You have such an interesting early story about how you first got into computers, building websites at 13 years old in Stockholm. I mean, you know, this is definitely something we hear over and over again from people who've built some of the biggest companies in Silicon Valley. You know, they were kind of these rogue kids making money and kind of getting into trouble at a young age. What was it for you that really drew you to technology?
Well, there's actually a story before starting web pages. I think like many others, early on I had two things that drove me. The first thing that happened in my life when I was four years old is I got handed a guitar, and in my family it was like, you have to play an instrument. There was nothing else. And about a year later I got my first computer, and it was a Vic 20. At the time I didn't know how it worked. I thought it was kind of boring to be honest.
I think a year after that I got a C64, which is, you know, we're talking like when memory was in kilobytes instead of megabytes or gigabytes or terabytes or whatever we're talking about now. And what was really cool about this computer is that it had about 200 games on it. So all of a sudden I'm like, oh, computers are like game machines. That's kind of interesting. Um, so the way I played games was that I had, at the time, you had like tape recorders. Now, I'm going to sound really old.
Well, let's just say, by the way, I had a Commodore 64. Actually, my parents were teachers and I was younger than five, so we had no computers, but my next door neighbor had a Commodore 64, and I'm like 10 years older than you. So, like either Sweden didn't get good computers or like you had a f***ing computer as a kid. I sort of had a f***ing computer as a kid. I also loved, by the way, that your parents balanced this out. They were like, 'Here's a guitar. This will get you laid. Here's a computer. This will not.'
Yeah. That was pretty much what happened, too. So different stages in my life, one had the upper hand over the other one.
Well, I've got my girlfriend here, so I'm...
Wow, look at that. All right. But sorry to interrupt.
So it was sort of funny, and this is, you know, I was playing games and I think it's interesting today to kind of look back. So when I played a game, I had a tape recorder that you press play and 20 minutes later the game started. It was really at that level. But eventually I got bored of all the games and I figured, you know, what's now? And I found this book. So I started reading.
And I was incredibly lucky because the first example in the book was how to write a game. So I figured, okay, I'm bored with all these games, so I might just as well try to write my own game. So I did that.
And what kind of game was it?
I think it was like more of a Pac-Man kind of game. And then it sort of later evolved into sort of a flight simulator kind of game, but it's really hard doing that with just one pixel that moves left and right. But hey, I tried.
It's like Pong of flight simulators.
Yeah, something like that. And it just kind of evolved and then one day I sort of asked a friend of the family, like what's the hardest thing you can learn in computers, and the person at the time said well C++ is really hard because it takes like 40 pages of code even to get a mouse moving. And at that point I was sort of hooked. So I was like, okay, well I'm gonna learn this because it seems hard. And I was driven by challenges. So it sort of really started there and it sort of propelled into always doing new things when it was hard.
You picked an appropriate field for that. I mean, you picked the field where pretty much no company save Pandora has survived. So, I see this has stuck with you.
Yeah. Well, I've always done sort of impossible things. So when you fast forward to 1999 I think it was when I discovered Google, I was amazed by it because I was like, wow, this is some really cool technology. So I applied for a job but because I didn't have a university degree they turned me down. And they probably still would because I still don't have a university degree. And I just said, okay, well screw them. I'm going to make my own search engine, and it can't be that hard. And it turned out that it was actually really, really, really hard. So don't try that folks if you ever want to compete. But I think I've always been that way. I think I'm naive enough to think that things will always work out and that I don't really fully understand how hard certain things are. So I kind of get into these almost impossible things. And I think that's kind of one of my big drivers.
So is it that, I mean, because it sounds like you're kind of saying two things. The first is that you don't necessarily internalize how hard something's going to be, but the other is when someone tells you you can't do it, it's like, well, f*** you.
Well, put it in f*** you terms. Um, is this going to get censored after?
Oh, no. We've had Ben Horowitz. No, no, no, no, no. Good. In fact, so Reuters was writing up something news from the Chris Sacca one last week and they said like in an exploitative ridden interview, so you can... All right.
The stage, the bar is set high. That's good. Well, yeah, I mean I just refuse to believe that anything is impossible. I still haven't met, you know, I still haven't walked through life and found that really anything is impossible. And I think, you know, what's amazing is that we have all these companies now in our lifetime that are pushing the envelope. Like, who would have thought a few years ago that we'd have self-driving cars, but we sort of do. Who would have thought that, you know, we had private enterprises trying to send people to the moon. There's a lot of things that people said that was impossible that are now fully possible. And I think you have to be a bit far-reaching in order to truly do something that makes a difference in the world.
Um, when you were, you know, early on building all of these websites and, you know, starting your career sort of this, you know, young ballsy entrepreneur, what did your parents think about that? What did your neighbors think about that? I mean, was that very common in Swedish culture?
No. It was like no one we knew was doing anything entrepreneurial at all. My parents thought it was like a fun hobby and they sort of said, 'Well, that's great, but you should go back to your studies and do that instead.' And my neighbors, I don't know. They didn't say much. I lived in this kind of pretty rough neighborhood. So mostly there was like some black sheets on the window and they were probably growing weed in the apartments and stuff. So they didn't say much about it. I don't think that they even knew what computers were. So I was sort of by myself.
Mhm. I've, you know, as you know, I've traveled a lot to emerging markets and interviewed a lot of entrepreneurs who sort of, you know, just had this thing inside of them the way you did. You know, didn't necessarily see other people doing it. And a lot of people have argued that, you know, we take in this country for granted how much entrepreneurship is sort of fundamentally encouraged and people have argued that in other countries you need someone to encourage it, whether it's a family member, whether it's education, or whether it's society. And I'm curious who encouraged that in you?
Well, I had friends of the family that were always encouraging me and I think I also had my sort of immediate family. While they didn't understand what I did or the fact that you can even someday make a living doing it, they always encouraged me to follow my dreams and do what I wanted to do. So I think I quickly realized that if you do something that you truly love, you'll put the hours and the effort into it into becoming really good at it. And if that's the case, you almost always will figure out a way to make a living doing it.
Um, so I figured that out pretty early on and I don't think I was ever afraid of failure. For me, I was just seeing it as an opportunity and I figured that like if plan A failed, I could always do plan B and start studying or take a job or do that. And I just think that's always been my guiding beacon. Let's figure out how to have fun. And if you have fun in the process, you will put the effort and the time into it. Doing your own company and being an entrepreneur, it's so much more than a job. It's kind of like a lifestyle. It's something you've chosen to do. So you got to pick a problem that you're really interested in, because we're going to be spending, you know, hundreds and hundreds of hours, at least a hundred hours a week, but you're going to spend hundreds and hundreds of hours just sort of starting to figure out what that problem is and trying to define it and defining what the value is that you're trying to solve. So you better be passionate about it.
Let's talk about your passion about music specifically. You know, I mean, you wound up sort of very literally merging the guitar and the shitty computer. Now, I mean you and I, in addition to both having Commodore 64s, also sort of share something in like this sort of visceral memory of first seeing Napster. And you know, I grew up in Memphis, Tennessee, which was not a particular tech hotbed. And I mean I just vividly remember like that week we, I was, you know, super young in my career and my now husband and I both like took off work to just, you know, cuz the injunction was coming down and we had like 12 hours to like get as much music off of like a shitty connection as we possibly could. And like everyone we knew, like half of my newsroom and half of his publishing company, called in sick and it was like a gold rush. It was like reminds me like rioting footage where you just see people like, oh f*** the cops are coming, let's grab as many TVs as possible. And I was covering finance at the time and I think that was probably one of the things that like made me really pay attention to the internet in a different way and so many entrepreneurs my age, Napster, not necessarily Netscape, but Napster was that seminal moment because it was the moment when computers, you know, weren't about academics, it was about pop culture and it was like that was kind of the moment when computers and the internet became like our generation's Rolling Stone, MTV. So I'm curious of how you first came across it, what you first downloaded, like what that whole experience was like for you.
Well, for me it was like I grew up with a single mom who was working in a child care center. So we didn't have a lot of money. I didn't even remember how I first discovered Napster. What I do remember, however, is I was actually not one of those people with a shitty connection because the amazing thing with Sweden is like we got broadband, fixed broadband, like 10 megabits I think in 1998. So I've had it like for years, or even more than a decade now. And what was amazing about it is all of a sudden you have this experience where you could search for any song in the world and they got it. And what I did was that I then, if the person had a fast connection, I browsed all the other stuff that that person had, which sort of became like a filter for more things that I wanted to check out. So, you know, many of the truly great bands I didn't trust what my parents said about what was great music or what other people that were adults thought about music. So weirdly enough, I trusted these total random strangers who had this one song that I was looking for and if they had a fast enough connection, I kind of trusted that there was all these other great music that they also had. So I just ended up like listening to all these amazing, amazing artists. Weirdly enough, a lot of it is like really old school stuff like Led Zeppelin, The Beatles. I kind of had my music education through Napster. And I think that like really shaped what kind of music I'm into at the moment as well, more so than anything else.
But I think the biggest thing that people misunderstand with Napster is that I think Napster was really, if you think about it today, people listen to more music now than ever before and by a bigger diversity of artists. We can no longer, if we go back in time to the 70s or the 80s, we identified ourselves with a certain music taste. But post-Napster, we don't. Because people aren't just into hip-hop. People aren't just into rock music. The truth is, we're probably into a bit of everything. And I really think that Napster cemented that thing.
And over long periods of time, that's what got me into Spotify. I do think that that's something that's inherently good for culture and therefore inherently good for people.
Well, I mean, I keep discovering probably 20, 30 new artists a week. And it's not because like some label sends it to me. It's because of people that I know or that I'm interested in, the kind of music that they listen to, and I just sample it and within 10, 15 seconds I'm like, 'Okay, this is pretty cool. I might, you know, listen a bit more to this.' And that poses new interesting problems. Especially like if you think about it in a world like Spotify, if you got 20 million songs, how do you know which song you're going to listen to? But again, I do think that it's something that's inherently good for culture and thereby inherently good for people.
Why do you think it's so inherently good for culture?
Well, I mean, again, I think any type of, first and foremost, I'm one of those who believe music is something that really does good for people in general. So if you start thinking about it, like if we're sad, we often listen to a song and I at least feel a lot better after doing it.
Or sometimes you want to wallow. Sometimes you just want to like feel awful.
Yeah. But or if I'm pissed off, you know, at a label or someone, I listen to Rage Against the Machine and all of a sudden it's like, yeah.
I think that's what everyone does. I was going to say Rage Against the Machine, too.
Yeah. Well, Rage Against the Machine are good for that.
What would be like your, like if you were to do like your first date mix, what would be on it?
Oh, that's a tough one. I know this is going to sound really cheesy. I probably shouldn't even say this.
Well, as long as you played it for her, like if you're playing it for other women, there would be an issue.
It's true, that's true. Um, well, I think that's kind of funny, too.
Kenny G, you were going to say Kenny G.
Not not Kenny G. Uh, we actually played some, no, I think that was the latest, you know, some sort of cheesy R&B stuff. This is going to get really awkward pretty fast.
It would not be a PandoMonthly without embarrassing confessions.
Yeah. So there's a lot of like R&B stuff on that list. Slow dance.
Yeah. And some Barry White, some Marvin Gaye, you know, setting the right mood.
Do you put like a red handkerchief over the lamp?
Yeah. Or at least dim the lights, you know? Put some candles on. I'm basically describing my...
Is this the time when you want to leave?
You're right. Music is good for culture.
Yes, it is. It gets us to share.
Not have reproduction is what you're describing. Yeah. So you obviously had this passion and Napster was the seminal thing for you. I want to get more to this explicitly later, but, you know, you haven't taken this attitude of, you know, f*** you labels. You've taken this at least outward-facing attitude of we want to save the labels and, you know, you clearly think music is important for culture. Back in the Napster days did you think what you were doing was wrong?
No. I didn't understand it. I didn't, in all honesty, I didn't even understand it was illegal because there wasn't that kind of debate. I assumed at some point that the artist would get paid for what I did so I thought it was fine. But I also think, you know, over time, what I've realized is that convenience quite often wins. And it's not like people don't want to pay for music. It's just that if the option of stealing, what I don't get is, you know, for so long with music we had buying music was actually a much worse option than stealing it, in every direction. Because if I paid for something, in the digital product at least, if I bought something on iTunes back in the day when we started Spotify, what I paid for was a DRM song that I couldn't play on anything other than Apple's devices. And by the way, I could only play it on three. So if I for whatever reason was a good customer buying many iPods, I was screwed. The sound quality was pretty lousy. It was 160 kilobits. And it of course cost them money whereas the product I stole, I could get it lossless quality. No restrictions on what to do with it. And I think the only point in time, it's really the only point in time when the stolen product has been much, much, much better than the one you legally acquire. So for me, it was a pretty big given why we ended up where we ended up in the music industry because, you know, again, the illegal product was so much better than the legal one.
So that was the thing that we were trying to tackle with Spotify to sort of even out the odds, right?
So in between that sort of love affair with Napster and Spotify, you worked on some other companies. So what I want to get to is I know that you and your partner put a lot of your own money into Spotify. How did you make the money to put into Spotify?
Right. Well, so the story is this. I started when I was 14 just by pure accident, discovering that, you know, by the time I was 14 I was a pretty skilled C++ programmer, I taught myself at least. And then I had taught myself HTML, CGI programming, which was really big at the time, and people started asking me. Local people asked me if I could help them do their homepage. This was the big buzzword at the time. Everyone needed a homepage. And in Sweden at least, most of the firms that were doing it charge you like 50 grand to create a simple two-page homepage. So people started asking me, so I said, 'Well, I'll do it for 100 bucks just to see if I can get it.' Then the person said, 'Yeah, sure.' So that was great. Okay, I made the homepage. Then next time someone else came back and said, 'Can you create a homepage?' I said, 'Yeah, sure, 200 bucks,' and the person said yes. And it kept evolving up until I was charging five grand per homepage. And at that point I had so many people knocking at my door wanting me to create homepages and I was still in elementary school.
So they'd be like, is Daniel home?
Sort of like that. My parents didn't know who was calling and I even snuck out and bought a cell phone so like people don't know that I had like a secret business number that people could reach me on. So I went to school and I taught myself Photoshop because I figured it can't be that hard to be a designer. Today it's much harder. But back then, you know, you had these glowing things on the pictures and you had like...
Dancing Jesus, and you could do a bit of all of that.
Was that your specialty? Dancing Jesus is everywhere.
Yeah. Or at least, you know, guest counters and color-changing web pages and things like that. I wasn't a very talented designer by the way, but what I realized was that, you know, I'm not that good at design but maybe I can teach people how to do Photoshop because it's a tool. So I taught the people in my elementary school that was really good at drawing and stuff. I taught them how to do this.
Now, why did they go along with this at 14?
Well, I bribed them, too. So it was kind of like a simple way. It was actually funny because what I realized was stuff was more valuable than cash because when you're 14, you sort of realize money is good, but more effective is actually giving them stuff.
Well, you know, iPads and cell phones and, you know, things like that. Games was huge. Or, you know, if you create this really fast, I'll give you a PlayStation that you can play around with. I often gave them my own stuff.
Like, I have to picture a 13-year-old Daniel Ek, and by the way, you're so bald in this middle image, going to his friends and saying, and like going on the playground and like opening a trench coat with games and cell phones and saying, 'Want to learn Photoshop?'
Well, I mean, now you get my trick with Google. I mean, it's not too different. Same game. I've been doing it all my life.
Yeah. Friday massages. Yeah. Come up.
So I was giving them some stuff and the people that were good at math, I figured there has to be some correlation of people who are good at math and programming. So I taught them how to program. I could even use the school's equipment to do all this on. So basically after school I told my teachers that I was educating others but I was actually sort of doing my own sort of child labor factory at the time.
I think this would be illegal in the US.
Probably, and it probably was illegal in Sweden too. But you know what, so I built it sort of from nothing, too. At some point, I was almost making 50 grand a month, sort of not really knowing what I was going to do with all.
When did your parents find out you were doing this?
It took them a while. They started asking once, you know, the huge TVs started entering the house and all the video games and, you know...
So you were like the mob wife who goes out and buys the fur right after the big score.
Yeah. So I started doing that. I started buying really expensive guitars and things like that. They didn't understand the value of that though, so I could still do that. But I don't think there was many 13-year-olds that had a 1957 Fender Stratocaster like in original condition and things like that. But I sort of did. But after you bought all the stuff you want, I started thinking about what do I really want now?
But to go back to your parents busting you, like I want to hear that they were like, 'We need to sit down. Are you dealing drugs?'
No, I just have an illegal ring of children building websites. Exactly. Well, they were getting a bit like, 'I don't really know what's going on here.' So they started calling up all the teachers and said like, 'What is he actually up to and what is he doing?' But the teachers thought I was teaching people Photoshop and HTML. So they were kind of like, 'Yeah, well, you know, he's educating all these other kids.' So they really thought I was a responsible humanitarian.
Yeah. Humanitarian that did some work after school, but they didn't realize that like most of my school life then at this point was already...
So, you know, in Sweden you have carpentry classes and things like that because, you know, you want to be well versed. So I bribed someone to do my carpentry classes and all my work there, and while longer I bribed another guy to do all my exams when it came to Swedish classes.
Basically, everyone in the seventh grade was a varying level of your assistant.
Well, you know, I quite quickly figured out the way of like getting people to be incentivized.
Yeah, I think that's the way. Something that would be harder with the labels.
Yeah. But we'll get to that later. But you know, so I got to that position and then...
So your parents called the teachers.
My parents called the teachers. The teachers like, 'No, no, no, he's a great, he's like straight A students.' What they didn't realize was I probably wouldn't have been a straight A student but I again picked the right people carefully to do my homework and kind of told them to make it seem like I did it. Which worked pretty well.
Which worked pretty well. But once you sort of bought all the stuff, I started like thinking about what else to do.
So I started, you know, buying servers because I figured that that was kind of interesting and, you know, would be fun to play around with a bunch of infrastructure as well.
Was that because you wanted to just do bigger things?
No, not really. I just thought it was cool to have a bunch of servers.
Everyone does. It started by me having them in my wardrobe for the first part.
It works really well, by the way, if you want to dry your clothes. If you have a couple of servers and hang in some wet clothes, it dries up in about 30 minutes. So it's pretty good.
So you outsource the laundry as well.
Yeah, to the servers. So we sort of did that, and was building, building, building more things to the point where I actually, I didn't keep track of like paying taxes and, you know, what you were supposed to do. So I was building all these companies and we're now past year 2000, and I built like an SEO/SEM business because I learned from search that the way to make money was like getting high up in search engines.
And how old were you by this point?
So I'm probably like 18, 19 by now. So I learned that. So I sort of started a business that did that. I figured out that I was still into search, so wanted to create some sort of search. So I had a product searching company. I figured out that I could understand contextual relevancy. That was big at the time with Google AdSense. Again, I was pretty much copying what Google was trying to do and because I thought it was cool. So I built all these things and then one day I got a letter from the Swedish version of IRS, the tax man, saying that I owe them a couple of hundred grand worth of taxes. And I had no idea that I did that and I didn't know how to pay for that. So I actually thought I would go in personal bankruptcy.
So you were like spending as much money as your, you weren't, tucking money away?
Yeah. Well, no, not at all. Because, you know, I was 19, 20, 21 and like enjoying life. But I also, you know, bought servers and hired programmers. I didn't know what to do with them, but I figured we could figure fun interesting projects to do. So I had probably 25, 30 employees doing projects that I thought was interesting.
Uh-huh. I assume you were out of your bedroom in your parents' house by this point.
Yeah. Oh well, I got them to move actually so I could keep my...
Yeah, I took over the house. So, you know, I was running things there and what I realized was, you know, I was almost going personal bankruptcy and it was pretty tough. It was actually mostly tough because I realized that I was going to have to lay off people and I was thinking, you know, not so much about the fact that I didn't know how to support myself because my philosophy was, you know, I can always take a job, but it was kind of painful that all these people might lose their livelihood. So I was depressed there for a while, but in a series of lucky things changed in 2005. Actually, I think the defining moment in Europe was when Skype sold to eBay.
Because what happened was the market just like opened up. So within really just six months I sold four companies. So I went from like having virtually no money at all, not even knowing how I would support my own livelihood, to selling all the companies.
How did that happen? Were people just...
I think it was the time when the markets sort of opened up so people started looking much more and, well, we should acquire companies too because that's what eBay did. And eBay actually continued to acquire, I was working on a Nordic auction company called Tradera that then got acquired by eBay as one of them. And then it sort of just kept going on. So within a couple of months really I was going from personal bankruptcy to having a few million dollars in the bank.
That was f*** off money for me. And it's kind of a weird situation when you go from something monetary that limit I had which was like having a few million dollars in the bank, I had already reached. I thought I was going to reach it or was hoping or aspiring to reach it when I was 30, but I reached it when I was 22.
So that was kind of weird.
So what then happened is I got really depressed. Because I was out partying for a while and, you know, trying to meet women. I was not that successful by the way. I thought everything would be much better with money, but it turns out that it gets you in the club, but it doesn't help you that much further. You still have to actually talk to someone in the end. I was really disappointed.
And what was like your pickup line back in those days? Would it be like, 'Excuse me,' and like throw out a...
Well, excuse me. And like probably push someone over. I don't know.
Yeah, that's not very smooth.
No, it's not very smooth. I didn't have much game. I'll tell you that. I still don't have much game, by the way. But, you know, so the things that I thought I wanted, if you're a geek growing up, all I wanted was really to be accepted and really to belong. And what I realized was none of that money mattered. It didn't make me happier. In fact, it was kind of sad to think that the thing that I strive for didn't actually mean anything in the end. So I started thinking about what truly mattered to me and I'd realized that there was two things in my life that had always been really present which was music and technology.
And I then sort of realized that all these companies that I was doing was a lot of fun but I also never felt like I belonged in them. And I started thinking about why that was. And I realized that I didn't apply myself to one problem. I didn't apply myself to one thing. So I was always like the guy who wasn't part of the group because I never had time. I was always the outsider to like, okay, we should do like this and then sort of went over to the next project.
So I started thinking to myself, and it's really interesting to see if you start thinking more long term what decisions you end up making. So constraining yourself is actually something that's hugely powerful and focusing your effort on something. So I started saying, you know, if I was going to spend five years of my life on just one thing, what would that be? And what kind of environment would I want to create in order to do that? And I came up basically with the fact that I wanted to have an environment where I could have fun. It shouldn't feel like it was work. It should feel like it was fun.
And I wanted to have an environment where you could learn from other people. And I wanted to have an environment where even if it was a small way, that the problem was big enough that you had the potential impact of changing the entire world. So that's what I set up. So I sort of said, okay, that's what it requires for me to focus five years of my life. And then the fact that it was going to be music was sort of obvious both for me and my co-founder.
And he had at the time, he had a company called Trade Doubler which had IPOed by that time and just a couple of months before got like a bid from AOL for I think $1.2 billion or something. So it was pretty big company, right? So we just said look, this is what we want to do, and took our own money, and because no one wanted to bet on a music company.
So we knew that we had to sort of bootstrap the company with our own money and we ended up doing that actually for close to almost two and a half years before we could actually launch the service.
And that two and a half years, was that largely spent trying to get sort of your first European deals?
Because I mean it sounds like you wanted to, you know, again, unlike Napster and, you know, frankly, unlike a lot of the companies that we see coming out of the valley sort of waving the disruption flag, your tact wasn't I'm going to change the laws by breaking all of them. I'm going to break this industry and bring it to its knees until they need me. It was you wanted to work within it, right?
Yeah. Well, I mean the way I looked at it was the problem that we had before was exactly that we tried to disrupt it without the industry's participation. So I wanted to do something where in the end the artists and the labels and everyone in the ecosystem was a part of the development. And that ended up, I thought naively enough, I didn't know much about licensing, but I thought that can't be too hard because there's all these illegal options out there. So surely they must be ready to embrace a legal option. And it turned out that they were, but it took two and a half years to get them to that point.
What was the stumbling block? Because I think people in the valley always, always struggle with that same issue. And it's like we have for more than a decade now. I mean, Mark Pincus talked about the same thing with Tribe where he thought, well, the newspapers have no other choice but to embrace us. And he said, you know, I didn't realize their other choice was to go out of business. You know, Sean Parker said their view with Napster was they'll go to them and say, 'Look what we have, and if you close us down, it'll shatter into a million little pieces, and they'll have to come up with us for a legal solution.' And he also didn't realize they had the choice of just wrecking their industry and suing their customers. I mean, over and over again, people seem to make the assumption that these people are going to be logical. You see the same thing with the up roar over Game of Thrones, and why won't HBO just give it to us? The reason why is these guys aren't thinking long term because they're people running public companies and the bulk of their revenue will get killed if they embrace these new things. So how did you, what was the range of attitudes you heard from the labels towards this and how did you get some of them over that hump?
Well, I think the biggest fear, and to your point, it's not that they don't want to think long term. I think what the problem is is that they've heard too many sunshine stories in the past where there's been people coming to them and saying, 'Look, we're going to disrupt your entire industry and you're going to be in a much better place.' But no one's been able to tell them what that better place means. Does that mean that the industry is going to grow and how would it grow? And what are the steps there? So I think there's been a healthy amount of skepticism from any content company by the way on trying, they sort of want to dip their toe in the water and then sort of start moving more and more stuff over there rather than the approach of sort of just jumping.
And so the range of attitudes when we spoke to the labels were actually mostly about cannibalization. And it was incredibly frustrating because as an end user you see it so clearly, like of course it should work this way, but what ended up happening, but this was really helpful for me is because I didn't know anything about the music industry, it sort of almost went as a sort of mental and intellectual debate about how we could reach the end goal. So what ended up happening is we kept adjusting all the time to the feedback we got.
So, you know, we came in and said, 'Look, we think all music should be free, period. No ads.' 'Well, how are we going to make money?' Okay, that's a good problem. Let's go back. And then sort of approach... We did figure that part out. But getting to the point where, you know, there was a lot of assumptions. For instance, in our case we were pretty much one of the first companies to try audio advertising. Most investors when we tried to pitch that was like, 'Audio advertising doesn't work. It's never going to work. There's no market for that. Display is the thing.' So we were like, 'Okay, well, here's the model if we built it on display. Here's the model if we built it on audio. But we still think over time our bet is going to be on something that fits the format a lot more than just display.' So that was a big assumption. So we had to model that and we had to show the labels like, 'This is what we actually believe.'
And you just kept having to iterate that.
But then of course there was the ones at the labels that also just like, 'Look, you know, we just want to do what we used to do.' The music industry is a funny place because there's, it attracts, I don't know a single space that have had so many talented entrepreneurs give a go at it. So you've had obviously Parker and Fanning doing Napster. You've had Niklas Zennström and Janus Friis who then went on to do Skype and, yeah, who did Kazaa. You've had Zuckerberg.
Most people don't know that at the early days of Facebook, what Mark really did, it wasn't a sure bet that he was going to do the Facebook, he also wanted to do Wirehog, which was this file sharing service for music. So I think there's been a lot of really, really talented entrepreneurs, the IME guys, the MySpace guys, there's been a whole ton of them who tried to do music. And I think the problem is, you know, over time the technology entrepreneurs that have tried to do it have been a bit too disruptive. And I just think when it comes to content in general that one has to have, you know, a more show them the path to get there, more than, okay, well, it's this way because, you know, again, they're not going to bet their lives on that. And the artists aren't going to bet their lives on that either. If you can't show them the path to get there...
Right. So it's interesting because as you're describing this and thinking about how entrepreneurs raise money and there it's always this thing of like, okay, you know, just go build something, you'll figure it out later. Go build something, you'll figure it out later. And I feel like that was a lot of these guys' pitch to the labels was like, we just got to give it all away and then we'll figure it out, and it's sort of that Silicon Valley mentality. But part of that is because it's sort of, you know, no one exactly knows and it's a very hard thing to track how discovery leads to sales. So how were you able to like build out this argument before the company was even launched?
Well, it was incredibly tough and that's why it eventually took two and a half years to convince people to do it. But I think in the end there was a healthy number of arguments that I think certain people bought. But then there's something that we did that I don't think many people know, which is that we actually took a good bunch of our own money in the end and just said, 'Well, we believe in this so much that we're going to put our own money in there.' And it's really hard then for a media company if you're saying, 'Look, we're really worried that you guys are going to just instantly flip this company or that you're just trying to make a quick buck,' if you yourself are putting sort of your balls on the table kind of thing. So I just felt that that was like a huge driver in the end because every argument that they had we countered with, 'Well, what if we do this?'
And eventually we gave them enough reasons and they stopped having any counterarguments.
Because we simply just took care of argument by argument until...
That's a really good question. In all honesty, I learned something in one of the prior businesses that I was working on. And that was that I was literally like sleeping outside an office for about two months in order to get the meeting that I wanted.
Um, no. Like literally like sleeping outside of the office.
Like a homeless person?
Yeah. Like a homeless person. And I just believe that, again, you win a lot by being super passionate and have a lot of persistence. And what really worked was that it didn't matter what week it was. I always ended the conversation. We could have been screaming at each other and I always said, 'So, are we meeting next week again?' And there's something disarming about that whole approach. And even if we sort of didn't end up, I was just always there.
You must have been so annoying.
Oh, yeah. I was really annoying.
Like you would, I bet you would call and the receptionist would be like, 'It's that E guy again.'
Yep. That was me. But look, when the person refused to meet me, I just went and met someone else. So I usually joke and say, 'Look, I met everyone from the janitor to the CEO,' but it's probably true.
The other part is I used to have hair before I started this and at the end of the process, I didn't. It's a lot easier now, by the way. You don't have to like cut your hair or do anything. It's...
So, two and a half years, you finally got the deals. Do you think had you launched in the United States, you ever would have gotten that far? Were the European rights easier to get as an experiment?
Yeah. A lot of our success came from the fact that we started in Europe. Most of media companies are really driven out of US, which means that there's a lot more attention to the homegrown markets.
It also means if you're working in media that the check sizes you have to write is a lot bigger. So starting it out in Sweden, no one really cared about that market. It was sort of seen as a Mickey Mouse market, like, okay, well, huge piracy. Who cares what happens there? These guys could try it out and see what happens. So we started there and just kind of expanded from there up until the point where we convinced them that going to the states was a good thing.
And that took quite a while.
That took another two years.
So you and I met during this process and I constantly harangued you because you guys would call us up and be like, 'No, really, we're coming next week. It's going to be a huge announcement. Write something saying we're going to come.' And then journalists would be like, 'No, really, they're coming next week.' And then you wouldn't. And like it went on for years and years and years. I mean, how much of that was, and I'll just ask a rude question because I haven't really done that yet, except sort of the thing about getting laid that was a little rude, but how much of that was you trying to sort of work the press to get more hype about you? And how much of that was or being naive or how much of it was you really did think you had these deals coming this quickly?
So it's a bit of both. It wasn't working the press because I still don't know how to do that. So it was more from the aspect like we were naive. We actually figured that like okay, it took us two years to get the licenses so surely it can't take that long to get them as an extension for the US, especially as we were willing to pay a lot of money to get there, too.
So it's definitely part of that. The other part of the equation was we actually were super close a number of different times.
Can you walk us through like the whole timeline?
Yeah. Well, I mean we pretty much a couple of months after we launched in Europe we started the discussions about launching in the US.
And were those with the same people? Were they with US companies? Did they introduce you? Like how did you get into that?
It's the same companies. This is the interesting thing. So, you know, again, if you want to do a deal with a major label, it's probably around 10 people who does the deals in total. There's not a whole lot of people.
