Spotify CEO comments on company’s layoffs amid job cuts seen across tech sector

Spotify became the latest tech company to lay off a portion of its employees, and its CEO commented on the the move.

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DAVE BRIGGS: Tech layoffs. Spotify confirming in a statement it will lay off around 6% of its workforce. CEO Daniel Ek writing, quote, "Like many other leaders, I hope to sustain the strong tailwinds from the pandemic and believe that our broad global business and lower risk to the impact of a slowdown in ads would insulate us. In hindsight, I was too ambitious in investing ahead of our revenue growth."

SEANA SMITH: Well, Spotify is one of the 174 tech companies with layoffs so far in 2023. That's according to trackerlayoffs.fyi. And a new survey revealing that there could be more pain to come. Nearly 20% of US firms expect layoffs at their company in the coming months. That's according to a recent survey from the National Association for Business Economics. And Dave, I think the big question here, what so many people are asking, when you see company after company in the tech sector announce layoffs over the last several weeks, whether or not that's indicative of what's going to come in the broader economy.

It's interesting once you start digging into some of the research that's been published on this. And Sam Ro of the TKer did this over the weekend. He cited Goldman that was out with research back in November, saying that the trends that they have looked at in the past when tech companies have laid off workers hasn't necessarily translated into widespread layoffs.

And that's reflected when you take a look at some of the recent numbers that we've gotten in the labor market. Unemployment rate still extremely low. Labor market seems to be strong. So that might be a silver lining there that maybe this is just some problems with companies that scaled way too quickly during the pandemic, and they're trying to correct some of that headcount now.

DAVE BRIGGS: Right, most of the companies we've seen do these layoffs, at least this year and late last year, scaled up headcount more than 50% based on pre-pandemic numbers. The only one that really hasn't-- and that's why they haven't done layoffs-- is Apple, who only increased headcount about 20%. And these are huge names-- Spotify, big public companies that we're all familiar with-- but very small companies. Remember, Spotify, only 9,800 worldwide employees, 5,400 here in the United States. So generally speaking, my answer would be, no, it's not indicative of what's about to come in this space.

I want to bring Dan Howley in on this. Curious your thoughts about this. Again, tech makes up about 10% of our economy, but only about 2% of our workforce. So is it really a barometer of what's to come?

DAN HOWLEY: I don't necessarily think so. And you have to look at what's going on with the tech layoffs in general. Yes, they're partially caused by the economy, kind of as far as the tech economy goes, pulling back from the explosive growth that we saw during the pandemic, right? A lot of these companies went out and, as you guys pointed out, hired huge numbers of employees, thinking that there was a new normal, right? We would kind of all be online at all times. We would forever be on-- shopping on Amazon. No one's going to go to brick and mortar stores anymore.

And we, frankly, just haven't seen that. People realized that they wanted to get back outside into the real world. And so you saw people start shopping again in person. Amazon is now suffering from that. That's why they're laying off those 18,000 employees. And we saw with the likes of Meta, Microsoft, Alphabet, there were these huge amounts of employees being brought on. But then they started to hit issues.

Apple with ads-- sorry, Alphabet with ads. The ad market obviously suffering as companies pull back on their ad spending. Ditto for Meta, but oh, yeah, they're also spending billions of dollars on the Metaverse, so they're dealing with two issues there. They still also, by the way, are just about overcoming the problems that Apple had thrown their way with their privacy changes. Microsoft, they overhired. We see slowdown in cloud and PC sales. So it's a number of different issues. This isn't necessarily a monolith when it comes to this kind of layoffs that we're seeing.

DAVE BRIGGS: And it is maybe more indicative of what we're seeing in the podcast space here. We're seeing fewer mergers and fewer M&A activity, slowing ad growth, like you just talked about, and really growth rates that are about half of what they were in 2020, although podcasts are still growing. It's surprising to see their head of content out. Really did a huge job there. Dan Howley, thanks so--