

Ben Horowitz on the Skype acquisition - geoffschmidt
http://bhorowitz.com/2011/05/10/microsoft-buys-skype/

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iamelgringo
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>

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wdr1
> 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.

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tokenadult
"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.

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nopinsight
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.

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stretchwithme
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?

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gregpilling
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.

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joshu
Editorializing in the title. "flip"?

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blantonl
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".

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joshu
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.

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blantonl
Flip is not "extremely negative." It is a reality in many business
transactions. As I wrote in my parent post the term "flip" carries a negative
connotation, but the end result is that someone took on a greater risk than
the other guy to buy into a business with the sole purpose to resell their
share at a greater value. Anyway you look at it, that is a flip.

And I'm cool with that. Good for Ben.

~~~
joshu
Flip implies selling quickly without adding much value.

Skypr has publically been on an IPO path for a while, and that is no flip.

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ntoshev
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.

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

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RyanKearney
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>

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

~~~
afterburner
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.

