Returning to build Spotify recommendations

In this episode, Wouter sits down with Erik Bernhardsson, founder and CEO of Modal, the cloud compute platform that powers some of the fastest-growing AI companies in the world, including Lovable, Meta, and Chai.

Before Modal, Erik built Spotify's recommendation engine from scratch; then scaled Bolt's engineering team from 10 to 10,000 people in five years; and watched it nearly collapse when interest rates rose. 

He started Modal self-funded, with a tiny team and almost no customers, two years before anyone noticed. Then stable diffusion dropped, and everything changed overnight.

Erik talks about why you learn more from success than failure, how he keeps a pulse on an 80-person organization, and the fundraising advice he gives every founder: raise less than you think, at a lower valuation than you want, and never confuse VC enthusiasm for a strategy.

If you're building something hard and wondering whether conviction is enough to carry you through, Erik is proof that sometimes it is.

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This episode is also presented by AssemblyAI, the leading Speech AI platform. Their API gives developers access to production-ready models for transcription, speaker detection, summarization, and more. If you're building anything with voice or audio data, AssemblyAI is the standard.

Check them out at 
https://www.assemblyai.com/explore/biography-podcast?utm_source=biography&utm_medium=podcast&utm_campaign=credit_grant

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Follow Wouter: https://x.com/WouterTeunissen
Follow Erik: https://x.com/bernhardsson
Follow Modal: https://x.com/modal

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Biography Newsletter: https://biography.beehiiv.com/

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(00:00) Trailer
(01:23) Why study physics over CS
(03:03) Physics thinking in business
(05:35) Random sampling for accountability
(07:44) Many ways to fail, few to win
(09:33) Listen to pain, not solutions
(11:05) Infrastructure requires conviction
(14:00) Joining Spotify as employee 40
(19:00) Leaving and scaling from 10 to 10,000
(23:30) Starting Modal
(25:59) Stable diffusion changes everything
(28:28) Finding product-market fit
(31:50) Product-led growth
(34:09) Should have hired sales earlier
(37:00) Keeping the org simple
(41:26) Co-locating across offices
(43:31) Hire from successful companies
(47:29) Don't take too much funding
(51:39) Modal's funding rounds
(55:49) Advice for younger founders
(59:30) Modal's multi-product future
(01:05:02) US vs Europe startups
(01:08:46) Wrap-up