SCOOP: Zennstrom defends Skype while stepping down
Oct 1, 2007
By Thomas Crampton
October 1, 2007 – Niklas Zennstrom, CEO and co-founder of Skype, today stepped down from the company ahead of the scheduled work-through period for its acquisition by eBay.
Shortly before the public announcement of his departure, Zennstrom agreed to give an exclusive English-language interview to this blog. (He has also agreed to speak with Dagens Industri, if your Swedish is up to it.)
DEFENDS AGAINST SKYPE CRITICS
eBay has recently faced much criticism for a deal struck two years ago to pay $2.6 billion to purchase the free telephone service.
Intended to expand the auction website’s market share and payment operation, analysts have lately warned that Skype has failed to bring enough growth or monetize the user base fast enough.
Zennstrom vigorously defended Skype’s performance, saying that few companies have ever grown a user base so quickly and warning against quick monetization of users drawn to a free service.
“Some people have been critical of Skype, but I am very proud of the company’s growth,” Zennstrom said in a telephone interview with ThomasCrampton.com. “Very few companies can claim to match the growth trajectory Skype is on and continues to be on.”
- VERY FAST GROWTH
Beyond the pure numbers in the user base, Zennstrom said the company has also managed to increase market share against all competitors.
With the company profitable for the first three quarters of this year and revenue growing, Zennstrom said the company is monetizing the user base well.
- CHALLENGE TO MONETIZE
Those calling for Skype to further increase revenues from users fail to understand the balance that must be struck between seeking profits and supporting expectations built around free phone calls.
“Some people may want to monetize faster, but the key is to figure out what is the right speed of monetization,” Zennstrom said to ThomasCrampton.com. “If you act too aggressively, there is a real risk you will lose the huge active user base.”
AHEAD FOR SKYPE
Zennstrom said the timing of his departure feels right since it comes four years after the founding of the company.
“I am an entrepreneur who starts and launches companies,” Zennstrom said. “It is time for someone else to take it to the next level.”
Skype’s chief strategy officer, Michael van Swaaij, will act as CEO of Skype until a permanent successor to Zennstrom is found, the company said in a press release.
But the departure from Skype is not without sadness, Zennstrom added.
“Beyond creating a business, Skype literally touches millions of lives and this is something to be proud of,” Zennstrom said. “I would like to think that we have contributed to making the world a little bit flatter.”
Another achievement not to be ignored was launching a global Internet company out of Europe, Zennstrom added: “It was not easy.”
Zennstrom said he will now focus on his Internet television venture, Joost, and Atomico Investments, an entrepreneurial investment company set up with Skype co-founder Janus Friis. (Janus wrote today about moving on from Skype.)
At Joost, Zennstrom said he would work on the product and content strategy rather than take a CEO or operational role.
For Joost and Internet video in general, some of the most interesting innovations will come at the border between traditional TV content and user-generated content, Zennstrom said.
As for the advantage of Joost over other platforms, Zennstrom said the company’s peer-to-peer style of network allows for better distribution of higher quality content than server-based video systems, such as YouTube or Daily Motion.
“Joost is not a video clip on a website, it is a robust delivery platform for high quality content,” Zennstrom said. “Both content and the user experience in navigating that content are important.”
Looking beyond video, Zennstrom said the next five years will offer much more Internet innovation than the previous five.
“The spreading of broadband and mobile Internet makes for so many opportunities that it is difficult to single out one zone,” Zennstrom said. “The one thing that seems clear to me is that companies need to take more account of end-users.”
Too often, Zennstrom said innovations focus on the technically-minded.
“People now demand that things work straight out of the box and want instant gratification,” Zennstrom said. “Those companies that offer simple yet rich propositions will prosper.”
Top on Zennstrom’s Internet wish list: A solution to the deluge of email.
“Everyone is getting lost in their in-boxes. I would really like to see some innovation there, please.”