Selling The Company Back To The Founders

I read with interest the Brad Stone piece in the NY Times this morning suggesting that Niklas and Janus might buy Skype back from eBay. I think this is a wonderful idea and I hope it happens.

Back when eBay bought Skype in 2005, I was skeptical that eBay was the right home for Skype. I also thought the price was in the right ballpark. I got the first part right but the second part wrong. In hindsight, eBay paid too much and bought a non-strategic asset.

Now eBay is rumored to be thinking of unloading Skype for $1.7bn to $2bn and the Skype founders are trying to round up as much as $1bn of cash (including their cash I assume) to combine with seller financing from eBay to get the deal done.

Brad says in the Times that Skype did $145mm in revenues in the fourth quarter. If that's true, and I assume it is, then Skype could do as much as $700mm to $800mm in revenues in 2009 if it is growing at a reasonable rate. Is $1.7bn to $2bn a reasonable price for a business that is doing $800mm in revenues in the current year? I don't know, it really depends on how profitable that business is.

I do know that Skpe is a great freemium business model. Most of the conversations on Skype are free because they are between Skype users. But some of them are paid and according to TeleGeography, Skype now makes up 8% of all international calling minutes. If Skype can be a $800mm revenue business this year and capture more than 10% of the international calling market, I think $1.7bn to $2bn may well be a very good price.

But the best thing about this is getting the asset back into the hands of the entrepreneurs who created it and built it. We all saw what happened at Apple when Jobs took back the reins of the company and I suspect Niklas and Janus would not be thinking about this if they didn't have a strong strategic plan for Skype.

I've said this many times on this blog and I'll say it again. Big companies mostly mess up entrepreneurial companies when they buy them and it really is best that companies like Skype stay independant and run by their founders if that is possible. And it looks like that might be possible with Skype. That makes me happy.

Reblog this post [with Zemanta]