ebay and skype, you screwed up

star fund manager peter lynch of fidelity magellan fund in the 80’s used to talk about companies that diversify into areas that they have no business being in, calling it “di-worse-ification.” that’s exactly how i see the failed marriage between ebay and skype. there is absolutely no reason why ebay had to buy skype to benefit from skype’s voip technology. they could have done an strategic partnership and both sides would have been happy and reaped the reward; but oh no, ebay went shopping happy and bought a business they know nothing about. they distracted themselves with running skype, took just enough attention away from their core business, and at the same time distracted skype’s crew on focusing on their business to work on silly integrations.

it’s not unusual to have asset rich companies get too ambitious and buy stuff that they shouldn’t, but it’s a surprise that the seller didn’t lock in the price of the sale better. under the earn-out agreement, it is reported that niklas zennstrom and company will only get $1.7B instead of the $2.6B. that’s a pretty big haircut. zennstrom should have just taken the $1.7B at the time of the sale and saved himself two years of time and grief.

obviously there’s a lot of monday morning quarterbacking, but i think alot of blogger saw it when the purchase was announced:

Let’s Talk About Skype: “i can’t help but think that the wrong company bought skype. imagine if Nokia had bought them or even Verizon or even Google.”

(A VC : Venture Capital and Technology.)

my advice to meg: talk to microsoft, get them to take skype off your hands for a percentage of ebay, they could integrate it with their not-successful VoIP offerings. i know steve and meg are friends, sure you can work something out.


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