Spotify Black Sheep Among the Big US Tech-giants

Spotify Black Sheep Among the Big US Tech-giants

To plan routes and navigate, people use Google maps, watch series: on Netflix, and for music: on Spotify. All these apps are now inseparable from our daily lives. Still, Spotify is a black sheep in this list; other than Google, Netflix, and other tech giants or electronic component providers from the US, Spotify is from Europe.

The company was founded in 2006 by Daniel Ek and Martin Lorentzon in the Swedish capital Stockholm. Since last week the company has been stock-noted, and over the years, Spotify has become a European success story. Of course, it is not the only European tech company that made it, but it has managed to conquer a unique position among consumers. Therefore, those can be easily placed on the essential American internet services list.


The Social Network

Big European companies like Spotify are searching for access; it seems they need to be stock-listed to take the next step towards greatness like the other tech giants. According to Professor Eric Stam, you need to have the ambition to create something big; that mentality we see more in the USA than in Europe.

That does not mean that the EU has no fertile soil. In Europe, there is a good knowledge infrastructure and good programmers. The only thing lacking in Europe is the mentality to think more significantly like in the US; in that field, the company looks more like a US tech company than a European. What makes the company interesting is that Spotify is in a different position than, for example, social networks. They didn’t specifically need networks to grow.

Extra listeners mainly provide better recommendations. The company was able to conclude the right deals with record labels and search directly for the consumer, for example, the link with Facebook. Spotify succeeds in what is more difficult for other European players, but that does not mean the company is also more comfortable. Big tech companies come up with their music services and what makes it even more threatening is that they are less dependent on their income from them; there are also no physical parts, like electronic parts.


America First

For years there has been a big difference in Europe between American tech companies and European ones. Companies like Apple, Facebook, and Google dominate the European market, leaving less space for European success. According to the magazine Wired, a big difference between the two continents is that America is wealthier than Europe. In America, venture investors earn five times more money than comparable companies in Europe, which we can notice that the magazine says will change in the future. According to the magazine, investors such as Larry Page (co-founder of Google) and Jack Ma (co-founder of Alibaba) will increase interest in the European continent.


So Why Be a Stock-listed Company?

Usually, a company goes to the stock exchange to raise money or change ownership. For that, they create new shares that external parties can buy. Generally, companies opt for an accompanying investment bank for the entire process. The latter must then examine the interest in the new shares with the institutional investors to set an introductory price.

But Spotify tackles it differently. For example, the company will not raise additional capital but allows existing shareholders to sell their shares through the stock exchange. Think of it as a kind of reciprocity towards early investors in the company. As a company that deals with electronic components, there is more room to grow if you are stock-listed.

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