Martin Lorentzon has been actively involved in the startup scene for a long time. After starting his first venture in 1998 at the age of 29, Lorentzon has since developed an eye for spotting emerging market trends and finding the right people to turn his ideas into reality. “After all, I’m really good at two things – finding the good and smart people, and looking into the crystal ball to predict the future”, Lorentzon summarizes.
Since 2006, Spotify has grown from a Stockholm-based startup into a global phenomenon to fundamentally disrupt the music industry. “From early on, Spotify’s business model has focused on providing users with real-time access to music instead of full ownership, and other industries have followed the lead. Nowadays, we have Netflix, Airbnb, and other industry-defining companies, all focusing on the increasingly popular access model.”
When asked about the drivers behind Spotify’s success, Lorentzon emphasizes the importance of perseverance. “It took us 2,5 years to convince VCs of our business idea and obtain test licenses for online music distribution in Sweden. In the beginning, investors and record companies were laughing at us. You’ve got to attack like crazy to succeed, there’s no other way.”
In addition, Lorentzon states the ability to execute as the main indicator of future success. “Execution and finding the good people account for 97% and business idea only for 3%. People usually overestimate the significance of the business idea, although the idea really doesn’t matter that much. Execution is the ultimate key to success.”
In addition to promoting perseverance and execution, Lorentzon talks a lot about the true meaning of company culture and employee commitment. Although Spotify has grown into a multinational organization with over 1,500 employees, the company still arranges regular induction sessions for its employees in its native Sweden. “Every year, we arrange an introduction day for our new employees in Stockholm. I have been on board for ten times. After all, we’re a tech-savvy company driven by our developers. Everything is about the culture.”
According to Lorentzon, the Nordics form an ideal environment for early-stage startups. Having debated the Nordic countries for a long time, Lorentzon says Finland and Sweden are developing “nicely”, especially due to the emergence of the booming gaming industry in the area. “In order to find the next Nokia, we need to support each other. We really need more companies in the region.”
However, securing VC funding may be tricky, especially in the early stages of developing a new company. “The Nordic region is still lacking adequate VC money, which became quite evident during my first years at Spotify. Surprisingly, I had to finance a lot of development out of my own pocket.” In the future, Lorentzon hopes to start “pouring Spotify money into other ventures” to support the emerging startup scene in the area, following in the footsteps of Niklas Zennström, CEO and Founding Partner of Atomico.
Ending the session, Lorentzon shares his most useful tips for aspiring founders and entrepreneurs at the beginning of their journey. “When you start a company – be two persons, don’t do it alone. It’s a bumpy road ahead. Two people would be ideal, three or four is already too much. You should be equals, but still have a different angle looking at the business.”
Lastly, Lorentzon highlights the vast importance of experimentation, referring to the classic method of trial and error. “Debate what’s good and what’s bad, and finally you will get there.” Following the initial steps of coming up with a feasible business plan, the team should focus on building a prototype and start talking to VCs with a realistic vision in mind – combined with dynamite perseverance and execution.
Photos by Samuli Pentti
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