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Swede Daniel Ek has been fond of programming and music since childhood, and once deciding to combine these two hobbies, he created Spotify. What else do you need to know about the billionaire who conceived a business to fight music piracy?
Millionaire at 23 – Billionaire at 35
Daniel Ek’s stepfather taught him to program as soon as the boy was given a computer, at the age of five. The passion for programming turned out to be so strong that by the age of 14 Daniel was already writing in C ++, and then out of curiosity he also mastered HTML. The ability to make up websites helped him earn his first money.
According to Ek himself, in the late 1990s, programmers in Sweden charged $50 to create the site’s homepage, and he asked $100 for it. The result satisfied the client, and he brought another one. This time, Ek asked for $200 for the same job.
After school, Ek entered the Royal Institute of Technology in Stockholm, but his studies prevented him from developing his own projects, and he soon left the institute.
At the same time, he was developing the Stardoll browser game and the Advertigo advertising company, which analyzed user behavior on the Web and offered ads that matched his interests. The latest startup caught the interest of another Swedish entrepreneur, Martin Laurentson, who then ran an advertising traffic tracking company. Laurentson suggested that Eck sell Advertigo.
This deal (about $ 1,25 million) provided Ek with the status of a dollar millionaire at the age of 23. He bought a Ferrari and went to conquer the nightclubs of Stockholm, but very soon fell into a deep depression: the money did not bring the expected joy, and new acquaintances and friends seemed to be bought.
Pirate music fighter
At the same time, Martin Lorentson also became disillusioned with money. A shared sense of unfulfilled expectations from wealth allowed Eck and Laurentson to bond and become friends. They spent time discussing music, but very soon the entrepreneurial spirit took over and they decided to start another company – an audio streaming service.
Back then, music piracy flourished in Sweden, and there were not so many options to buy music legally – cassettes and CDs. Ek and Laurentson wanted to create a convenient service that, on the one hand, would allow users to legally listen to music, and on the other, give musicians the opportunity to earn money from their work.
The main idea was to shift the model of a music radio station to the Internet, and advertising revenue to pay for the purchase of music.
Work on the Spotify site took Ek and Laurentson several weeks, and negotiations with record labels dragged on for several years. Swedish labels were the first to agree to cooperate with Spotify, and 11 years after the launch, in 2017, the company signed a contract with the world’s largest labels Sony Music Entertainment and Warner Music.
This deal allowed Spotify to become a public company in 2018: investors valued the company at $29,5 billion.
Failed rock musician
Along with computers, music also fought for Ek’s attention. There are free music schools in Sweden, in one of these the future entrepreneur learned to play the piano and guitar. Later, he independently mastered the harmonica, bass and drums.
His grandparents were professional musicians, and for a long time he planned to follow in their footsteps. At the age of 18, he decided to devote his life to music, played in a rock band and even managed to go on a concert tour, but it was this period that made him realize that he was not ready to devote six hours a day to music every day.
During this time, Ek also had to go through the painful realization that he lacked the skills and talent to become a successful musician: the band he was in found a new guitarist and they stopped calling him to rehearsals.
IT empire school boss
As a teenager, Daniel Ek started making money building websites, but quickly realized that design was not his forte. Then he found among the classmates of other schoolchildren those who are good at Photoshop, and offered them to work for themselves. Ek paid them with things: games, phones, iPods – for the guys, such gifts were more valuable than simple money.
The semi-legal business of creating websites grew, and Ek could no longer cope on his own. He offered free programming lessons to classmates who understood mathematics well, and in return they fulfilled his orders. Ek used computer classes as an office, and told teachers that he helped students with computer science.
For a long time, the parents did not pay attention to the son’s business, but they decided to have a serious talk with him when he brought home a huge TV and bought himself several expensive guitars. The teachers convinced the parents that Daniel was doing great with his grades, and they calmed down. Only in fact, Ek had not done his homework for a long time, but bought them from more diligent classmates. Already at that time, he was earning $50 a month, which was more than his parents’ family budget.
Spy and Observer
Daniel Ek had never run a big company before Spotify and had little idea how to do it because he had never even worked in a company of that size. One day, he talked about his desire to do an internship with Coda founder Shishir Mehrotra to see his management style, and he agreed.
After Mehrotra, Mark Zuckerberg and several other founders of large startups agreed to such “internships”. Ek said they wanted to hear his opinion on their management style, and so he was able to “spy” on the founders of large technology companies.
Such observations helped Ek to distribute management styles on a scale from Elon Musk, when one person makes all the important decisions in the company, to Mark Zuckerberg and Facebook, where it is customary to discuss every important decision with the team. Ek himself is somewhere in the middle of this scale, when the discussion does not cancel the last word for the leader.