Ben Horowitz on the Skype acquisition

http://bhorowitz.com/2011/05/10/microsoft-buys-skype/

by geoffschmidt • 15 years ago

77 18 15 years ago

bhorowitz.com

joshu3• 15 years ago

Editorializing in the title. "flip"?

blantonl2• 15 years ago

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".

joshu3• 15 years ago

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.

tokenadult• 15 years ago

"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.

stretchwithme• 15 years ago

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?

gregpilling• 15 years ago

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.

sunstone• 15 years ago

This guy got really lucky and he's hoping no one will notice.

afterburner• 15 years ago

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.

nl• 15 years ago

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)

nopinsight• 15 years ago

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.

iamelgringo• 15 years ago

I'm repeatedly impressed by Andreessen Horowitz. Every person I've met on their team rocks, and now we're starting to see how their investment thesis is panning out.

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

Meai• 15 years ago

Microsoft already has Lync

wdr1• 15 years ago

> Microsoft knows how to make a ton of money.

Yes, but only out of Windows & Office. It's been a while since they've been able to expand into other areas.

E.g., their online division typically loses >$500M.

erikstarck• 15 years ago

You have to give it to Fries and Zennström. They've essentially sold Skype three times, making billions each time.

RyanKearney• 15 years ago

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

ntoshev• 15 years ago

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.

Ben Horowitz on the Skype acquisition

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