New layoffs in tech — Spotify: how it affects product managers

Spotify has announced a new wave of layoffs affecting 17% of its workforce, approximately 1500 individuals. Let’s see which conclusions product managers can reach from this news.

Earlier this year, the company had already cut a total of 800 jobs. It seems that investors, amid the crisis, are growing increasingly impatient and are no longer willing to wait for future revenues but instead demand immediate financial returns.

Why I think so

1. Looking at the Q3 report for this year: Spotify exceeded its targets for Monthly Active Users (MAU), premium subscribers, revenue, and operating profit. Operating expenses compared to the previous year decreased by 13%, and Spotify acknowledges that this was mainly achieved through personnel cost reductions.

2. Apparently, this was not enough to offset previous losses, leaving three options: significantly increase revenue, further reduce costs, or both. It is faster and less risky for financial results to cut costs, which seems to be Spotify’s current strategy.

What does this mean for product managers

Essentially, nothing new, except for things that were already relevant in times of crisis:

1. Align with directions that can generate a positive financial outcome here and now. These can include products aimed at cost reduction or revenue generation. However, more risky ventures promising future returns may face challenges in the current climate. Plus, there’s the additional risk of being laid off.

2. Relevant not only in a crisis: Evaluate the company and the business sector you are entering. There’s often a sense that the company is choosing us, not the other way around. However, if the company or its market is not successful, it directly impacts your product outcomes. Therefore, assessing the market, scrutinizing the company, its leadership, asking questions — it’s all normal. Employment is a two-way deal.

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