Spotify CFO Steps Down Following Mass Layoffs

Paul Vogel, who joined Spotify in 2016 as head of investor relations and was later promoted to chief financial officer in 2020, has announced his exit after the digital music streaming giant made large layoffs.

In his announcement, Vogel said that he will be leaving the company on March 31, 2024, NDTV World reports.

It was a transitional week for Spotify, as the company also announced last week that it would be downsizing its workforce. The aim of this mass cut, which affects 1,500 people (about 17% of the entire company), is to save on costs after a dramatic downturn in economic growth.

This might appear a bit contradictory. However, according to Inc., Spotify CEO Daniel Ek in 2020 and 2021 took advantage of lower-cost capital and invested hugely in expanding the company’s workforce, marketing, content enhancement, and new verticals. Ek explained, “These investments generally worked, contributing to Spotify’s increased output and the platform’s growth this past year. However, we now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big.”

Inc. reported that this announcement comes after the company announced its last quarter’s profits as $70 million. However, Spotify has been unable to make money and has lost just over half a billion dollars in the first nine months of this year, the report suggests.

In a press release, Ek said, “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. 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.”

With this in mind, Spotify and Vogel have decided to part ways, but Ek shared his appreciation toward Vogel for his “steady hand” in supporting the expansion of the business through the COVID-19 pandemic and unexpected economic uncertainty.

According to The Wall Street Journal, Vogel said, “The company will be more thoughtful with its future spending and focus on areas that are driving the most growth.”

With the outlook to accommodate “the company’s realignment of its financial leadership team,” Spotify’s vice president of financial planning and analysis, Ben Kung, will be taking on more duties during the interim.

Per Inc., Spotify hired beyond measure when it was cheaper to do so, but now it’s not sustainable to borrow at the current rates, as the company still hasn’t made profits despite making efforts to accomplish this. “The reason Spotify is in this situation isn’t just because it hired too many people over the past few years. It’s in this situation because its leaders keep making bad bets on things that aren’t helping Spotify do what it’s supposed to do: make money,” Inc. stated.