Daniel Ek: Life After Spotify, Broken Healthcare Incentives, Catching Disease Early & AI's Potential

All-In with Chamath, Jason, Sacks & Friedberg

In this episode, Spotify co-founder Daniel Ek discusses his transition from running the music streaming giant to launching NECO, a new healthcare

Key takeaways

• Daniel Ek applied the 'Spotify playbook' to healthcare by focusing on vertical integration and high-resolution data collection.
• The US spends 18% of its GDP on healthcare, yet outcomes are declining due to a reactive rather than preventative system.

Main topics

• Spotify's history and music industry negotiations
• NECO healthcare business model

Notable quotes

If you discover these things early, they're totally preventable.

Conclusion

The episode highlights how entrepreneurial strategies from the tech se

Transcript preview

Speaker 2 (0:00) All right, everybody, welcome back to the All In interview show, where we, the All In podcast, dedicate an hour to just some of the great thinkers, creators of our time. And today will be no different. Daniel Eck is with us. You know him, the co-founder of Spotify, which he started 20 years ago, and he ran it for those two decades to an extraordinary state of affairs today. well over 700 million active users, over 300 million premium subscribers, but... On January 1st this year, he shifted and became the executive chairman with me and David Freeberg today. Daniel Mack, how are you, sir? Welcome to the program. Well, thank you so much for having me. It's good to be on. Yeah, it's good to see you. We've known each other for 20 years. I remember the first shack your partner leaned into me at a... internet summon or something and said, hey, check this out. And he showed me Spotify. But this was at a time when nobody had a subscription service. So we're going to talk today about your new startup, which is incredible in the healthcare space. But take us back to the launch of Spotify and how that crazy idea got started. And then how hard it was to break through with the music industry, which are also known as the hardest partners. in the world. As your wealth grows, have you noticed how much more complex things get between investments, tax strategy, and estate planning? Managing it all is a full-time job that you didn't ask for. Creative Planning can help. Their coordinated team of investment managers, CPAs, and affiliated estate attorneys can do much of the heavy lifting so you don't have to. Creative Planning, where wealth works together. Go to creativeplanning.com slash all in. Speaker 3 (2:00) Yeah, well, I usually start off by sort of saying whenever anyone asks me about the story, it's like, well, I had hair when I began this. And by the end of this, I obviously ended up being bald. So you can see that it wasn't an easy journey. All jokes aside, I mean, just to kind of set the scene, I mean, I started Spotify in 2006. I was 23 at the time. And the world looked a little bit different. So this is pre-iPhone, pre... I mean, Facebook existed, but it was college only. YouTube didn't exist. So just like that kind of dates me, but this is before all the things we now take for granted. And the world at that time and the music industry at that time was in free fall because music piracy was kind of rampant. So we had Napster, we had Kazaa, we had all these things. And there was an organization called the RIAA. that went around and actually sued individual consumers in the US for illegally downloading music. And so I was sitting in Sweden and I was thinking to myself, you know, this is wild and this is crazy. There's no way to put the genie back in the bottle. And me and my co-founder, Martin, we were kind of sitting and spitballing startup ideas at the time. And, you know, Martin asked me like, well, you know, if you could do anything you'd like to do, what would you do? And I said, well... My real passion is music, but that seems like a really stupid idea. And he's like, well, why is that a stupid idea? And I kind of told him about, you know, it's really hard because you have to do all these deals with the record companies. You have to then figure out how to do licensing and copyright, and you have to do all of these different things. And he said, well, what if you did this? And then he kept asking these what if questions. And eventually I ran out of. reasons to say it. So I said, well, I guess you could do something. And if you did something, it would feel like you had all the world's music at your fingertips. And he's like, well, that sounds pretty good. And I said, well, okay, well, let's give it a try. We started trying to license music. Originally, the idea was to try to go global from day one. And everyone was just laughing at us when we were originally saying that. But I sort of lucked out because it turned out that one of the worst music markets in the world was my home country, Sweden. And part of the reason why it was one of the world's music markets was because we had super fast broadband already from the early 2000s. So we were kind of living in the future where people had such quick bandwidth connections that they could download pretty much whatever they wanted. So they were doing it and iTunes actually wasn't even available. in the marketplace. So there was literally no legal options. So I think the music industry had lost like 80 % or something of its revenues. And so it was like, it was kind of this crazy of, you know, coincidence and kind of all of these things, the conflicts of events where we figured out, you know, that me and my partner, we basically took all of our own money that we had made from prior startups. and we set the record labels, what if we would guarantee you that basically you'd keep your bonus for the next year and you make your budget for next year? You know, if this really is as bad as you think it is, then you just shut it down after a year, but you still made the bonus. And if this actually works, you win as well. So you win no matter what. And they're like, okay, well, this seems kind of like an interesting idea. And they eventually, after a few years of negotiation, agreed to it. So we launched in late 2008. And it instantly became a huge hit. We then took it to the UK and made a huge hit there. And then in 2011, 15 years ago now, we launched in the US. And yeah, I mean, and the rest is sort of a history. Speaker 2 (5:58) Isn't that amazing, Freiberg? Five years in the laboratory just to get to the U.S. market is quite a journey. That's a lot of pain and suffering. Yeah, but you know the crazy thing is I'm on the same journey now again. Speaker 3 (6:15) Yeah, here we are. Neko, actually, as crazy as it is, we started the company eight years ago in 2018. And we started it in Sweden. in 2023. So it took us five years to develop the product, try it out in Sweden. And then once we proven it in Sweden, we took it to the UK and did it there. And then from there on, now we're launching in the US. So it's the exact Spotify playbook again, but this time in healthcare. One Speaker 1 (6:47) of the afflictions of great entrepreneurs is your entrepreneurial, right? I mean, you just can't stop. Speaker 3 (6:53) Or maybe I just have a hype. pain tolerance. I'm not sure which one. Yeah. Speaker 1 (6:57) Once things got smooth, you had to get back into it. But at what point did you start thinking about doing other things, Daniel? Were you like actively angel investing at Spotify over the years as CEO? The business is building hundreds of millions of users, public, successful. Things are growing nicely. You've got a great leadership team. We've obviously met a lot of your team over the years. How did you start to do these other projects? I know you've got a few others and focus on NECO. Speaker 3 (7:23) Yeah. It's kind of crazy. I'd forgotten about it, but my team now showed me very recently. I apparently did this lunch with the FT interview in, I think, 2012 or 2013 or something, just after the US launch of Spotify, where I was talking about healthcare already back then. So I've been thinking about healthcare specifically for a very, very long time. And it's just been, you know, I think a lot of people just talk about sort of all the stuff that's going bad in the world. But my view is that actually most things are going pretty well. And it's kind of up and to the right on the technology curve and all the things that we're getting. But I try to focus on the problems that aren't going that well. You know, one of those happens to be healthcare. So I've been kind of interested about this as like, you know, how is it that we're spending more and more money on healthcare, but getting worse and worse outcomes? And what can we do about it? And so that really kind of got me into the space. I think healthcare is kind of unique and kind of special. I honestly didn't have any money until Spotify went public. So I wasn't a prolific angel investor. What Speaker 1 (8:35) year was that? Speaker 3 (8:36) That was 2018. We went public. Yeah. So I probably started doing a little bit of investing in 2018, but Speaker 1 (8:44) I Speaker 3 (8:45) had no money before then. It was literally just kind of all in focus on Spotify for, I guess, the better part of 12, 13 years before I made any investing in anything else. And then you and I, we were talking about it at this dinner like a week ago or something. But I then tried to do a little bit of investing. I'd actually already started Netco at that time. I kind of just realized that I loved building way more than I loved investing. And so right now Speaker 1 (9:20) - Speaker 3 (9:20) Freeport Speaker 2 (9:20) came to the same conclusion. It's so painful to watch companies you invest in. Speaker 1 (9:25) This was our whole dinner conversation the other night. Yeah, get mismanaged and you can't do it. Well, you spend time on boards. That's why I don't join boards anymore. You're sitting on a board, you advise a CEO and they don't listen to you and you pull your hair out. Like I would have done something different. Why didn't you do this? And if they are listening to you and you're effectively instructing them on what to do, it also doesn't work because they're not leading. And so I became pretty committed to this idea. You find amazing entrepreneur, founder, CEOs, give them money and never look at it again and you'll be fine. Generally better than not. And then the flip side is, if that's really what... you're passionate about and you're, you have the activity or the agency it's to step in and do it yourself. The more Speaker 2 (10:08) instruction they need, probably the less chance they're going to succeed. Yeah. So Speaker 1 (10:12) Daniel, maybe you could just give us the overview on Necco kind of what the, yeah. And how you came to that idea, right? Yeah. How Speaker 2 (10:18) did you come to this specific Speaker 3 (10:19) idea? I started researching the space. a very, very long time ago. And maybe just as a quick primer for the audience, the US is spending 18 % of its GDP on healthcare. It's the single largest line item in the budget right now. And if you take heart disease alone, it's in the hundreds of billions of dollars that are being spent on that disease group alone in the US alone. I mean, it's just insane. It's larger than... Fortune 10 companies revenues, just one disease group. So it's a gigantic problem, as I mentioned. And so I started looking into everything from like, you know, drugs to, you know, can you make more efficient drugs? Is it about cancers? And basically started like targeting, like, what are the real reasons why it looks that way? And I think that the real conclusion ended up being, there's lots of reasons, not one. You know, we see... But we see a few really big ones. Cardiology or heart health is a major one. We see skin cancer, melanomas being another big one. So there's a few sort of major groups of illnesses that is over representative. But the major one is really chronic disease overall. And the crazy thing about chronic disease when you read about it is that If you discover these things early, they're totally preventable. And the cost of dealing with them is very small and is suffering for the person that are having it and their family and community is very small too. So the key thing is if you discover things early, you're actually good. And so then the question is, well, why don't we discover things early? And it happens to be that... we don't have enough data. So everyone in the entire healthcare industry is in agreement that we have to take healthcare from reactive to preventative health. But then, you know, there now all the disagreement starts, which is how do you do that? And our view, my co-founder Yalmar and I, our view is really that it all starts with having better data. If you have better data, you're going to... be able to discover things much more easily. And that in itself then leads you to have a chance of discovering those things