Skype's origins in Kazaa and its unique corporate culture. Acquisitions by eBay and subsequent legal drama. The decline of Skype and its replacements. Microsoft's acquisition of Skype and the future of communication tools.
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Quick takeaways
Skype's origins can be traced back to the peer-to-peer file sharing platform Kazaa.
Skype's unique corporate culture included unconventional practices like a swimming pool in the boardroom and initiation shots for new employees.
The acquisition of Skype by Microsoft allowed it to become a key player in the unified communication market and integrate into various Microsoft products.
Deep dives
Skype Acquisition and Growth
Skype, the popular video chat and communication platform, was acquired by Microsoft for $8.5 billion in 2011. The acquisition was a product acquisition as Microsoft aimed to integrate Skype into its ecosystem and offer a stronger communication offering. Prior to the Microsoft acquisition, Skype had experienced significant growth, reaching over half a billion users and generating $185 million in revenue in Q3 2009. Over the years, Skype has been integrated into various Microsoft products such as Outlook and different Office applications. The acquisition also brought about changes in the management team and led to the reorientation of Skype as a business and consumer-focused communication platform.
Competitive Landscape and Rumors
Skype faced competition from other chat and video platforms such as Google Hangouts and Facebook's Messenger. There were rumors of Google and Facebook being interested in acquiring Skype prior to the Microsoft deal. The integration of Skype into various Microsoft products aimed to provide a comprehensive communication solution. The acquisition also allowed Microsoft to utilize its overseas capital, enhancing its global reach and improving its product offerings.
Skype as a Unified Communication Platform
Under Microsoft, Skype has become a key player in the unified communication market. Skype for consumers and Skype for business have been developed to cater to different user needs. The integration into Microsoft's ecosystem, including Outlook, Windows, and other Office applications, has made Skype a prominent communication tool. However, it faces competition from other platforms such as Slack, Zoom, and other similar chat and video conferencing applications.
Potential Alternatives and Impact
Had Skype not been acquired by Microsoft, it is possible that other tech giants like Google or Facebook could have acquired the platform. The future of Skype as a standalone company could have looked different, with potential partnerships or further growth into consumer or enterprise markets. Additionally, the overseas capital held by Microsoft played a role in the decision to acquire Skype, allowing Microsoft to use the capital and integrate the product into its ecosystem.
The significance of the Microsoft and Skype acquisition
The podcast analyzes the Microsoft acquisition of Skype, questioning its potential for profitability and growth. The speaker initially had a skeptical outlook on the $8.5 billion acquisition, but acknowledges that Skype has grown as expected. The podcast explores whether Microsoft could have used the cash for better alternatives, but concludes that the acquisition was a better choice than buying treasury bills.
The potential and growth of Skype
The podcast discusses the growth and potential of Skype as a communication platform. It highlights the organic growth of Skype, with no money spent on customer acquisition. The speaker compares Skype's low cost of acquiring users to competitors like Vonage, which heavily invested in advertising. The podcast also examines the rise of mega acquisitions and draws a parallel between Skype and WhatsApp, questioning whether Skype could have become as successful in the messaging space. Overall, the podcast praises the growth and product market fit of Skype, but acknowledges that it never fully realized its potential due to its corporate history and lack of strong leadership within Microsoft.
An acquisition so wild and crazy, they had to do it again. And again. Ben & David cover tech’s perhaps most-traded asset, Skype (which also happens to be a fantastic business). How do we even know which deal to grade? Tune in to find out…
Community spotlight: Slack community member Swyx’s financial data research startup Sentieo!
Skype founders Niklas Zennström and Janus Friis’s meeting in the 1990’s at Swedish telecom company Tele2
Zennström & Friis’s introduction to talented Estonian developers Jaan Tallinn, Ahti Heinla, and Priit Kasesalu as part of Tele2’s efforts to jump into the dot com “portal mania”
Skype’s origins in the technology powering Zennström, Friis and the Estonians’ first startup endeavor together: the peer-to-peer file sharing platform Kazaa
The “complicated” legal, technological and ownership situation for Kazaa and Skype
The second Skype acquisition: eBay’s 2009 decision to spin the company out to a private investor consortium including Silver Lake and the newly-formed Andreessen Horowitz