horatiumocian

Just a small correction: Microsoft bought Skype from Silver Lake / Andreessen Horowitz, not EBay. At the time Microsoft bought it, Skype seemed to prepare for an IPO, although I'm not sure how willing they were to go through with it.

I assume he was also a Lyft driver and was accepting rides on both apps.

LinkedIn has generated $500M+ revenue in 2011 and will generate more than $900M this year. And they market value is $13B. So you can hardly call them "vaporware with no revenue".

Probably he means that the data from the backup is not up-to-date (i.e. not actual).

I think that Sheryl Sandberg has options worth close to $1B, but either they are not vested yet, or she didn't exercise them. Still not as much as Moskovitz or Parker, but probably more than she would get at any other company (except one where she is the founder).

I think that LinkedIn is trading at less than 20x revenue (revenue in 2011 was more than $500M, and market cap is around $10B)

A16Z invested in PicPlz, which was a competitor to Instagram, after the initial investment in Instagram (which was then called Burbn and was doing something else). So, after Burbn pivoted to Instagram, A16Z had to choose between 2 competing products, and they chose PicPlz for further investments. Not an inspired choice, but they still took a good chunk of money from Instagram's $1B acquisition.

Probably the best example is Amazon. They were unprofitable for the first 6 years or so, using VC money (and money from the IPO) to increase their market share as quickly as possible. Groupon might be another example soon, if they don't get bankrupt, of course.

What about Avangate (www.avangate.com)? I don't know too much about them, so I am not sure if they are what you're looking for.

It couldn't have been 2003. There was no Facebook then.

Well, they might be right, if they are referring only to the money that are invested in the company itself (i.e. by issuing new shares, not by buying out existing shareholders).

Out of the $800M Twitter investment, only half of it was an actual VC investment, so we are looking at $400M.

Let's see the others:

- Groupon got $950M, but I think 3 quarters of that went to buying out existing shareholders

- Clearwire got $900M from Intel and Motorola. Even though Intel Capital is an actual VC fund, I am not sure about Motorola having a VC fund, and in any case this sure sounds like a strategic investment, rather than a VC one

- Western Intergrated Networks got $889M, but if you like at the investors, they are private equity rather than VC: Blackstone Group, Madison Dearborn Partners, Oak Investment Partners and Providence Equity Partners

So, I think they are right if they are referring to traditional VC investments. The only problem is that I am not exactly sure what a traditional VC investment means.

I think that MySpace was valued at $12 billion at some point; where there where rumours that Yahoo! would merge with MySpace, and News Corp would receive 25% of Yahoo's shares (they were valued at around $50Bn).

Here is the article: http://techcrunch.com/2007/06/19/is-myspace-worth-12-billion...

Is it possible for Microsoft to buy only the smartphone unit from Nokia, and let Nokia manufacture and sell feature phones? That would make more sense for Microsoft, but I am not sure it is possible for a lot of reasons (legal, patents, competition, brand dilution).

Maybe he's in touch with a Nokia insider that has knowledge of their intentions, and this is way he is so good at predicting Nokia-related news, but not other news.

1) Skype has stronger growth than when it was owned by eBay

2) When it was spun off by eBay, Skype acquired the IP of their P2P technology from the founders. This makes it more attractive to suitors

3) Skype has filed for an IPO, which would give its valuation a premium

These are the reasons that make Skype more valuable now than when it was spun off by eBay. If you add a bidding war between Facebook, Google and Microsoft, it explains the $7 billion valuation.

However, I agree that $7B is too much for Skype, unless there are great synergies for the acquirer.

I think that Microsoft buying Skype makes more sense than Google or Facebook buying Skype.

First, the way for Skype to make decent revenues is to go for the enterprise market, which brings them paying customers. It would be really hard to convert end users to paying customers, because of all the competition out there (Google Voice). So, they need to cater to enterprise customers. And Microsoft is huge on the enterprise, they would be able to integrate it into their suites, and make it a multi-billion dollar product in a few years.

I don't see any reason for Facebook buying Skype (different technology, different culture, price too high). Also I don't see any reason for Google to buy it other than to kill it and fold it into Google Voice (possible anti-trust issues?). So, even if the Microsoft-Skype deal isn't a match made in heaven, it still makes much more sense than Facebook-Skype, or Google-Skype.

The cultures of Amazon and Netflix are more similar than the cultures of a generic mature company and a start-up. Amazon is still taking risks and starting new businesses - AWS is one example. Most recently, they started venturing into video streaming, and MP3 streaming. And, unlike other companies like Yahoo!, Cisco, or even Google, Amazon's investments and acquisitions have been quite smart, see Zappos and LivingSocial.

All in all, I think Jeff Bezos would love to buy Netflix - strong brand, entrepreneurial culture, outstanding execution - but Amazon doesn't afford to pay the price for it. Additionally, Reed Hastings would do anything to avoid such an acquisition.

I think the most important thing is that they have healthy revenue growth (more than 100%). If they have $90M in revenue per quarter, they can do much better than $2M in net income, if they focus on that, but they are still focusing on growth. If I remember well, LinkedIn predicted a net loss for 2011.

This article seems to overlook the fact that even if Amazon, Ebay, Microsoft had a very small valuation at the time of their IPO, the founders, early employees, and probably some VCs held on to the stock for a long time after the IPO; thus all the founders became billionaires.

I think what he wants to say is that the next 10 years will be better for VCs (because they will wait much longer to exit than before, being able to get 500X returns). For founders, it will actually be the same.

Indeed, the fact that Skype was spun off by Ebay, and is preparing for an IPO with close to $1Bn in revenue, contradicts a significant part of this conspiracy theory. Although, it still could be true.

Here it is: http://www.bloomberg.com/news/2011-05-03/facebook-is-said-to...

To be more precise, it's $2B in EBITDA, not net profit.

I don't see many reasons for Facebook to buy Skype:

1) Technology: Skype's core technology is their P2P technology. They have their own clients for PCs and mobiles. Facebook resides in the cloud, and it works from the browser. This is a huge difference on PCs/Macs, but less so on mobiles, where Facebook also has apps.

2) Price: At $3-4Bn Skype would be by far Facebook's biggest acquisition, as all the others have been under $100M. As they don't have the amount of cash that public companies like AAPL, GOOG or MSFT have (at least not yet), it's quite a big effort for them. There need be a lot of synergies to justify paying this kind of money.

3) Culture: Skype is older than Facebook, and has European roots. Facebook has so far made small acquisitions (more like acqhiring), they don't have any experience with integrating a big company like Skype.

4) Business model: Skype is going for the enterprise market (see the appointment of the new CEO last autumn), and selling subscriptions. Facebook is going for consumers, and selling ads.

Overall, I think a better option for Skype would be an IPO, a telco acquisition, or maybe a Google acquisition.

Facebook may make $2B in profits this year. So I think they could come up with this cash. Also, they can give some of this amount in stock.

I am not sure that Marc Andreessen has so much influence at Facebook. He has one of the 3 board seats that are controlled by Zuckerberg. And Skype would be Facebook's biggest acquisition so far, so it wouldn't be easy for him to convince Zuckerberg to do it.

I suggest it would be a good idea to try to clear the ownership issue as soon as possible. Am ambiguous agreement will come around and bite you when you have some degree of success. Everybody in the team will feel like they had a major contribution toward it and will want a bigger share of the equity.

I remember reading at the beginning of the year that Google wants to change the way they are organized, in order to stop their employees who were frustrated with their bureaucracy from defecting to Facebook and other start-ups. A possible form would be similar to the advertising group/holdings, where each agency has a lot of autonomy.

I think it's feasible to do that at Google if the infrastructure group would be spun off as a stand-alone entity (let's call it Google Ops) that can offer resources and consulting to any product group. When a new product is started, it would be similar to a start-up: 3 people in a room in the Googleplex who could choose to work with Google Ops, Amazon EC2, or something else. And Google would own a majority stake in this "start-up" and it would give them a certain budget (up to $1M - $10M).

I wonder if there will be any more acquisitions in the social media monitoring. I think the best candidate is Visible Technologies.

Ev is involved less and less (from the TechCrunch article). Maybe he is preparing for his next venture.

I think Jack will concentrate on the product, the monetization part will be left to Dick Costolo.