Ben Horowitz on the Skype acquisition(bhorowitz.com)
bhorowitz.com
Ben Horowitz on the Skype acquisition
http://bhorowitz.com/2011/05/10/microsoft-buys-skype/
19 comments
"We specifically thought that Niklas and Janus, two of the preeminent technology entrepreneurs of our time, wanted Skype to be a huge success and would do everything in their power to make that happen. As a result, we did not think the doomsday scenario that greatly concerned other investors--that the founders would attempt to shut down the company through the courts--was an actual possibility"
Wow. This and the comments about how much Skype's user base has grown since Google and Apple began competing in the same space are very interesting. Plainly, someone is wrong about the value of Skype (see the other stories submitted to HN about this transaction, for the clash in points of view) but just maybe the investors who just sold Skype to Microsoft are right.
Wow. This and the comments about how much Skype's user base has grown since Google and Apple began competing in the same space are very interesting. Plainly, someone is wrong about the value of Skype (see the other stories submitted to HN about this transaction, for the clash in points of view) but just maybe the investors who just sold Skype to Microsoft are right.
Skype fits well into Microsoft's collection of assets. Its stronghold on the enterprise market will make Skype even more dominant. Moreover, this is a piece that might help Windows Phone 7 more competitive with iPhone and Android.
A key determinant of the value of this acquisition is how well they can execute the integration of Skype with their other products.
A key determinant of the value of this acquisition is how well they can execute the integration of Skype with their other products.
The network effect is the big thing. Free Skype-to-Skype calling is a powerful incentive.
Of course, ultimately exploiting that will depend on people using Skype as their primary way to make calls. And somehow keeping other means of communication from supplanting the phone call.
And since 2010 has been referred to as the year we stopped talking to each other, this investment still may not work out. Even the most basic calling plans give most people way more minutes than they can use.
Will heavy users and international callers spend enough to make it work? Or will international calls one day be as seamlessly made as domestic ones?
Of course, ultimately exploiting that will depend on people using Skype as their primary way to make calls. And somehow keeping other means of communication from supplanting the phone call.
And since 2010 has been referred to as the year we stopped talking to each other, this investment still may not work out. Even the most basic calling plans give most people way more minutes than they can use.
Will heavy users and international callers spend enough to make it work? Or will international calls one day be as seamlessly made as domestic ones?
I think what you will find is a large increase in business users. Many of my friends are using Skype for international calls for their business - the same people who are seemingly locked into using MS Outlook. I use Google Apps myself.
There is a strong small business contingent stuck on Outlook though, and if MS integrates with that, they should have no problem selling lots and lots of paid, higher quality business use minutes.
There is a strong small business contingent stuck on Outlook though, and if MS integrates with that, they should have no problem selling lots and lots of paid, higher quality business use minutes.
Editorializing in the title. "flip"?
Ben is a venture capitalist.. flipping is what he does for a living.
Edit: Down-votes or not, please keep in mind that the business model of a venture capitalist is to make an investment and sell it at a future time for a profit. There seems to be a negative connotation around the term "flip", but the reality is that there is significant risk to being a "flipper." Horowitz took an enormous risk and he was rewarded for his "flip".
Edit: Down-votes or not, please keep in mind that the business model of a venture capitalist is to make an investment and sell it at a future time for a profit. There seems to be a negative connotation around the term "flip", but the reality is that there is significant risk to being a "flipper." Horowitz took an enormous risk and he was rewarded for his "flip".
There were a lot of people in the deal, so it is not like he sold the company himself.
Further, flip is extremely negative. VCs who do this for a living don't get very far.
I remember being lectured repeatedly about this. "are you building a company or a burger?"
Your use of terminology gives me the impression you have gathered your understanding from blog posts.
Standard disclaimer: I am both an investor in a16z and invested in them. Along with a number of other firms on both sides.
Further, flip is extremely negative. VCs who do this for a living don't get very far.
I remember being lectured repeatedly about this. "are you building a company or a burger?"
Your use of terminology gives me the impression you have gathered your understanding from blog posts.
Standard disclaimer: I am both an investor in a16z and invested in them. Along with a number of other firms on both sides.
Flip is not "extremely negative." It is a reality in many business transactions. As I wrote in my parent post the term "flip" carries a negative connotation, but the end result is that someone took on a greater risk than the other guy to buy into a business with the sole purpose to resell their share at a greater value. Anyway you look at it, that is a flip.
And I'm cool with that. Good for Ben.
And I'm cool with that. Good for Ben.
Flip implies selling quickly without adding much value.
Skypr has publically been on an IPO path for a while, and that is no flip.
Skypr has publically been on an IPO path for a while, and that is no flip.
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I enjoy Ben's posts a lot, but what has actually happened to Skype since eBay sold it?
IP lawsuit was resolved, the Skype network effects continued to work, the economy changed, is there anything else? It doesn't seem to me like much value was created inside the company for these 18 months, more like the perception of potential buyers changed.
IP lawsuit was resolved, the Skype network effects continued to work, the economy changed, is there anything else? It doesn't seem to me like much value was created inside the company for these 18 months, more like the perception of potential buyers changed.
You have to give it to Fries and Zennström. They've essentially sold Skype three times, making billions each time.
FYI This is what your website looks like to me if you decide to use flash to display plain text. http://i.imgur.com/vrwUO.png
This guy got really lucky and he's hoping no one will notice.
People like people with good luck. Especially when they're handling their money. I'd imagine Ben wants everyone to know how lucky he was.
Funny how he's "got lucky" 3 times now. (Netscpe server division, Loudcloud/Opsware and now Skype. Not counting other successful Andreessen Horowitz investments: Facebook/Zygna/Twitter/Groupon)
re: Microsoft + Skype:
Microsoft knows how to make a ton of money.
Microsoft is looking at an explosion of CPU cores on desktop computers. What are we going to be using those cores for? Embarrassingly parallel problems like 3D rendering, OS eye candy and video processing and compression. Multi user HD video chat is going to be happening really soon for really cheap. That's quite disruptive. (See Telepresence systems) [1]
The more peer to peer nodes that are added to the Skype network, the better the product. If Windows ships a Skype client turned on by default with every OS and copy of Office it sells... that peer to peer network starts to look like BitTorrent in size.
Cisco currently charges $300k for a telepresence room. Their 37" telepresence system runs about $50k last I checked. Skype chats just got blessed as an enterprise system. There's a _lot_ of money to be made here.
My nieces and nephews are in 3 different countries and about 6 different states. Every night, they live on Skype, and video chat for free. When I grew up in Central America in the 70's, a phone call to the US was $3/min.
Microsoft no longer has government oversight from the anti-trust settlement... Things might just get interesting.
ref: [1] http://www.cisco.com/en/US/products/ps7060/index.html