Martin Lorentzon - Founder of Spotify

One casual Wednesday afternoon we meet up with Chalmers alumni, honorary doctor and founder of one of today’s most talked about enterprises. The name of the company is Spotify and the man in question is Martin Lorentzon.

 

It is the month of July, peak of summer. Old LP discs belonging to Martin Lorentzon and Daniel Ek are perfectly displayed in the waiting room, a part of the reception area, as a reminder of a time when music was a luxury matter and something that could only be played via a source called the “vinyl player”.

Those who are not on holiday are diligently working by their desks in the colorful and creative Spotify office in Stockholm. Martin is also here. In an earlier interview with IVA (The Royal Academy of Engineering Sciences), he has said that “people do not do what you tell them to do, but instead follow your actions”, this we believe is the reason to why instead of treating himself to a well-deserved summer break, he lives the importance of being an inspiring role model and therefore also always makes himself noticeable to his organization.

He sees himself as a self-taught, curious, wild and motivating individual and considers this to be the foundation to why he has done so well in his career.

– I read a great deal, catch a lot of information around me, try my way onward and encourage others to be more solution-oriented. I also say that a problem is not a problem and the value of your business is the sum of all the problems that you solve – another mantra that I live by.


Much of this motivated and strong-willed attitude arrived early and evolved during his time at Chalmers. It was back in 1990 that Martin first set his foot at Chalmers Campus Johanneberg to start his education within Väg- och Vatten (civil engineering) and although some years have passed since the start of his entrepreneurial journey, many memories still remain.

– Being a student was great! I recall us having a very dedicated president, Anders Sjöberg, he was known to be involved in the everyday life of the students and was somewhat also considered a bit of a joker. You studied, that’s why you were there, but there was also a lot of mischief and revelry happening. Amongst many things, I was involved in CCC (Chalmers Cortège Committé) and at that point did not understand why neighbors complained and the president got annoyed when there were fireworks in the middle of the night. But now, being older and hopefully also a little wiser, it becomes clear that of course people were mad when, at 2am on a Thursday morning, you blew rockets in the sky. In short, it’s important with balance and control.

Chalmers Cortège Committé was one of the various student associations in which Martin participated during his time as a student. Engaging in the social life on campus is something he strongly encourages others to do during that time of their life. He still stays in touch with many of his university friends and states that education is primary, but what you learn when taking part in student unions; create networks, build relationships and the social aspect of it, is just as important.

– The further you get, the more important it becomes to know and to have a combination of politics, contacts, network and relations. If your aim is to get an agreement of some sort, then relationships are everything. Take China as an example, in China it’s easy to settle a contract but you can’t guarantee a bond. In Japan on the other hand, it’s harder to reach an agreement. First you have to spend time building a relationship, but once the papers are signed, you walk away with a well-grounded new business relation.

It’s most definitely an advantage to be involved in student associations (during your years at university) and equally important to have an involved president who sees the importance of investing in these matters. The fact that a university has strong bonds with business is beneficial for the school, the individual and the business community alike. Sweden has many successful collaborations of this kind but is still not on the same level as the US where many universities rely heavily on donations and therefore invest a great deal in these types of relationships. Martin believes that all technical universities should adapt more to the present and be open to discuss practical problems publically.

– Technical universities often end up being isolated islands, they have to become engaged much sooner. Chalmers is doing very well but in general all universities should offer a broader education that better prepares the students for the workplace. As examples he mentions courses in networking, making professional presentations and rhetoric.

 

Another advantage for those with an entrepreneurial outlook is to have someone, who has done as well as you yourself hope to do one day, to look up to. With all the digital communication we are exposed to today, finding role model or mentor may sound easy but back in the 90s, this was (however) not the case. According to Martin, back then, entrepreneurship and making money was (rather) taboo and therefore, a lot of successful people who deserved further attention were neglected. Having various types of role models is something that the Spotify founder finds important to communicate when he travels with the “Prince Daniel Fellowship”, which he became a member of in 2013. The intention of the foundation is to inspire young people to become entrepreneurs.

– I myself don’t have any immediate mentors but it’s something I keep telling others to look for. I believe it’s important with different types of people to look up to and not entirely healthy to have only one role model.

Martin also sees it as vital not to put too much focus on so-called ”drop-outs”. He finds it unrealistic to believe that you after primary school are able to start your own business and instead promotes education as the best investment in yourself.

– To study, read as much as you can, learn economics, technology, rhetoric, take language classes, network – all of these things are some of the best investments one can make. I always say that I don’t want to highlight success stories about drop-outs but instead mention those who took the long road, those who studied, it makes more sense that way.

Daniel’s (Ek) story is amusing but so improbable. The likelihood of success increases dramatically with a stronger educational background. It’s simply too big of a risk to think that you succeed if you leave school ahead of time. Additionally, Martin thinks that the growth of role models in diverse industries is positive for society.

– About 25 years ago, no one had an artist or a chef as a role model. This new trend is something that has come along with some immense changes; digitalization, globalization and urbanization. Digitalization and globalization is nothing but positive. Urbanization is good but debatable. Nowadays it is what it is and people often want to move to larger cities. I'm not saying that you should discourage urbanization but politically, I think we should help out so that it becomes possible to live more spread out in the country.

It is rather easy to understand why Martin has strong views on society. The opinions of today’s school system, tax rates and the environmental discussions are many and in one way or another interlaced in our conversation.

Among other things, he talks about health care contribution and the frustration over how Spotify, one of Sweden's most modern employers, does not have the ability to support many of the activities that young people today practice such as horseback riding, yoga, etc. as this is not deductible at the moment.

Another delicate topic that affects a lot of everyday work is the difference in VAT taxation in terms of printed and digital press. The fact that 6% is taxed on printed media and 25% on digital is, according to him, completely illogical since trees create oxygen and therefore anything printed should always be taxed higher.

– It's crazy, but also difficult because I have mentioned this to politicians for five or six years now and they often react by surprise and after that nothing happens.

The frustration around these matters is just what makes Martin feel so strongly about education. In addition to involvement in the so-called "Kodcentrum", he is also passionate about innovative thinking in primary school. He trusts that it would benefit many universities if children and teenagers were informed in the early school-years about the opportunities they will be exposed to later; that it is essential to broaden their knowledge and what subjects they need to learn in order to get accepted to their preferred universities after high school.

There is also another idea that Martin has which is based on information he has read that it is essential to create an interest in the technical subjects amongst girls before they reach the age of twelve.

– If we are to grow more female programmers in the future and after this significant age we are already late. Subsequently they start focusing on everything else that comes with adolescence and so we end up having less girls moving on to study tech.

Another issue is the curriculum. Looking at the speed of everything today it is simply not enough to revise the official syllabus only once every twentieth year.

– Take the smartphone as an example, it was launched in 2007 and look at how much has happened since then. When it comes to development in primary school, things are moving too slowly and the way technology is moving nowadays, this just won’t work. You have to widen the amount of choices and start including more contemporary subjects such as programming and business economy, not to mention everyday economy so that when teenagers decide to leave home, they understand the importance of tax, “rut and rot” (Swedish tax deductions, ed. note) and everything else worth knowing, says Martin. 

 

One can spot a pattern between Martin’s self-taught persona and how he wants to contribute to society with his own experience. Education will always remain the primary foundation to who he is but along the way, he has also lived and learned and therefore been the creator of his own opportunities. Subsequently, he believes studies at Chalmers offer a great advantage from an entrepreneurial perspective as you are exposed to problem solving at an early stage.

– Take mathematics as an example, you’re always faced with a problem to solve. By learning how to solve mathematical tasks you become rather pragmatic and not afraid of problems. If you’re to create something of value it’s an advantage to be showered with problems as the more you solve these issues, the more the value of the company increases (referring to one of Martin’s aforementioned mantras of how the value of the company is the sum of all the problems).

In addition to the knowledge you gain from school, Martin also reasons that you as a person have to be interested in your surroundings. He claims that by doing so, automatically additional thoughts and situations will appear which you can later use to your advantage.

This was the case when Martin, along with Felix Hagnö, started his first company Tradedoubler back in 1999, and again when Spotify was founded seven years later.

– Usually it starts with a paradigm shift. Since I'm quite curious, well-informed and have read a lot of newspapers, I can often notice a shift in the crystal ball. Around the years of 98/99, there was a change from analog to digital. Google started it, but still no one knew how to make money online and it was then that digital advertising came to life. Unlike a bus ad, in a digital ad, you can do so much more; interact, click on links, measure and see results.

Just like digital ads, this was how Spotify came about; through a shift where the ownership model become an access opportunity and where availability is now a priority.

Airbnb and Uber, where neither products nor services are actually owned by the business itself, are examples of two companies using the same type of model. Martin believes that these companies, just like Spotify, also have a positive impact on our environment.

– From an environmental point of view, we use the world's resources in a much better way. Just think of it, instead of using a lot of energy to manufacture a CD, cut down trees for paper to become someone’s artist cover, then let out exhaust by transporting the discs by air to its final destination, we can just add songs digitally where anyone, anywhere and anytime can listen to them – all environmentally friendly.

The open-mindedness and initiative-taking is strongly fostered in all media exposure associated with Martin. He sees how, over the years, he has evolved into a person that is wiser, more balanced and more politically interested, not to mention who believes in entrepreneurship and liberal thoughts á la the Moderate party (right wing, ed. note) but also agrees with the traditional Social Democratic values. In Martin’s opinion, it is all about common sense, both in politics but also when giving advice to young entrepreneurs.

– You should not start a business on your own. You need a partner to discuss things with, someone to share ideas and knowledge with and learn from. Sure, you might own the whole company by being just you, but what if you get sick? The ideal situation is to be two people in a start-up, not three, that could easily create conflicts.

Moreover, don’t put too much focus on the business idea. That’s only 3% whereas the operational part is 97%. You have to be patient, test, fight, twist, turn and do everything in small steps.

Trial and error (known learning theory, ed. note) is something Spotify as an employer encourages. Martin is aware that we all make errors and believes that as long as you learn something from them, try again and hopefully not make the same mistake, you can turn a bad situation into something positive. Martin has no direct regrets of his past actions but if he could go back in time, he would have spent that time learning more languages.

– Knowing a language is a way to build contacts and relationships. I know English and German, which are the official business languages, but it would have been fun to understand Spanish or Mandarin when you’re doing business with for example China.

He also mentions China as a country he would recommend starting a business in.

– If we look at cities, I would say Stockholm, Gothenburg and Berlin. Although Berlin is a bit of a copycat town while you see more innovation in the Swedish cities. Considering this, Chalmers and KTH are good schools because they both create innovative hubs. Sweden is fantastic for start-ups in the sense that we have laws, regulations, patents, broadband, high Internet penetration and strong ownership.

Next year marks the ten-year anniversary of Spotify. Though Martin will not comment on any objectives, he promises the company will keep on growing and celebrate properly.


Text: Anna Plaza

Photos: Sara Arnald, Anna Plaza


 

Published: Wed 09 Sep 2015. Modified: Tue 22 Sep 2015