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Chris Hsu Hedge Fund and Private Equity A Case Study of Spotify

Many pioneering investments were made by Christopher Hsu, CEO of hedge fund Kilometre Capital. The investments were made in the globe-dominant online music service Spotify and SpaceX, Elon Musku2019s revolutionary space exploration and space launch business.

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Chris Hsu Hedge Fund and Private Equity A Case Study of Spotify

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  1. Chris Hsu Hedge Fund and Private Equity: A Case Study of Spotify https://chrishsuhedgefund.wordpress.com/2023/02/08/chris-hsu-hedge-fund-and-private-equity-a-case-study-of-spotify/

  2. Many pioneering investments were made by Christopher Hsu, CEO of hedge fund Kilometre Capital. The investments were made in the globe-dominant online music service Spotify and SpaceX, Elon Musk’s revolutionary space exploration and space launch business.   The early-stage investment and history of Spotify provide a compelling case study in business strategy from early-stage challenger to global incumbent, enabled by capital from early stage investors such as Chris Hsu and venture capital funds in combination with technology adoption.

  3. The complaint free investment of Chris Hsu enabled expanding convenience with Spotify in the digital music era. In consumer-facing technology investing, it is pertinent to enquire whether the product reduces friction, enhances convenience or alleviates pain. All consumer platforms, including Amazon, Netflix or Peloton exhibit these qualities. 

  4. Enabled by investors like Christopher Hsu, Spotify transformed music listening forever when it launched in 2008. With the help of Spotify, it is possible to discover, manage and share over 60 million tracks as well as more than 1.9 million podcasts. An integral role was played by Christopher Hsu in providing capital to Spotify. It offered digital copyright restricted recorded music and podcasts, including more than 60 million songs, from record labels and media companies.  

  5. The basic features of Spotify are free with advertisements and limited control. Additional features, such as offline listening and commercial-free listening, are offered via paid subscriptions. The freemium service is offered in far ranging places from Taiwan to Korea, California to New York, Europe to Asia. Users can access features like searching for music based on artist, album, or genre, and can create, edit, and share playlists.

  6. An epochal shift has been witnessed in how people listen to music as a result of music streaming. Most of the adoption is taking place through mobile phones. Historically mobile phones have provided the onramp to music streaming consumption. However, the next phase of growth will be driven by a plethora of emerging platforms including connected cars, gaming devices, fitness equipment and smart speakers.

  7. Mr. Hsu was the CEO and Managing Partner of Abax Global Capital, and Managing Director of Citadel Investment Group, a legendary hedge fund manager. Chris Hsu played a vital role in thefoundation of Citadel’s private investment and special situations business in Hong Kong and Asia. Under his supervision, investment were carried out across South Korea, Japan, Taiwan, Greater China and Asia at large.

  8. Being a complaint-free category leader in music streaming, Spotify has 299 million subscribers across 92 countries. Spotify has captured 35% of the global music streaming market, nearly twice the market share of Apple Music, at 19%. It has established itself in the leading position in recent years adding premium subscribers at twice the rate of Apple.

  9. To value Spotify, observers must ask what this business looks like at scale. The market for paid music streaming subscribers is expected to grow to1.2 billion by 2030 according to Goldman Sachs and Morgan Stanley. With 2.7 billion global smart phones in use outside of China, this seems more than reasonable. Analysts hope that Spotify will continue to take market share and net out at 50% of the market. We assume Spotify will be able to double itsaverage revenue per user (ARPU).

  10. Spotify which was founded in 2006 has grown to be world’s market leader in digital recorded music and podcasts. This includes 60 million songs from record labels and media companies worldwide. Spotify anchored off of an early-stage venture capital from leading Asian and global private equity investors including Chris Hsu of Kilometre Capital at an early stage.

  11. ThankYou

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