping up against the same problems startups across industries are facing, like high capital costs and slowed economic growth.
Ek said the cuts may seem “surprisingly large given the recent positive earnings report and our performance,” but due to “the gap between our financial goal state and our current operational costs,” Spotify would take “substantial action.”
I feel like I have read a bunch of these stories lately.
The “business model” for companies like Spotify was to keep getting investors to give them more funding. Now that investment dollars are a lot harder to come by, they are essentially on a starvation diet, and they are starting to cannibalize themselves.