After landing a $200 million credit line and acquiring music data platform The Echo Nest, Spotify is widely expected to announce its IPO in coming months. Spotify is a unique spin on the same fundamental formula that generated value for Netflix, Amazon, Groupon, Pandora and LinkedIn before it.
So what exactly is this magic formula? It’s simple, really: When a company uses data to personalize its inventory, it creates a better UX. This UX in turn draws in millions of users and investment dollars.
What’s the lesson startups can derive here?
Value today is less about big sales and more about how many users a company continually engages using data.