Prompt Cast
The History and Acquisition of Skype: From File-Sharing to Microsoft
TLDR This episode of Acquired explores the origins of Skype, its rapid growth due to its simplicity and free service, and its subsequent acquisitions by eBay and Microsoft. The hosts also discuss Skype's integration into the Microsoft ecosystem and the potential disruption to Google's business model with the release of the Pixel phone.
Timestamped Summary
00:00
This episode of Acquired discusses the history and acquisition of Skype, starting with its origins in 1999 and the challenges faced by its founders in developing the software.
06:08
In 1999, a Swedish telecom company hires three developers from Estonia to build a web portal, and later these developers go on to build Kazaa, a popular file-sharing program.
12:04
The founders of Kazaa sell the company but keep the technology, which they later use to develop Skype, a peer-to-peer file sharing technology that can also be used for transmitting voice over the internet.
17:42
Skype was able to gain a large number of users quickly due to its simplicity, free service, and the fact that it allowed people to make international calls for free, which was especially appealing given the high cost of long distance calling at the time.
22:54
Skype's growth continued with the addition of video calling two years after its launch, and in September 2005, they sold to eBay for $2.6 billion, with one of the rationales being that people could use Skype to verify transactions on eBay.
28:58
Skype's founders settle a lawsuit with eBay and the investor consortium, receiving a 10% equity stake in Skype, the technology becomes part of the company, and the founders also invest $80 million into the spin out, ending up with a 14% stake in Skype post-spin out.
35:23
Skype undergoes a restructuring, focuses on mobile, and is acquired by Microsoft for $8.5 billion, making it a highly successful business.
41:12
Microsoft acquires Skype and integrates it into the Microsoft ecosystem, including Outlook.com and Windows, while also acquiring Yammer for enterprise communication.
47:12
Skype's product offerings and lack of integration compared to Slack's unified user experience may be confusing for users, leading to a preference for a single superior user interface and customer experience.
53:28
Microsoft primarily acquired Skype for the enterprise side of the business, but if Facebook had acquired Skype, it would have been primarily a consumer-facing product, as evidenced by their integration of Skype calling into Facebook Messenger.
59:50
Skype's growth and product market fit were impressive, especially considering the limited technology and internet access at the time, and its success was largely due to organic demand and no marketing costs.
01:06:29
Skype's integration into Microsoft has been a slow process, but it was the right move to consolidate various communication platforms and leverage Skype's consumer offering for the enterprise market.
01:12:48
Google's potential change in business model with the release of the Pixel phone and integration of Google Assistant, and the potential disruption to their profitable business model, is the most interesting aspect of their recent announcement.
01:19:01
The hosts discuss the evolution of digital journalism and the potential for bundling buyer's guides with investigative pieces, as well as recommend reading a long-form piece about Sam Altman's expansion of Y Combinator and the importance of embracing failure.
Categories:
Technology
Business
