Skype Fires Executives, Avoiding Payouts

http://www.bloomberg.com/news/2011-06-19/skype-fires-executives-avoiding-payouts-after-microsoft-buyout-closes.html

by diogenescynic • 15 years ago

137 65 15 years ago

ebaysucks• 15 years ago

Amazing that this kind of behavior by Skype/Msft wasn't calculated in the contract at the time of signing it.

kenjackson3• 15 years ago

This is pretty standard. If your options haven't vested and you're let go there usually isn't much you can do. I doubt MS has anything to do with it, except the fact that they probably didn't express any particular concern regarding the deal if these employees were let go.

teej• 15 years ago

There's plenty they could have done before the contract was signed. They could have easily pushed for double trigger acceleration in their own contracts to prevent this.

fleitz• 15 years ago

Gurle used to work at MSFT IIRC.

djcapelis2• 15 years ago

Good for them. If you're going to be cutthroat dicks, be consistent.

I hope their good employees take note.

r00fus• 15 years ago

Reduction of equity stake after negotiated compensation just reeks of pure theft. So what are good employees supposed to do?

Doubtless the ones who did not get diluted were the big money while the workers get shafted (as usual). Kleptocracy at it's finest.

djcapelis2• 15 years ago

> So what are good employees supposed to do?

Leave, if there's any justice in the world.

This is how the market works. The reason you don't screw your employees like this is not just because you're a nice person, but because it costs you money in the long term.

ary2• 15 years ago

Stay classy Skype.

I wish there was an alternative that matched Skype's previous good qualities (or better). The obfuscation of the OS X Skype client UI, plus the fact that they're now owned by Microsoft has cast a shadow on what used to be a great service (to me at least). Surely there is room in the market for a serious competitor.

Corrado• 15 years ago

Do any of these strike your fancy?

* http://www.oovoo.com/home.aspx

* http://tinychat.com/

* http://www.vbuzzer.com/conferencing/web_conferencing.php

* http://www.goober.com/

* http://www.voxox.com/

ary2• 15 years ago

Maybe. Do you (or anyone else) have a preference?

kidmen• 15 years ago

For webcaming, I've personally found ooVoo to have better quality than Skype.

colinloretz• 15 years ago

Tinychat is the only one of these that doesn't sound like baby talk. Skype has done well and become a verb ("Skype me") and I don't see anyone asking to voxox, oovoo, or goober me anytime soon. There is a big gap out there for someone to offer a good quality, serious competitor.

Legion• 15 years ago

Goober is the only one with a Linux client. I may have to try that one out.

riffic• 15 years ago

OPEN STANDARDS are the alternative.

XMPP and its sister protocol Jingle are all described in detail in either RFC or XEP documentation.

pmjordan• 15 years ago

Are there any implementations of it that actually work well through NAT and which have a UI that non-technical people can use? We use Skype a lot - iChat would be fine, too, but seems to require port forwarding on both ends, which isn't going to happen anytime soon. Facetime forces you to use video, which isn't always what you want.

scott_s• 15 years ago

I use Gmail's video chat.

dstein• 15 years ago

And who can blame them, it's just more of the 8 billion for the rest of them.

adamfeldman• 15 years ago

Is this typical and accepted behavior in a transaction like this?

kenjackson3• 15 years ago

Pretty common, rarely as blatant.

Most commonly what you'll see is employees/founders who had vested but left the company early get screwed.

beambot• 15 years ago

What can a (startup) employee do to prevent these sort of situations from occurring after a liquidity event? In particular, what sort of terms should be in your hiring agreement -- eg. double trigger acceleration?

mrkurt• 15 years ago

This sounds like it was explicitly to get around the trigger clauses in the contract. They likely had acceleration for change of control, and fired people before the "event" that would have triggered that acceleration.

shimon• 15 years ago

Don't these contracts typically require termination with cause in order to interrupt vesting?

Not that that's a perfect solution, but it should at least make these more blatant acts a bit easier to pursue in court.

Joakal• 15 years ago

I'm curious too and would like a simpler explanation as a non-business person that's sort of familiar with shares.

meterplech2• 15 years ago

As PG suggests: http://news.ycombinator.com/item?id=2672454... the best thing you can do is work for a company where you trust the management team and the VC's that back them. An early stage investor would almost never do such a thing because it would completely damage their ability to get access to the best deals.

Check thefunded.com for the VCs (and ask around as well) and do your best to work for good people who care about their employees and reputation.

temp10238• 15 years ago

Technically this isn't Skype anymore. Skype management needed a cue from Microsoft.

jordan0day• 15 years ago

It is still Skype (well, the private equity firm that owns Skype). The msft deal hasn't gone through yet.

corin_2• 15 years ago

While it is their call, and they will want to maximise profit from the sale, there's no chance that MS didn't sign off on this - think how pissed they could be. "We're buying your company and you just fired the executives that we wanted to keep running it?"

I can only assume that it was decided as part of the sale negotiations. Whether it was Microsoft saying "we want to bring in a new team at the top" or the owners saying "we want to maximise profit" first, who knows.

pg• 15 years ago

The later the stage investor, the less they need to worry about their reputation with anyone except their LPs.

random42• 15 years ago

What is LP? Limited partners?

(Apologies for ignorance)

suking• 15 years ago

yes - the people that give VCs $.

dschobel• 15 years ago

Yeah but christ, is anyone going to want to take money from them after this? This is cut-throat by any standard...

astrec• 15 years ago

PE firms like this focus more on leveraged buyout than growth capital - the people taking their money are generally looking for an exit.

redthrowaway• 15 years ago

Does this not hurt their future ability to invest in big name up-and-coming companies? If I'm the next facebook or twitter, these kind of shady practices would make me think twice about handing over a large share of my company to them. Can they only get away with it because their competitors engage in the same behaviour?

sachinag• 15 years ago

a16z was also a part of the group that did the Skype MBO; I'd be surprised if founders held it against them.

bugsy2• 15 years ago

I'm sure this won't result in any costly lawsuits.</skepticism>

brudgers• 15 years ago

To keep this in perspective, Gurle, Dean and Gillespie were not long time employees from the startup days (all less than three years), Sunkara and Campa came on board this year through acquisition, and Brewsher, as head of marketing, was probably redundant in light of Microsoft's purchase.

daemin• 15 years ago

I'm wondering if this could be some mad-men-esque deal where the people fired really want to do their own thing? Get fired on purpose so that they're free to do their own company in the same space.

Probably not but that's something that came to mind for me.

Luyt• 15 years ago

"Microsoft announced the Skype acquisition on May 10 and plans to connect it to Outlook e-mail, Xbox game console, Windows mobile phones and corporate-phone software."

This is phase #1 of Microsoft's usual "embrace, extend, extinguish" strategy. Right now they embrace Skype and build it into some of their products.

The next step will be to enhance the Skype protocol with extra Outlook and Windows Phone options; these protocols will be proprietary, patented and certainly not published.

The final step will be to discontinue the Skype clients for OSX and Linux ('because their increasingly incompatibility with rich features the Windows platform offers Skype users'), update the protocol even further so that current Skype clients will stop functioning, and gradually remove the 'Skype' name and logo from their products, and eventually, from history.

The idea is to disadvantage any competitors, and to make Skype users switch to Windows or a Windows phone.

gaius• 15 years ago

FUD, FUD, FUD and that's easy to prove: Hotmail on the Mac works just fine.

gvnonor• 15 years ago

Are you being sarcastic?

lambda• 15 years ago

The Skype protocols are already proprietary and not published (I haven't checked if they're patented). It's not like Skype is an open standard or anything. This is one company that sells proprietary products buying another that sells proprietary products.

Microsoft would be stupid to kill Mac and Linux support for Skype (perhaps they may kill just Linux support). The value in a communication technology is in how many people can use it; the more people who are on it, the more it attracts. If they start cutting people off, it will become far less appealing for anyone to use, and very easy for a competitor without such restrictions on their network to steal customers.

meterplech2• 15 years ago

Just when I (and everyone else) was saying how horrible this is, I was shocked to find out the Google did something very similar to a Director of Operations named Brian Reid. They fired him 9 days before the IPO- leaving him with 119,000 unvested options at $.30 strike price. http://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist)

euroclydon• 15 years ago

If they're not vested, they're not vested. Maybe developers should strive for their delivery schedule to tightly coincide with their vesting schedule.

gnosis2• 15 years ago

https://secure.wikimedia.org/wikipedia/en/wiki/FYIFV

nhangen• 15 years ago

I hate to get spiritual here, but this is a major dose of bad karma, and I won't be surprised when shit hits the fan and something happens to these companies during, or after the deal.

In the meantime, I'm looking for a way to get off of Skype. I wish Google would spend more time improving Google Voice and Google Chat. I wonder if Apple has plans to turn Facetime into a Skype alternative?

drivingmenuts• 15 years ago

Whoever designed the OS X Skype UI should have been first against the wall.

jarrett• 15 years ago

A lot of people have commented that this type of stuff is standard. Maybe that's true.

But if I considered my stock options to be an important, must-have part of my compensation package, I'd demand contractual protections. Double triggers have been suggested; one could envision other safeguards as well. One way or another, I'd make sure that my options were safe in the event of my arbitrary termination.

If I couldn't negotiate that, I'd base my negotiations on the assumption that the worst-case scenario would happen. In other words, I'd discount the value of my stock options accordingly when deciding whether the offered compensation package was adequate.

Skype Fires Executives, Avoiding Payouts

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