How the Spotify mafia took over Sweden’s tech scene

When Daniel Ek and Martin Lorentzon founded Spotify in April 2006, they were two Stockholm entrepreneurs with a prototype so skeletal that Per Roman, the cofounder of investors Bullhound Capital, who would later back the company, says his first look at it was “world-changing,” despite there barely being a product to look at.

Two decades and 300 million subscribers later, Spotify has become a defining force in the Swedish tech scene: a company whose alumni have gone on to found, fund, or run many of the most ambitious startups Stockholm has produced, in much the same way Silicon Valley’s PayPal Mafia shaped the U.S. tech ecosystem. It’s one of several tentpole companies, alongside Skype, Klarna, and King, that have had an outsized impact on Sweden.

Ex-Spotify engineers and operators now run venture firms backing the next wave of Swedish startups, including Lovable. Last month, Patrik Torstensson, one of Spotify’s most senior engineers during its growth years, was announced as Lovable’s new head of engineering, another addition to an alumni network that includes the founders of Tictail (acquired by Shopify), Soundtrack, Lifesum, Kovant, and Homer.

But Spotify’s influence on Stockholm extends beyond headcount. The company helped instill a culture of ambition and a growing confidence that the Swedish capital can produce globally dominant consumer technology companies, and that failure, should it come, won’t be fatal.

Fast Company spoke with several Spotify alumni who have since gone on to found companies of their own and further expand Stockholm’s startup ecosystem.

Henrik Torstensson, partner, Alliance VC

Henrik Torstensson joined Spotify in May 2010 as head of premium sales, when the company had around 300,000 paying subscribers. By the time he left three years later to cofound the wellness app Lifesum, that figure had grown to 6 million.

He points to Spotify’s willingness, beginning around 2010, to hire commercial operators from top American companies—early Google ad sales staff, Facebook partnership leads—as the moment Stockholm’s talent pool truly leveled up. “You got a really good mix of very ambitious, very good, mostly Swedish engineers and product people with a commercial acceleration which would have taken much longer,” says Torstensson, who now invests in the Nordics’ next big startups at Alliance VC.

Ali Sarrafi, cofounder and CEO, Kovant

Ali Sarrafi arrived at Spotify just as it was launching its first iPhone app, working on the data and machine-learning team, and stayed through the company’s IPO. During that time, headcount ballooned from around 100 employees to roughly 3,000, growth so relentless that engineers on his team complained about spending too much time interviewing candidates. “We didn’t really think much of it back then, because we were in the midst of it,” he says.

Sarrafi later left to build an industrial AI startup before founding Kovant, which sells autonomous agents to manufacturing firms grappling with what it estimates is a $3 trillion annual global efficiency gap. The cultural blueprint he learned at Spotify still shapes his company. “Best ideas, best facts, always win, not the person who’s the boss,” he says.

Wilhelm Lundborg, founder, Homer; partner, Greens Ventures

Wilhelm Lundborg has toured many of the biggest names in Stockholm tech: Spray, a Yahoo-like portal, in the late 1990s; Skype in the 2000s; Spotify from fewer than 100 employees to 3,500; then Tictail, which Shopify acquired; and now Homer, an AI-driven home-management app. He is also a limited partner in Greens Ventures, a venture fund made up mostly of ex-Spotify employees backing companies such as Lovable, Tandem Health, and Sana.

Lundborg argues that the Jante law, a Scandinavian cultural convention discouraging people from standing out, is fading in Stockholm. “I’m prepared to call that dead,” he says. “Everybody’s super excited and super happy and celebrates the successes of each other.”

Ola Sars, cofounder and CEO, Soundtrack

Ola Sars never worked at Spotify, but his company likely would not exist without it. A five-time music startup founder, Sars led the launch of Beats Music in Los Angeles before returning to Stockholm burnt out and convinced there was a business-to-business opportunity Spotify wasn’t pursuing. In a secretive Stockholm bar, he pitched the idea to Spotify executives, who backed it.

In 2014, the two sides jointly funded Soundtrack, which is now licensed in 75 countries with more than 50 million tracks and around 110,000 paying business customers spending roughly $30 per month. Spotify still holds a stake in the company. Sars says he values the village-like feel of Stockholm tech over what he sees as the Bay Area’s cutthroat culture. “My neighbors are C-levels at Spotify, and I can always ask Daniel or Martin or Alex what they think,” he says. “We’re not competing about shops here—we’re competing outside of Sweden.”

View the full article