When Ebay first bought Skype, a friend who is knowledgeablee about this
business area said, 'I have three theories of why they did
that.".
The problem here is that acquisitions should not be so mysterious that
you have three theories on it, the way you have multiple theories on
why a date didn't call you back within a week. Acquisitions are supposed to be done through careful valuation of the
company that is being acquired.
In the case of eBay, my 'theory' is that
Niklas Zennstrom convinced eBay that he, Zennstrom, as an official
producer of disruptive technology, was ready to disrupt all over
eBay's business model. I'm sure he did this with much hand
waving, talk of Google, and some snazzy Powerpoint. He also
probably pointed out that Rupert Murdoch wanted to buy Skype but
he wouldn't
sell out to the 'man' i.e. someone who owned a
traditional media conglomerate. And besides the 'man', Murdoch,
didn't really understand
the full extent of the disruptiveness of this technology and would not
give Zennstrom and Friis what they were asking for it.
At that point, this is likely what went down:
A senior eBay executive
said, "This is crazy we can't buy a company for what he's asking when
this service (VoIP) will trend to free in a few years. Besides,
if we need a VoIP service, let's just build our own by buying the
components. Its not exactly secret, how to do this."
At
which point everyone young in the room thought, uh oh old guy doesn't
get it alert. we majorly have to buy this company. This
would have been accompanied by Zennstrom rolling his eyes like he has
heard this all before when people have said I don't think your
technology, which is free, is so disruptive.
Then they left their boardroom, meet up at a bar (without the doesn't-get-it
executive), ordered martinis. Someone said, 'Hey, have you seen
Google Earth. That is so cool.' Then Meg Whitman (who
hadn't seen Google Earth) thought to herself my God, they have a
product with the word 'earth' in it, that's our market!, and turned to Zennstrom "Listen I think
I can get them to agree to $4 billion but you're going to have to give me your Powerpoint slides to use."
And so it was. And now Meg Whitman had to use the word
'ecosystem' when talking to analysts. I really applaud the
communications people, they really digged deep for that one. I
mean anyone can quote a strategy concept from Michael Porter of Harvard Business School (Five Forces -
duh) but you really have to know what you're doing on Google search to
find one of those 'alternate strategy words'.
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Monday, October 24
by
Siobhan McLaughlin
on Mon 24 Oct 2005 07:58 AM PDT
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