STREAMING NOW: Watch Now

Spotify's secret weapon

After a series of Spotify executives gave presentations for nearly two hours at an ...

Posted: Apr 3, 2018 12:32 PM
Updated: Apr 3, 2018 12:32 PM

After a series of Spotify executives gave presentations for nearly two hours at an investor event last month, the company brought out its closer: Barry McCarthy.

McCarthy, Spotify's CFO, stood in stark contrast to his boss. At 64, he wore a blazer, dress shirt and gray hair. Daniel Ek, Spotify's 35-year-old CEO and cofounder, presented in a plain white t-shirt and sneakers.

What stood out more than the attire and age gap, however, was McCarthy's resume. He'd previously served as the CFO of Netflix, helping to take the company public. Now he was pitching yet another entertainment service to Wall Street -- a coincidence he and Spotify made sure would not go unnoticed.

"Since my Netflix retirement [in 2010], its stock price has increased about ten times," McCarthy told the investors, analysts and media outlets watching the presentation. "So you have to ask yourself: should I buy the stock now or should I wait til this guy retires? I hope to answer that question for you today."

He mentioned Netflix three times in the first three minutes of his presentation, then name-dropped it again in a Q&A that followed, hinting each time at the significant investment opportunity ahead.

On Tuesday, Spotify is going public in a highly unusual debut that sees it ditch the usual fundraising and fanfare. But the company is looking to lure investors in part by comparing itself to a company with which Wall Street is very familiar.

"The comparison is good. It shows that even Netflix was underestimated and then they became this giant," says Santosh Rao, who tracks Spotify as head of research at Manhattan Venture Partners. "It shows that there is power in numbers."

McCarthy is seen as the ideal pitchman.

"He's the right person to sell that message," says Michael Pachter, an analyst with Wedbush. "Barry has street cred, so it helps immensely."

Related: Inside the war between Spotify and Apple

McCarthy joined Netflix in 1999, shortly after its founding, and helped take the company public in 2002 at a time when it was still losing money -- not unlike Spotify today. Fifteen years later, Netflix stock had jumped 14,000%.

"Barry was a brilliant partner through our IPO and during his years as our CFO," Reed Hastings, CEO and co-founder of Netflix, said in a statement to CNN. "Spotify is fortunate to have access to his no-nonsense approach and deep understanding of markets and investors."

While Netflix and Spotify are both streaming businesses, there are significant differences. The key to Netflix's success in recent years has been spending heavily on original content to lure viewers. Spotify is less focused on exclusives than on developing algorithms to better personalize the music experience.

Spotify also faces steeper losses and stiffer competition than Netflix did when it went public, with Apple, Google and Amazon all offering rival music services. And Spotify is choosing to forfeit the usual safeguards for investors by listing its shares directly on the New York Stock Exchange without relying on underwriters to help assess demand and set a price.

McCarthy will have to navigate those challenges.

Spotify declined to comment for this story. Woody Marshall, a Spotify board member and a partner at Technology Crossover Ventures, called McCarthy a "great person and experienced executive."

The only blight on McCarthy's resume comes from a role he held in between Netflix and Spotify. He briefly served as the COO of Clinkle, a much-hyped payments startup that nearly collapsed amid concerns about the leadership of its young CEO.

When McCarthy left Clinkle in 2014, he told one publication that the startup was "not nearly as close to scaling the businesses as I thought they were when I came in the door. And that's what I do."

The next year, McCarthy joined Spotify. Clinkle now barely registers as a footnote. All that mattered to those watching McCarthy's investor day presentation was Spotify -- and Netflix.

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 65436

Reported Deaths: 1848
CountyConfirmedDeaths
Hinds5487116
DeSoto352328
Madison238763
Harrison237835
Rankin222032
Jackson220142
Jones184258
Forrest172155
Washington158237
Lauderdale139090
Lee133232
Neshoba127891
Lamar118414
Bolivar116333
Oktibbeha109037
Lowndes103935
Warren100731
Scott98720
Panola98012
Sunflower96723
Copiah94128
Lafayette93714
Leflore89362
Pike87734
Holmes86348
Grenada83021
Yazoo80712
Pontotoc7918
Lincoln79041
Leake77925
Simpson77930
Wayne74921
Monroe74751
Coahoma69711
Tate69227
Marion63819
Marshall6389
Covington60713
Winston60415
Adams60225
Union56215
George5484
Newton53511
Pearl River52037
Attala51324
Walthall48919
Noxubee44411
Chickasaw44119
Tallahatchie40710
Calhoun4009
Claiborne39913
Smith39413
Prentiss3869
Alcorn3825
Clay38214
Jasper3819
Hancock36314
Tishomingo3505
Itawamba33710
Tippah32513
Clarke32425
Tunica3176
Montgomery3073
Yalobusha30710
Lawrence3067
Humphreys28211
Carroll25411
Quitman2401
Greene23111
Kemper22815
Jefferson Davis2266
Amite2206
Perry2207
Webster21612
Jefferson1946
Wilkinson19413
Sharkey1903
Stone1633
Benton1330
Choctaw1304
Franklin1162
Issaquena251
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 94827

Reported Deaths: 1674
CountyConfirmedDeaths
Jefferson12486232
Mobile9420204
Montgomery6449148
Madison516130
Tuscaloosa405769
Baldwin338023
Unassigned319060
Shelby316432
Marshall306034
Lee258844
Morgan229517
Etowah204128
DeKalb174513
Calhoun167213
Elmore167238
Walker149864
Houston134812
Dallas130523
St. Clair128915
Russell12772
Limestone126113
Franklin123820
Cullman118912
Colbert114113
Lauderdale112315
Autauga105021
Escambia104416
Talladega96713
Jackson9244
Tallapoosa84179
Chambers83538
Dale80223
Blount7593
Butler75635
Chilton7456
Coffee7365
Covington71620
Pike6877
Lowndes56724
Barbour5655
Marion56224
Marengo53614
Clarke4949
Hale46426
Bullock45011
Winston44011
Perry4364
Wilcox41410
Bibb4134
Monroe4084
Randolph39410
Conecuh37810
Pickens3779
Sumter36018
Lawrence3321
Macon32013
Washington32012
Crenshaw3123
Choctaw27712
Cherokee2587
Greene24911
Henry2493
Geneva2480
Clay2375
Lamar2122
Fayette1835
Cleburne1251
Coosa1012
Out of AL00
Tupelo
Clear
92° wxIcon
Hi: 92° Lo: 70°
Feels Like: 94°
Columbus
Clear
92° wxIcon
Hi: 92° Lo: 71°
Feels Like: 97°
Oxford
Clear
90° wxIcon
Hi: 89° Lo: 67°
Feels Like: 92°
Starkville
Clear
88° wxIcon
Hi: 89° Lo: 66°
Feels Like: 88°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather