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Summary:

Skype co-founders Niklas Zennstrom and Janus Friis are at it again. After disrupting the music and voice cartel’s operations, the duo is taking on television. It shouldn’t come as a surprise. I had reported on that as part of the Business 2.0’s June 2006 cover story, […]

Skype co-founders Niklas Zennstrom and Janus Friis are at it again. After disrupting the music and voice cartel’s operations, the duo is taking on television. It shouldn’t come as a surprise. I had reported on that as part of the Business 2.0’s June 2006 cover story, The 50 Who Matter Now. In the little profile on the boys, we mentioned, “Their next move is rumored to be a company that will enable peer-to-peer television. If experience is any guide, broadcast and cable TV execs should be afraid. Very afraid.”

Now Business Week has dug-up more details on the company, which has hired software engineers in nearly six major cities. So far, it seems the project, dubbed, The Venice Project, has been funded by eBay millions that lined the dynamic duo’s pockets. Whatever the case might be, this doesn’t look good from an eBay investor’s perspective.They spent $2.6 billion (and change) on Skype, and the two main guys are busy doing other projects.


Business Week says that Zennstrom and Friis are really engaged with the company and what not, but if you been in the industry long enough, you know that is marketing speak at its best.

According to Hani Durzy, an eBay spokesperson, Zennstrom and Friis were always expected to look into new ventures because that’s what they do well. “We have encouraged those guys to explore different ideas and different concepts that they find interesting,” Durzy said.

Hey how about focusing on something the company paid $2.6 billion. Isn’t that what should be top of their mind. I guess that additional $1.5 billion in earn outs doesn’t really matter for the boys. Meanwhile, eBay might invest in the new company, reports Business Week, because the auction giant could provide commerce expertise to this television venture if it makes it to the finish line.

PS: I have a part two of this story coming, but not till middle of this week.

  1. How come Skype ramped and is the 800# Gorilla while GizmoProject and Free World Dial UP never got off the launching pad????
    skibare

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  2. In all fairness, much of that $2.6 billion is tied to the business performance of Skype. That is very much worth noting.

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  3. Because Gizmo and world Dialup did it several years after Skype. Today everyone and their monkey’s uncle is offering telephony, there was a hole and Skype plugged it… name one client that doesn’t offer or plans to offer PSTN termination today. 3 years ago no one did.

    This new Product sounds interesting – maybe its a Slingbox Sharing type system? Just an uneducated guess.

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  4. But FWD did it BEFORE Skype, including free calling to a specific country on some special days. I suspect the difference is in the process of downloading: each FWD download was a deliberate attempt, whereas (I can not confirm though) every Kazaa included the Skype client, thus bootstrapping the system with millions of users in one upgrade cycle.

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  5. There already exists a similar product in this space: PPLive TV (www.pplive.com/). It is not so well known because the application itself is in Chinese. I have tested the application and came away pretty impressed.

    The product already exists … The problem is the content.

    PPLive TV is very popular for the simple fact that you get a lot of questionable content on it. This model however is a recipe for disaster (a la Napster) in the US.

    The clout of the skype guys may solve the content problems. If they can sign on the big guys and then we may have an amazing product on our hands

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  6. I don’t remember Skype being included with Kazaa at any point.

    I think Skype was their attempt at “going legit” and would have kept it completely seperate.

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  7. These guys are supposedly working fulltime at eBay. How can eBay let them moonlight, especially when the new venture is in the software business? A fulltime job doesn’t mean a 9-to-5 job. It means dedication and sometimes working overtime.

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  8. voila39,

    actually a large number of kazaa downloaders got skype bundled with it. it was one of the reasons, i have heard, not confirmed why some of the big players in the valley decided to pass on the deal.

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  9. I think it was bundled with some version of Kazaa (search indicates that it is V3) during the early part of Skype history. I may be off about how early; but I have a strong suspicion that that played a role (if not a significant) in increasing the download count and also adoption.

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  10. From my understanding of the P2P lawsuit waged against Skype by Streamcast, Skype hijacked millions of users from the P2P network in the beginning. This may have given them the critical mass necessary for successful viral marketing.

    Plus they did everything else correctly. GIPS.

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  11. Skype works like magic. While all that SIP crap is hampered by endless problems with opening ports etc. Sorry, I like the idea of SIP. But I like a nice product that works with out problems even more.

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  12. What’s next… electricity?

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  13. Jesse Kopelman Monday, July 24, 2006

    I think Skype was successful because it didn’t start as a US-centric service. Outside the US, telephony was/is much more expensive and that is where the real demand was. Skype came into the US via osmosis — all of a sudden your out of country friends were threatening never to call you again unless you got it. If you got Skype for this reason, you are not going to go to the trouble of convincing other people to change to SIP and thus the pressure for new people to come on to Skype continues to build — easier to join in than force people to change. Anyway, it wouldn’t surprise me if this TV product is also not US-centric, as the TV situation is also much different outside the US (with a lot less effort paid to enforcing copyright in some very populous markets).

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  14. no, next stuff will be “brain connected skype wireless connector”:)

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  15. I don’t know where this will take Zennstrom and Friis or for that matter eBay. The whole thing looks boring, the new venture that is.

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  16. It makes sense to let these guys go “play” with stuff. That’s where the best ideas often come from.

    I find the most productive and innovative time I get is taking time out of “work” and putting into something that is interesting and challenging. It’s amazing how quickly that stuff I’ve done finds a valuable use in “work”!

    I think eBay should be applauded for giving their team the latitude to experiment and try new stuff.

    Have you seen the ads on regular TV for eBay? eBay could then advertise on their own TV network? Product searches related to video content could be great. Here’s a review on the Technology Channel of the latest gadget – click here to see who’s selling it on eBay…

    Flop or success, give it a chance. Once upon some guys thought of a HTML page and a worldwide web, maybe a lot of people said “stop that and get back to REAL work” – thank goodness they didn’t listen.

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  17. ¿Qué podemos esperar?

    Mi especulación:

    1. El modelo de negocios de la TV es la publicidad. No existe medio con más poder que la llamada pantalla chica para que los anunciantes den inicio a la narración de las historias de sus marcas

    2. Las nuevas generaciones (y sobre todo mientras están jóvenes) no comulgan con el sofá. No se oponen a las pantallas, al contrario las adoran, pero necesitan que éstas les permitan la comunicación en doble vía, la conversación. Prefieren las pantallas que no solo hablan sino aquellas que también escuchan y responden

    3. Combínese 1 y 2 y ¿Qué tenemos? La magia de la TV de los años 60 era reunir a toda la familia frente al receptor (así fuera en blanco y negro) para presenciar juntos (valga la redundancia) las historias que los productores hábilmente sobrecargaban de emociones y misterio… Ocurre sencillamente que el significado de FAMILIA y REUNIRSE ha cambiado… Más no la magia…

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  18. still waiting Tuesday, August 29, 2006

    well… still waiting, where is the 2nd part of this story as promised?

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  19. still working on getting more details, collecting facts etc. hang on…

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  20. “…nearly six major cities”

    Wow. That would be – five?

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  21. Looks like Skype is late to the streaming (not downloading) game…

    Gridnetworks (www.gridnetworks.com) is already out there with Reeltime (www.reeltime.com) as there first content provider…from what I know, Reeltime is in deep negotiations for a content deal with a major studio and that may be announced before the end of the year…

    They are currently in beta and I spoke with the CEO (Barry Henthorn); he alluded that as soon as they get a major studio finalized then they will open to the public with a massive marketing campaign.

    Check out Grid’s player in action on reeltime’s site…it is quite impressive…with the right content (for reeltime and other providers), Grid will quickly be catipulted to the top and have the edge in what appears to be a hard fought race.

    Ive long thought that downloading would be prehistoric in a matter of time and that streaming would be the answer…it appears thats the direction we are headed…

    Thats a good thing.

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  22. nice article but i thought co-founders of Skype are from Denmark,not Estonian guys…

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  23. [...] on their Venice Project, a forthcoming video play first revealed in a Business Week story. Om thinks it does not bode well from an eBay investor’s point of [...]

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  24. [...] Celebrity Founders: Niklas Zennstrom and Janus Friis started the company in 2006 after palming off Skype to eBay for billions of [...]

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