These execs don’t want to work at Microsoft? Not true. Most of those laid off were taken by surprise, and assumed they were at least part of the Microskype transition. Those I’ve checked in with were ready to dive into partnering and integrating with Microsoft, taking Skype to a new level.
These execs wouldn’t fit in at Microsoft? No. Gurlé was a Microsoft alum. And they just need to fit in at Skype.
Performance below expectations? Possible in some cases but this didn’t apply to many. Some, like Americas GM Don Albert, were pulling enormous wins with few resources against strong adversaries. Others, like Skype for Enterprise GM David Gurlé, had only received their first real headcount in 2011Q1. Campa and Sunkara had just joined the company.
Tony wants his own team. These team members were at Skype before Tony Bates took the job last fall, with the exception of the Qik team. The Board and previous CEO Josh Silverman picked the newest; the rest came under earlier Skype leadership. Has Bates been recruiting leaders who fit better with his communication and leadership styles? Is there a long list of candidates from Microsoft’s bench?
Microsoft has better teams/talent in those departments. Imagine an IM backchannel at Microsoft where leaders question why Skype should have its own regional distribution channel, its own business account execs, its own telco relationship team. Imagine a conversation about leveraging large and proven Microsoft resources. Imagine a RIF list. This looks like the first serious reason. Let’s line up the jobs and see.
Gurlé. SMB and large enterprise products and sales. Microsoft’s enterprise teams sell Windows, Office, networking products, collaboration tools, phone systems, and accounting software. Their customer relationships took years to develop and bring in billions from around the world. Better, faster to add Skype’s products to their portfolio than to maintain a separate sales arm. Gaps to Fill: 1. Skype will need to set up corporate sales support (marketers, analysts, specialists) and large account customer service functions. 2. SMB self-service and channel-partner support. 3. Fearless product innovation to make Skype invaluable in the workplace and the muscle to move it through engineering.
Dean. Corporate development, partnerships, alliances. I really haven’t followed how Microsoft operates in this area. The overlap theory may not apply to Christopher Dean.
Shaw, Sunkara. Mobile telecom products and partnerships. Microsoft has its own phone company, selling the Phone operating system to handset makers and carriers. Their partner-relations team has a better history of getting cooperation from wireless operators than Skype, seen as a competitor until recently. Gaps: 1. Skype needs visionary and inspiring product leadership in mobile, Augmented Reality, and gestural interface apps. 2.
Albert, Bewsher, Campa. Distribution, marketing, and advertising. Whatever they accomplished at Skype or Qik, Microsoft has massive operations in place with one of the largest advertising and promotion budgets in the software industry.
Gillespie. Human resources. Gillespie completely rejuvenated Skype’s recruiting sites, advertising, promotions and put Skype Palo Alto on the path to add nearly 500 more employees this year. This in an intensely competitive climate for Silicon Valley engineering talent. Yet Microsoft has one of the largest HR organizations in all of IT.
These roles will shift from building and running Skype teams to persuading Microsoft’s other divisions and headquarters services to serve Skype’s mission.
This leaves us with…
Investors want their stock back.Bloomberg interviewed an analyst who speculated preemptive firing was motivated by Skype’s investors wanting to get stock back from employees before the deal goes through.
There’s a kind of employee stock purchase agreement loophole which permits company owners to buy back stock from non-executive employees at a low fixed price before a merger or acquisition. All the appreciation in company value moves back from employees to investors. This kind of buy-back was rumored (reported?) when Steve Jobs sold NeXT, Inc. to Apple in December 1996. It shocked and surprised NeXT’s hard working, sweat-equity employees.
That event is why nearly all Silicon Valley employment agreements comes with a clause protecting from take-backs, even when they fire you.
Did this happen here?
I haven’t checked the few executive agreements on file with the SEC but I recall several of the departing have clauses protecting them from missing out on the payout from fully vested stock and options. Those who don’t have strong contractual protection are negotiating. Pick your jurisdiction. Bring your lawyer.
Is it about to happen to other employees?
I’ve seen no evidence to support this at Skype. Yet. While Silver Lake’s self-interest remains, getting back the small stock and options issued to non-executive staff may be less of an issue to investors than avoiding new litigation, more bad press, the defection of key employees and endangering partner relationships. Again, stay tuned.
Would Skype’s investors really try to screw hardworking Skype employees?
In a heartbeat.
Why now?
The no-engineers-fired mix suggests pre-alignment. Timing favors the “Investors want their stock back” theory.
See also:
setteB.IT: “Strange coincidence when a new owner begins to take possession of his new conquest, and at the same time, some executives go away.”
Om Malik: “Skype cuts senior executives. Why?” (originally subtitled “Smart or just crazy?)
Electronista: “the cuts are unlikely to assuage fears that Microsoft may reshape Skype in a way that hurts non-Windows platforms or Skype itself. Losing Shaw may be one of the deeper hits as Microsoft has historically had difficulty making strong deals with carriers.”
Strategy VP Dean led Skype’s consumer market business development for the last five months, headed up Skype’s global business and corporate development since November 2008 and was Josh Silverman’s Chief Strategy Officer for the year before that.
Gurlé was Skype’s VP and General Manager for Skype for Business for 18 months, bringing similar experience from his time at Thompson Reuters and Microsoft. Gurlé posted to his LinkedIn page about his being founder and CEO of Code name ‘Pilatus’: “More details to follow after I take two months off to get some rest after hectic but fun life at Skype.” David is on Cannes time.
Skype has not announced about replacements. Stay tuned.
UPDATE 5: 1435 Pacific. Skype: “Doug Bewsher, David Gurle and Russ Shaw have left and Neil Stevens has assumed the new role of head of Products and Marketing.” Stevens prior job was Vice President and General Manager for Consumer.
UPDATE 4: Friday, 17 June. 1151 Pacific. Unconfirmed:Doug Bewsher, Chief Marketing and Officer, and Anne Gillespie, HR head, also went this week.
UPDATE 3: Wednesday, 15 June 2011. 1053 Pacific. Russ Shaw, VP and GM for Skype’s relationship with mobile operators is out the door too. Shaw was instrumental in landing and keeping Skype’s partnerships with O2, Verizon, TELUS and Nokia. Skype for smartphones became a staple under Shaw.
UPDATE 2: 1035 Pacific. VP and GM for Americas and Advertising Don Albert is gone too. Albert is the longest serving member of the executive team by a long shot, going back to early 2006 shortly after eBay purchased Skype. Probably more than anyone else, Don was the driving force behind making Skype a household name in the US and Canada. From LinkedIn:
Built and managed a great team that was responsible for building Skype’s business in the America’s region, and for launching multiple new advertising revenue streams globally. Launched Skype’s first subscription calling plan, which was hugely successful and became the model for future offerings. Created a Skype section in all of Wal-Mart’s US stores, with huge branded signage explaining Skype to the Wal-Mart shopper base. USA Today called it the "mainstreaming of Skype" on the cover of its Business section. Signed global bundling deals with 3 major PC OEM’s. Oversaw Skype’s first social network deal, with MySpace. Formed a partnership with The Oprah Winfrey Show which gave Skype a huge brand boost and accelerated user growth. The culmination of the relationship was a one-hour show entitled "Where the Skype Are You?"Launched a formal "Skype for Broadcast and Film" initiative, which has led to many placements on network news shows, as well as "Who Wants to be a Millionaire," The Miss Universe Pageant, "Californication," and the theatrical release "Going the Distance" among many others. Negotiated deals to monetize Skype’s massive download flow. Launched click-to-call advertising. Launched display advertising with top brands participating from launch.
UPDATE 1: 0956 Pacific. Skype PR: “Skype, like any other pragmatic organization, constantly assesses its team structure to deliver its users the best products. As part of a recent internal shift Skype has made some management changes.”
Skype GM David Gurlé spoke at length to a small crowd. In French. Five-part video courtesy of the Bay Area’s French American TV. I have no idea what he said, proving again language is the last barrier to a global culture. I’d love English highlights if you’d care to take notes.
Useful “how we do things” mandates for a company in transition. They don’t identify who Skype is and what it stands for.
So here’s my own rough draft.
We Believe In Talking. Speech is not just a human right, it defines us as human beings. Talking connects us to our families, our friends, our work and our communities. Skype helps people talk.
We Believe In Fidelity. We will strive to make your conversations as vivid and true-to-life as you want them to be.
Relationships Matter. Relationships are built one conversation at a time. They bring knowledge, friendship, love and trust. Skype helps you give relationships the care, attention and skill they need to prosper.
People Form Groups. Belonging is a fundamental human drive. People form informal groups among friends and people who share interests. People form formal groups, like companies, teams, and governments. Skype will help groups form. Skype helps groups talk internally and with other groups.
Speech Leads To Action. We are more powerful with others. Working together is how we improve our lives and heal the world. Skype helps people get things done together in the workplace, in the public square, in the arts, in learning, and in our playgrounds. You will get more done when you Skype.
Safety First. You should be free from fear. Skype actively opposes abusive communication, the use of communication to further violence and other crimes, identity theft and other property crimes. We will help you be free from casual surveillance by private parties and governments.
We Support The Personal Power Of Skype Users. Your data is yours to control. We help you define and enforce your privacy in our corner of the digital world. We support your data portability rights including the ability to bring your data to Skype, to put it to good use with Skype and with other services, and to leave gracefully with all your data. We listen intently.
We Cannot Do This Alone. Skype needs partners; we will be a great partner. We rely on the rule of law; we will be good citizens. We depend on the Internet and the intellectual property commons; we will leave the Internet better than we found it.
I’m sure Skype’s employees can improve on this straw man proposal. That’s what intranet wikis and retreats are for.
Is this how you see Skype? Items to add, subtract or change?
In 17 of the 18 pairs of companies in our research, we found the visionary company was guided more by a core ideology—core values and a sense of purpose beyond just making money—than the comparison company was. A deeply held core ideology gives a company both a strong sense of identity and a thread of continuity that holds the organization together in the face of change.
We chose the word ideology because we found an almost religious fervor in the visionary companies as they grew up that we did not see to the same degree in the comparison companies. 3M’s dedication to innovation, P&G’s commitment to product excellence, Nordstrom’s ideal of heroic customer service, HP’s belief in respect for the individual—those were sacred tenets, to be pursued zealously and preserved as a guiding force for generations.
I interviewed Tony Bates, Skype’s CEO, the night before CES January 2011. Skype said they would not be making forward looking statements. Lightly edited YouTube video and transcript below; my own comments will come separately.
Skype Journal: How did you come by your geek cred?
I was part of the team, the very small team that ran the ARPANET gateways in the UK, I call it the right place at the right time. And my story about how I’m self-taught is that I’m from London and I lived at the end of the Tube line and it took roughly an hour and twenty minutes to come in every day and an hour and twenty minutes to go home. That’s a long time where you’re kinda sitting there and so I immersed myself in manuals and texts. Strange story about that, back in those days, manuals were a lot better then they are today. I self-taught UNIX through basically DEC manuals.
And I really got involved in the infrastructure side of the Internet and so when people say a bit about being a geek, you’re seeing a bunch of RFCs around things like route reflection. Route reflection is an esoteric thing but it’s one of the things along the way that kept the Internet going.
There were some other jobs after that. I helped start RIPE which is the main name registry similar to the Internic and so on. I wasn’t the first guy there but I was like number four and I worked on a thing called a route server. But I always knew I wanted to build product. And so after that I did Internet MCI which is how we transitioned the NSFnet which was a lot of fun and it was all different then. It was when in those days the nexus of the Internet was actually in Virginia, So PSI was there, UUNET was there, Sprint was there, MCI was there. And we actually used to meet, a bunch of kids, geeks and we would actually trade SLA agreements. We would go to the Tortilla Factory once a month and I would buy a circuit, you’d buy a circuit and that was how it worked. And in those days there was no settlement and all the discussions we have today.
But I always kinda felt that the missing thing was how were these things going to evolve and scale.
When I joined Cisco I worked in the CTOs group and we had these guys called “consulting engineers,” very smart people mainly more pragmatists who had been building. And I kinda ended up being the de facto product manager for the high end router space and we were redefining it and there were a lot of people involved. But my first big project was working with a thing called 12000. The twelve-thousand was the real first carrier class box.
And then to cut a long story short so this doesn’t go on forever, the real big thing I got involved in was this thing called the CRS1 and what was brilliant about that was all aspects about building a system: which was hardware; we created this new operating system called IOS XR, which I drove and led and this you know; put it this way, pretty much any time that someone connects to your website you get sent one of these packets, it comes across one of these devices so it’s part of the infrastructure.
Rajiv Dutta died Monday and was cremated Tuesday. Guest post by Henry Gomez, former eBay SVP and Skype president.
Rajiv Dutta was my friend. He was someone you could always count on for encouragement. He was a great teacher. Rajiv could explain anything, no matter how complicated, and you always enjoyed the lesson. This skill came in handy when Rajiv talked to the financial community, especially in the early days of eBay. Rajiv’s success as eBay’s CFO reflected his enormous integrity, great intelligence, passion for the community, and his phenomenal ability to explain how our unique marketplace worked and where it was headed.
I have so many wonderful memories of Rajiv. Among my favorite are all those times we came together to work on eBay’s quarterly earnings announcements. Quarter after quarter for 6 years, Rajiv and I collaborated on the work of telling eBay’s story to reporters and investors. We were two passionate eBay believers capturing the story of a great company. It was incredible fun and a privilege to be a part of Rajiv’s work.
Working with Rajiv at Skype was also a lot of fun. Rajiv loved Skype and deeply believed in its potential. Skype’s success has proven him right.
For those of us who worked at eBay in its early years, the experience was remarkable. People forget just how much eBay excelled straight through the Internet crash of the early 2000s. In the darkest days of the crash, no one expected eBay or any other ecommerce company to succeed. But we were on a rocket ship. We were crusaders fighting for the success of the eBay community. We believed that we were making business history.
And at the center of our crusade – at the center of all the hard work, the passion and the emotion that went into our efforts – stood Rajiv Dutta, always ready to inspire us with his enthusiasm for everything we were doing.
I am blessed to have known Rajiv. His happy soul touched me in ways that I will cherish for the rest of my life.
Rajiv Dutta was Skype’s President from September 2005 to June 2006, part of the eBay team that bought Skype from its founders and investors. He was the second of eight executives who led Skype.
Sten Tamkivi writes “He was the kind of leader who actually knows the answers, but still takes the time to ask you the question so you can figure it out and make it happen. I never heard him raise his voice or force his opinion. I once failed to push my team to fix something in time that some other folks in the company thought is a dead end anyway – but I really wanted us to try. At some point Rajiv called me to do an ‘executive override’ to my decision – the first and last time I’ve heard that pair of words in my life – but even then came across with such clear and common sense, warmth and respect towards the engineers involved that just disarmed the tensions and even diametrical disagreements.”
There are moving comment threads on Fortune’s obit and the WSJ blog post, if you’d like to leave your thoughts.
I’ll update this post as people make observations about his year leading Skype.
One of Dutta’s longest professional relationships was with Meg Whitman. Here‘s a rare public "in conversation" between the two for the Drucker Institute, posted in March 2009.
Number of people logged in with Skype dial tone: 90% of normal. #skypemebaby
Offline IM: still unavailable. #Groan
Group video calling: still unavailable. #ooVoo
Skype rules out malicious causes for the outage. #wheresJulianAssange
Skype will send 30 minute anywhere-landline calling cards to Pay As You Go and Pre-Pay customers. #iwannabeabillionaire
Skype will extend active subscriptions for a week. #AndOnTheSeventhDaySkypeRested
Caption Contest.
Twenty words or less, no swearing, and no sex-related captions please!
US winner gets a freetalk everyman headset, made for Skyping. Skype and contractor employees may play but aren’t eligible for prizes. Leave your captions in the comments or tweet to @SkypeJournal.
The Skype network is recovering. A quick Skype call from Skype’s CEO Tony Bates and Brian O’Shaughnessy updates a few points. While the client, and our charts, are showing about 12.5 million online, Skype’s engineers say it is temporarily understated: 16.5 million and climbing is a more accurate number as of 0930 Pacific time. You can see the recovery over the last 18 hours.
Bates got a text from Skype CIO Lars Rabbe at 4pm GMT that the Windows client was down. Once the engineers were sure of the problem, they needed new servers to bring core services up. So they removed servers from non-core services and converted them into mega-supernodes. The co-opted servers were taken from running offline instant messaging (persistent chat) and group video chat; those services are offline. Offline IM affects about five million users.
Skype is throttling logins to avoid swamping the remaining web servers, so sign ins will grow smoothly instead of suddenly. The result is Skype’s core services – live IM and voice calling – are mostly back online. No ETA on the return of offline messaging, and group video chat.
Skype’s communication engine is heating up and we should be seeing short, frequent video updates from Skype management in the next hour.
CORRECTION: Brian O’Shaughnessy is head of global communications at Skype, not CMO. That honor belongs to Doug Bewsher.
Do you have a story about one of Skype’s eight former, present or future presidents? I’m writing my Skype Hall of Presidents and CEOs page. What did they accomplish? How did they leave their mark? Best gaffes? Defining moments? What are they like to work with? What are they doing now? In chronological order: Niklas Zennström, Rajiv Dutta, Alex Kazim, Henry Gomez, Michael van Swaaij, Josh Silverman, Adrian T. Dillon, and Tony Bates. Drop a line to tips@skypejournal.com.
Tony Bates is taking over from Skype CEO Josh Silverman at the end of October. Getting a board seat too. No interviews for now but we’re boiling over with questions.
Vision. Josh Silverman has a reputation as an excellent manager and strategist but isn’t known as a visionary. Have you been the guy with vision or the guy who executes?
Consumer brands. Skype has been a global consumer brand. Cisco is a brand people trust and need but Skype is beloved. What experience have you had leading a consumer product family?
Fighting Cisco. Some of Skype’s features compete directly with Cisco’s. Cisco also plays in markets adjacent to Skype’s. Are you prepared to go head to head with your former employees?
Managing Post-IPO. Skype has been free from the stock market’s quarterly pressure. How will going public change Skype?
Growth plans. Skype is growing rapidly but the rate of growth is slowing. What will it take to bring Skype from $1 billion revenue to $10 billion? From 150 million active users to 1 billion? New business lines? Marketing? New technologies? M&A?
Values. Skype walked away from some of its core values under Silverman, like lowering its expectations of privacy with Chinese spyware through the TOM-Skype joint venture and the unprotected conversations for Skype mobile on at Verizon. How do you see Skype’s core values as a business and a corporate citizen?
Google. Google is building highly scalable technology pointed right at Skype’s users. What can Skype do to outperform Google’s new platforms and the ecosystems they will draw?
Competing with telcos. You’ve been arming phone companies with the tools to migrate to VoIP and compete with Skype. What can Skype do to fight back against the operators who seek to ban, block and beat Skype through advertising, regulatory roadblocks, competitive pricing, retail presence, and convenience?
Skype at work. You learned a lot at Cisco about serving enterprise customers. Workers are changing, their work and their workplaces are changing even faster, and the world where those companies struggle is bafflingly uncertain and complex. What role could Skype play in the enterprises of 2015 and 2020?
Talent wars. Skype always fought hard for the best consumer Internet software engineering and design talent in Silicon Valley and the world. Where have you had success with the kind of agile, speedy, iterative, and open processes Skype uses? How will you define Skype as the place everyone wants to work?
Bonus: If you’re going to be Skype’s Ballmer, who will be your Gates?
Rumor: Michael Arrington suspects minority Skype owner Andreessen Horowitz is buying Foursquare. I love 4sq. Robert Scoble has 8 suggestions for building more 4sq consumer/platform value as Yelp copies 4sq features. Meanwhile, I can’t wait for an enterprise version, the better to check in with colleagues, clients, suppliers, partners. The location-based-workplace is here, waiting to be updated, searchable, social, and easy to navigate. LBS checkins should do wonders for triggering face-to-face work conversations, adding people virtually to f2f conversations, and plain old space-shifting virtual conversations. A little Skype integration, foursquare?
Steve Jobs announced iOS4 and iPhone 4 at the Apple WWDC. They should make a better platform for iSkype: faster processor, longer battery life, front (VGA) and back (HD) video cameras, two microphones with noise reduction, multitasking, an improved display and now support for Bluetooth keyboards. This could mean better performance from Skype, the ability to stay connected to the Skype network all the time, even better audio than what Skype’s SILK codec offers, touch typing text chat, and Skype video calling.
Apple announced FaceTime, iPhone 4-to-iPhone 4 video calling. The spec for FaceTime is based on some open protocols and Apple will submit the suite to standards bodies. The rumor that Skype wanted to use FaceTime was downgraded to Skype noticing it.
ooVooreset its pricing for multiparty video calling. $0.10 per minute per person (e.g. $18/hour for three people above the two free included in the service) or $20 per month for six-way calling. Clues to Skype for iPhone’s mobile video charges? ooVoo has to pay for expensive servers and bandwidth since every stream goes through its servers at least once. Unlike ooVoo, Skype distributes its iPhone and desktop video streams peer-to-peer. Skype can undercut ooVoo ten-fold and still make money.
Skype hiredRick Osterloh from Motorola to head consumer product management. This includes desktop software (netbooks? tablets?), Skype.com, and Skype’s paid products (SkypeIn, SkypeOut, SMS, voicemail, WiFi access, etc.).
Verizon will put Skype on non-smart phones too, according to a news release. "Skype mobile from Verizon Wireless, currently available on 12 different smartphones, will expand to more handsets later this year, including several 3G Multimedia phones." Good for Skype: a lower price-point means more users will have access to Skype. via Florin
Skype will redesign its Skype mobile UI to pursue international callers. From the same release: "In addition to Spanish, Skype mobile will also be available in Korean and simple Chinese, providing more flexibility and the ability to communicate with people around the world. Skype mobile customers will soon see an enhanced user interface with a drop-down menu with flags for international dialing."
Juniper Research predicts 100 million mobile VoIP users by 2012, half in the North America and Europe. An analyst said "we also anticipate that several more traditional operators will have joined 3UK and Verizon in the US and developed relationships with mobile VoIP players such as Skype."
People are using Skype from conception to the old age home
Telemedicine was attacked in today’s Telegraph Herald, covering Dubuque, Iowa. A right-to-life advocate is afraid out of town doctors will prescribe RU486 to women in local Planned Parenthood clinics through a Skype-like videoconference.
Kids are using Skype for video play dates. In a few years it will be Skype pajama parties. Then Skype sex. I saw a difference between watching people shoot pool through a video monitor and, as I did tonight, watching a pool game in a local tiki bar. As vivid as the video gets, the view is frozen. When I move my head, my body, perspectives change and the part of my brain that thinks spatially tells me this is real, not a painting. So let’s be sure to keep kids catching colds from other kids, immersing them in face to face reality along with skyped conversations.
Meanwhile, check out Skypito: "Kids can finally safely chat on the Internet. Strangers and bad guys cannot reach them anymore." Uses Skype, naturally. Free, sponsored by EasyBits. This follows the classic blend of server based community and desktop based Skype plug-in. Meanwhile CNN readers who’ve never seen kids play together virtually objected strongly to video play dates.
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