EuroFinance report 3: Keeping up with growth at Spotify

If Google is the first word in online information and Amazon the first for online shopping, then Spotify has established itself as the go-to for a new generation to experience music.

So says the Swedish music, podcast and video streaming company’s head of corporate development and treasury, Johan Bergqvist. This year’s winner of the EuroFinance award for treasury excellence, he recounted Spotify’s rapid growth in a presentation at the EuroFinance conference in Vienna.

Founded in 2006, it took the company two years to “get off the starting block”. The service launched in October 2008 and has become a major player in the global music scene within three years.

Bergqvist said that the Swedish music industry was essentially dead and piracy was rife at the time of Spotify’s launch and has since regained its health. The company’s own annual revenues, €430m when he joined three years ago, have more than quadrupled to surpass €2bn.

“I had the benefit of coming in without having to pick up any legacy,” he added. “I was able to develop a treasury structure from a blank sheet of paper, without any existing systems.”

The four pillars

The treasury structure that developed at Spotify was based on four basic pillars, which Bergvist dubbed the instruments (treasury platform and infrastructure); band members (the treasury team); performance (the work environment and methods of working); and playlist (treasury policy and procedures).

Bergqvist also decided at the outset that an organisation handling millions of transactions needed to be a lean operation, with a cloud base. The expertise of the Big Four accountancy firms was used in deciding the banks best suited for inclusion in the company’s request for proposal (RFP).

Among the requirements was the ability “to handle the chaotic environment within a company that’s doubling in size every year”. Spotify has also gone from operating in 20 markets internationally three years ago to around 60 today. “So although we’re a well-funded privately-held company, as we steadily grow we need to start thinking, for example, about a foreign exchange [FX] hedging strategy.”

However, when considering an investment strategy, “we decided early on that you can’t beat the market,” said Bergqvist and only a small proportion of its investment operations are retained in-house.

Among the lessons he has learned in his three years at Spotify? “Your comfort zone is your worst enemy – so you need to step outside it.”


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Mark Carney Bank of England

Tags: EuroFinance