Skype Fires Executives, Avoiding Payouts | Hacker News Reader

Skype Fires Executives, Avoiding Payouts

bloomberg.com

137 pointsdiogenescynic65 comments

"Microsoft announced the Skype acquisition on May 10 and plans to connect it to Outlook e-mail, Xbox game console, Windows mobile phones and corporate-phone software."

This is phase #1 of Microsoft's usual "embrace, extend, extinguish" strategy. Right now they embrace Skype and build it into some of their products.

The next step will be to enhance the Skype protocol with extra Outlook and Windows Phone options; these protocols will be proprietary, patented and certainly not published.

The final step will be to discontinue the Skype clients for OSX and Linux ('because their increasingly incompatibility with rich features the Windows platform offers Skype users'), update the protocol even further so that current Skype clients will stop functioning, and gradually remove the 'Skype' name and logo from their products, and eventually, from history.

The idea is to disadvantage any competitors, and to make Skype users switch to Windows or a Windows phone.

The Skype protocols are already proprietary and not published (I haven't checked if they're patented). It's not like Skype is an open standard or anything. This is one company that sells proprietary products buying another that sells proprietary products.

Microsoft would be stupid to kill Mac and Linux support for Skype (perhaps they may kill just Linux support). The value in a communication technology is in how many people can use it; the more people who are on it, the more it attracts. If they start cutting people off, it will become far less appealing for anyone to use, and very easy for a competitor without such restrictions on their network to steal customers.

FUD, FUD, FUD and that's easy to prove: Hotmail on the Mac works just fine.

Are you being sarcastic?

The later the stage investor, the less they need to worry about their reputation with anyone except their LPs.

Yeah but christ, is anyone going to want to take money from them after this? This is cut-throat by any standard...

PE firms like this focus more on leveraged buyout than growth capital - the people taking their money are generally looking for an exit.

What is LP? Limited partners?

(Apologies for ignorance)

yes - the people that give VCs $.

Does this not hurt their future ability to invest in big name up-and-coming companies? If I'm the next facebook or twitter, these kind of shady practices would make me think twice about handing over a large share of my company to them. Can they only get away with it because their competitors engage in the same behaviour?

a16z was also a part of the group that did the Skype MBO; I'd be surprised if founders held it against them.

Stay classy Skype.

I wish there was an alternative that matched Skype's previous good qualities (or better). The obfuscation of the OS X Skype client UI, plus the fact that they're now owned by Microsoft has cast a shadow on what used to be a great service (to me at least). Surely there is room in the market for a serious competitor.

Do any of these strike your fancy?

* http://www.oovoo.com/home.aspx

* http://tinychat.com/

* http://www.vbuzzer.com/conferencing/web_conferencing.php

* http://www.goober.com/

* http://www.voxox.com/

Tinychat is the only one of these that doesn't sound like baby talk. Skype has done well and become a verb ("Skype me") and I don't see anyone asking to voxox, oovoo, or goober me anytime soon. There is a big gap out there for someone to offer a good quality, serious competitor.

Maybe. Do you (or anyone else) have a preference?

For webcaming, I've personally found ooVoo to have better quality than Skype.

I tried ooVoo recently as my significant other had problems getting Skype working. I must say I can't see it as a competitor to Skype. The UI is borderline unusable due to all the flashing ads. What's worse is my contact list of one got deleted, and it was impossible to re-add my GF. That was on day 2. A few days later, she was back on my contact list. I don't trust it, and it's a pain to use due to all the ads and the general UI.

Goober is the only one with a Linux client. I may have to try that one out.

There's also LinPhone:

http://www.linphone.org

https://secure.wikimedia.org/wikipedia/en/wiki/Linphone

It has clients for: Linux, OS X, Android, and iPhone.

OPEN STANDARDS are the alternative.

XMPP and its sister protocol Jingle are all described in detail in either RFC or XEP documentation.

Are there any implementations of it that actually work well through NAT and which have a UI that non-technical people can use? We use Skype a lot - iChat would be fine, too, but seems to require port forwarding on both ends, which isn't going to happen anytime soon. Facetime forces you to use video, which isn't always what you want.

Google has just added WebRTC to the Chrome source tree. WebRTC (real-time communication) consists of Jingle, VP8, some voice codecs and other audio software they bought, and various NAT traversal algorithms. The IETF is standardising it and Mozilla and Opera are committed to shipping it. Somewhat interestingly, a bunch of Skype engineers seem to have been involved in it too.

http://sites.google.com/site/webrtc/blog/firststeptowardchro...

http://tools.ietf.org/wg/rtcweb/charters

I don't know how usable it is right now, though Google is apparently rewriting their Google Talk stuff to use it. But it seems like the future.

The jingle portion of WebRTC comes form libjingle, and is usable right now with Google Talk. There is also a second open source implementation that works with Google Talk called "telepathy".

http://code.google.com/p/libjingle http://telepathy.freedesktop.org/wiki/

Gmail's voice and video chat works fine and has a pretty simple UI. I'm not sure it follows those specs completely but there are open-source clients that can connect to it. The Google client itself has pretty good Windows/OSX/Linux support as a browser plugin and with the Google Voice integration in Gmail you get a pretty full-featured UI to call both people that are on Google Talk and normal phones. Unfortunately the Google Voice stuff is still US only.

Gmail's voice and video chat now supports the main Jingle standards, XEP-166 and XEP-167.

And there are two open source implementations that it works with:

http://code.google.com/p/libjingle http://telepathy.freedesktop.org/wiki/

I did mention there were open-source implementations that could interface with it. I tested it against empathy (telepathy based) today and was pleasantly surprised with how well it worked. Previous attempts weren't as successful. I tried with both clients inside the same NAT though so I don't know if the firewall punching bits are as good.

Thanks for the clarification on the standards, it seems to have evolved since the early days.

I use Gmail's video chat.

To keep this in perspective, Gurle, Dean and Gillespie were not long time employees from the startup days (all less than three years), Sunkara and Campa came on board this year through acquisition, and Brewsher, as head of marketing, was probably redundant in light of Microsoft's purchase.

Good for them. If you're going to be cutthroat dicks, be consistent.

I hope their good employees take note.

Reduction of equity stake after negotiated compensation just reeks of pure theft. So what are good employees supposed to do?

Doubtless the ones who did not get diluted were the big money while the workers get shafted (as usual). Kleptocracy at it's finest.

> So what are good employees supposed to do?

Leave, if there's any justice in the world.

This is how the market works. The reason you don't screw your employees like this is not just because you're a nice person, but because it costs you money in the long term.

Alas, market mechanisms aren't such great protectors here. They work best with large populations of similar events, where "average" behaviors can signal expectations and volatilities can be estimated on a fairly stable basis. Endgames offer the unethical opportunities to reap excess rewards without market penalties.

Hopefully, there will be enough information to know just how screwed these people are (or aren't, I've seen gossip that several were late-comers) and the VC / executive players involved. It's possible that these decisions make some sense, but it sure looks bad at first glance.

Funny how people thing this system could ever work.

Companies are the original trolls, making up new accounts and coming back without any negative karma or legal responsibilities. As long as corporations are separate from the people running them it's a joke.

> because it costs you money in the long term.

And makes lots more in the short term. The long term never seems to arrive for companies' current executives.

What can a (startup) employee do to prevent these sort of situations from occurring after a liquidity event? In particular, what sort of terms should be in your hiring agreement -- eg. double trigger acceleration?

As PG suggests: http://news.ycombinator.com/item?id=2672454... the best thing you can do is work for a company where you trust the management team and the VC's that back them. An early stage investor would almost never do such a thing because it would completely damage their ability to get access to the best deals.

Check thefunded.com for the VCs (and ask around as well) and do your best to work for good people who care about their employees and reputation.

This sounds like it was explicitly to get around the trigger clauses in the contract. They likely had acceleration for change of control, and fired people before the "event" that would have triggered that acceleration.

Don't these contracts typically require termination with cause in order to interrupt vesting?

Not that that's a perfect solution, but it should at least make these more blatant acts a bit easier to pursue in court.

I bet that the "with cause" part would be pretty easy to find. Every company I've worked for that had official policies wrote them so vaguely and all encompassing that every single employee was in violation. Some of the "don't introduce 3rd party software to the network" policies, when read strictly, make every single developer who writes a small automation script a violator of the policy.

I'm curious too and would like a simpler explanation as a non-business person that's sort of familiar with shares.

Just when I (and everyone else) was saying how horrible this is, I was shocked to find out the Google did something very similar to a Director of Operations named Brian Reid. They fired him 9 days before the IPO- leaving him with 119,000 unvested options at $.30 strike price. http://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist)

If they're not vested, they're not vested. Maybe developers should strive for their delivery schedule to tightly coincide with their vesting schedule.

https://secure.wikimedia.org/wikipedia/en/wiki/FYIFV

I hate to get spiritual here, but this is a major dose of bad karma, and I won't be surprised when shit hits the fan and something happens to these companies during, or after the deal.

In the meantime, I'm looking for a way to get off of Skype. I wish Google would spend more time improving Google Voice and Google Chat. I wonder if Apple has plans to turn Facetime into a Skype alternative?

Is this typical and accepted behavior in a transaction like this?

Pretty common, rarely as blatant.

Most commonly what you'll see is employees/founders who had vested but left the company early get screwed.

Amazing that this kind of behavior by Skype/Msft wasn't calculated in the contract at the time of signing it.

This is pretty standard. If your options haven't vested and you're let go there usually isn't much you can do. I doubt MS has anything to do with it, except the fact that they probably didn't express any particular concern regarding the deal if these employees were let go.

There's plenty they could have done before the contract was signed. They could have easily pushed for double trigger acceleration in their own contracts to prevent this.

My point is if they're planning on letting you go, they're not likely to bend over backwards to accommodate you.

Company's officers fiduciary duty is to protect interests of shareholders. Complicating contracts with the purpose of transferring that wealth from shareholders to executives could be construed as violation of that duty.

"Transferring wealth" isn't an abandonment of fiduciary duty, it's exactly what you do when you hire people and pay them. Nor is there anything wrong with negotiating contracts describing the details.

Good point. Just saying that unless you're a founder or a majority shareholder, you have little power in terms of blocking the deal from going through.

Gurle used to work at MSFT IIRC.

And who can blame them, it's just more of the 8 billion for the rest of them.

A lot of people have commented that this type of stuff is standard. Maybe that's true.

But if I considered my stock options to be an important, must-have part of my compensation package, I'd demand contractual protections. Double triggers have been suggested; one could envision other safeguards as well. One way or another, I'd make sure that my options were safe in the event of my arbitrary termination.

If I couldn't negotiate that, I'd base my negotiations on the assumption that the worst-case scenario would happen. In other words, I'd discount the value of my stock options accordingly when deciding whether the offered compensation package was adequate.

I'm sure this won't result in any costly lawsuits.</skepticism>

I'm wondering if this could be some mad-men-esque deal where the people fired really want to do their own thing? Get fired on purpose so that they're free to do their own company in the same space.

Probably not but that's something that came to mind for me.

Whoever designed the OS X Skype UI should have been first against the wall.

Technically this isn't Skype anymore. Skype management needed a cue from Microsoft.

It is still Skype (well, the private equity firm that owns Skype). The msft deal hasn't gone through yet.

While it is their call, and they will want to maximise profit from the sale, there's no chance that MS didn't sign off on this - think how pissed they could be. "We're buying your company and you just fired the executives that we wanted to keep running it?"

I can only assume that it was decided as part of the sale negotiations. Whether it was Microsoft saying "we want to bring in a new team at the top" or the owners saying "we want to maximise profit" first, who knows.

I am not so sure that has been established. MS is not historically this sociopathic. It might be a pig in a poke deal. Pay for a company, get an empty bag. We'll know if this is the case if MS says "hey wait a minute" or not.

There's always a chance that it wasn't part of the deal, but that Microsoft won't care. If they feel that they are buying the tech, and not the team, then they might not object to this.

The fact that they might not care doesn't change the fact that the sellers are extremely unlikely not to check if they care before firing everyone.

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