21 Sep

A word on the Skype Fiasco

Niklas Zennstrong and Janus Friis, Skype, eBay, Joost, Index Ventures, Volpi, Joltid, investors…

There are many opinions floating around the Web, but this case is of interest to me because of the following: 1) Buy vs. License, 2) Due-diligence process, and 3) Core-IP vs. Solutions.

What a mess. A mess that could have been avoided with a proper due-diligence process by eBay. Or perhaps, proper due-diligence was done, and everyone agreed to all, but now they look back, and don’t like the decision made back in 2005, but too late.

Who owns the core-IP? That is the question…

  • Skype founders created core-technology.
  • The founders applied the core-technology to a specific solution: Skype.
  • The founders (and investors) for obvious reasons wanted to maximize their intellectual property.
  • So, they sold the solution, Skype, for lots of money, while maintaining ownership of the core-technology, which was made available via licensing.

OK, so what is wrong with that picture so far? NOTHING!

eBay (or someone in eBay) must have known they were not buying the IP. Or perhaps they failed to recognize that running/monetizing a solution like Skype is not the same as for a bidding web-site. Maybe for eBay the solution by itself was attractive-enough; Skype, the solution, had millions and millions of users, which could have been all what eBay cared about at the time. Or maybe eBay was convinced (by Joost or other) or decided by themselves that the technology area was not their core competency and that it was better to keep it with Joost; who knows…

In my opinion, the licensing IP / sell solution approach was (and will always be) a smart move.

eBay at a minimum should have acquired a “branch” of the IP, or pay a fraction of what they paid; but they didn’t. This could have been the result of incompetence or just a deliberate decision. eBay made a mistake, and now must live with it.

As long as the transaction was done legally, it is what it is.

This world is full of smart-and-not-so-smart-people. And that will never change.