Leaked Spotify memo details reason for widespread changes at the company

The headcount at music and podcast streaming service Spotify  (SPOT) – Get Free Report got a lot smaller this week after the company announced that it is laying off 1,500 employees, or about 17% of its global 9,000-person workforce.

This is the third time Spotify has engaged in mass layoffs in 2023 alone after cutting 200 employees from its podcast division in June and slashing 6% of its workforce in January. 

Related: Spotify’s new plan is sure to make less-popular artists very angry

CEO Dan Ek put out a public statement on Monday announcing the move and the reasons behind the mass layoffs, saying that “considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives.”

But the truth has trickled out since then as apparently the company wasn’t done letting people go. 

On Thursday, Spotify announced that CFO Paul Vogel will also be leaving the company on March 31, 2024, a little over three years after he was first hired in January 2020. 

“Spotify has embarked on an evolution over the last two years to bring our spending more in line with market expectations while also funding the significant growth opportunities we continue to identify,” CEO Daniel Ek said in the public statement announcing the departure.

“I’ve talked a lot with Paul about the need to balance these two objectives carefully. Over time, we’ve come to the conclusion that Spotify is entering a new phase and needs a CFO with a different mix of experiences,

But that’s only some of the story, according to an internal memo that was leaked to Business Insider. 

“By most metrics, we were more productive but less efficient. We need to be both. While we have done some work to mitigate this challenge and become more efficient in 2023, we still have a ways to go before we are both productive and efficient,” CEO Dan Ek said in a message intended for his employees eyes only. 

“Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact. More people need to be focused on delivering for our key stakeholders – creators and consumers. In two words, we have to become relentlessly resourceful.”

As for Vogel’s eventual departure, Ek says the company needs a CFO “with a different mix of experiences,” in order to bring spending “in line with market expectations.”

Over the past few years Spotify has committed $1 billion to become the world leader for podcasts, even reportedly spending $200 million for the rights to Joe Rogan’s top-rated program.

In his original layoff announcement, Ek said that the timing of the layoffs could be surprising for employees who just saw the company report strong quarterly results, but that the move was necessary in order to avoid smaller layoffs over the next couple of years. 

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