clock menu more-arrow no yes mobile

Filed under:

The three reasons Spotify did a rare direct stock listing, according to CEO Daniel Ek

It’s all about transparency.

When Spotify listed its shares on the New York Stock Exchange this February, it did so with a rare, daring, direct listing, which cut out much of the traditional banking infrastructure that powers most IPOs. And it worked!

Why did the Swedish music streaming service do it that way? As Spotify founder and CEO Daniel Ek explained tonight at Code Conference in Rancho Palos Verdes, Calif., there were three main reasons:

  1. Transparency. “One thing about the traditional process — which was done in the 1970s — is obviously the world has changed a lot,” Ek said. “It just didn’t sit well with me to put out this document in this day and era when information is [fingersnap] like this and you can’t comment on it, you can’t say anything about it until the moment where you ring the bell and go public. I wanted to see if there was a way to push more transparency so that we could actually be open and could tell the story much differently.”
  2. Equal access to information for prospective shareholders. In theory, Ek explained, everyone should have the same information. “What actually happens in practice is you do this quiet road show and give some people a little bit more information, and then you open the doors and hope that those people will then hold your stock. And I didn’t want to do that. I wanted everyone to have exactly the same information.”
  3. Ek didn’t want to put anyone in a different boat. “Most often what happens is that the investors get to sell early on; the employees do not. I did not want that at all. I wanted everyone to have the same opportunity to sell — or buy, by the way — Day One.”

Sure, it was risky. “But we had a lot of data,” he said, “and we had a pretty strong indication where it was going.

“Overall, I would say, even if it would have been more volatile in the beginning, I don’t think it would have changed our decision. We’re trying to build something where we care about where the value will go long term, not what the stock will trade Day One.”

Watch Ek’s full interview with Kara Swisher and Peter Kafka below.

This article originally appeared on

Sign up for the newsletter Sign up for Vox Recommends

Get curated picks of the best Vox journalism to read, watch, and listen to every week, from our editors.