Technology Venture: Skype

Company summary & history
Skype Limited (the company that operates the Skype platform) was founded in 2003 by Niklas Zennström and Janus Friis with headquarters in Luxembourg. The first beta version was released in August 2003. Skype was purchased by ebay in October 2005, and the following year the number of users reached 100 million. In March 2009 Skype launched SIP for business users. In the third quarter of 2009, there were 521 million Skype user accounts, and Skype Limited's revenue reached 185 million USD.

Key people
Niklas Zennström – Swedish entrepreneur and investor. He co-founded several high-profile ventures including Skype and Kazaa, and most recently the investment group Atomico. He started his career in business development roles in the telecom and internet sector. Zennström has dual degrees in Business Administration (BSc) and Engineering Physics (MSc) from Uppsala University in Sweden.

Janus Friis – A Danish entrepreneur who co-founded Skype, Kazaa, and Atomico with Zennström. Friis began his career at an ISP helpdesk. He met Zennström in 1996 and they worked together to launch an ISP. Friis was named in Time Magazine's list of 100 most influential people. He dropped out of high school and has no formal education.

Ahti Heinla, an investor, Jaan Tallinn, a programmer, and Priit Kasesalu developed the actual Skype programme. All three had previously worked on developing the Kazaa platform too.

Start-up capital raised
In 2002, Skype secured 2 million USD of angel round capital from from 3 angel investors, and from Tom Draper Investment Company (a venture capitalist). In 2004 18 million USD were secured in capital from 4 venture capitalists: Draper Fisher Jurvetson, Bessemer Venture Partners, Index Ventures, and Mangrove Capital Partners.

Investors exit strategy
After the angel round, the founders & team retained 62% of equity, which was further diluted to 45% after a buy-out by venture capitalists . Skype was acquired by eBay in 2005 for approximately 3.1 billion USD, comprising of 1.3 billion USD in cash, 1.3 billion USD in ebay stock and a payout of 530 million USD to the founders.

In September 2009, eBay sold their 65% stake in Skype for 2.75 billion USD - a significant loss - to a private equity consortium made up of Silver Lake, Index Ventures, Andreessen Horowitz, Ben Horowitz and the Canada Pension Plan Investment Board (CPPIB).

Growth and acquisition strategy
Skype's primary revenue stream is through users who pay for the service to call non-Skype users. One potential method of growth was through their acquisition by eBay, who intended to use Skype to streamline communication between buyers and sellers on eBay – though this was later abandoned and Skype was sold again. To date, they have grown through diversifying their communication platform, offering business services and browser integration to highlight numbers that could be called through Skype in a single click.

Outlook
Skype's growth looks set to continue as they plan to introduce corporate subscription packages, including Skype-equipped televisions for suited for conference rooms and new tools for IT managers. With a planned debut in October, Skype has revealed details of Skype Manager, an online portal that allows that lets IT administrators oversee Skype usage by department, purchase Skype airtime and view company-wide costs.

Comments

  1. Skype was one of the major parts of online communication for individuals and businesses too. But nowadays it is facing a major downfall as Skype users are only 1.33 Million. I was shocked when searching about skype users. I came to know this when I was taking the HND assignment writing service and I asked for Skype interaction. And the service providers told me that it’s obsolete now and we are moved to new platforms. Then I realized that our favorite video calling platform will soon gonna left us.

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