Skype Is … “Open for Business”

As mentioned in a previous post I spent three days last week visiting Skype’s London office meeting with both Skype managers and a Skype partner. Out of all these meetings there was one overriding theme I came away with: Skype is "Open for Business".

Recall Andy’s VoIP Watch post last week where he questioned voice’s place within portals; he goes into some detail describing how Yahoo, AT&T, AOL and, yes, even Microsoft are struggling with how to derive a business model that works using voice and presence.

…. What’s funny is the IM players know all about presence, but one has to wonder who is Present and Accounted for when the decisions on how to make money are being discussed by those portal players. Surely no cash is being rung up that matters.

Rest assured there is no wondering about who is present and accounted for at Skype when the decisions on how to make money are being discussed. It was obvious to me that one of the outcomes of last fall’s reorganization is that every sales, marketing and business development manager at Skype has become very focused on meeting revenue and expense goals while accomplishing a defined mission such as to build a portfolio of business critical partnerships.

Partially based on my own past experience as a member of a management team executing the restructuring of a NASDAQ-listed company, I have the distinct feeling that, setting aside any future performance bonus for the Skype’s founders, Skype management’s immediate goal is simply to become a profit contributor to eBay. As my interim CEO of that past (and successful) experience would repeatedly state: "the bleeding has to stop now".

Fundamentally in the foreseeable future we will see four Skype revenue streams:

  • Telecom Services: SkypeIn, SkypeOut and extensions of traditional telephony interconnections.
  • Extras Gallery: where Skype and the publishers of Skype Extras share revenues while each have defined responsibilities with respect to the marketing and promotion of Skype Extras.
  • e-Commerce: built around engines such as Skype Find and Skype Prime
  • Hardware: royalties on Skype hardware that meets Skype’s Certification standards.

No surprises here in that all these programs are described within the Skype website. (Of course, Skype’s viral driver, free Skype-to-Skype voice and video calls worldwide, will not change.)

The real challenge here for each member of the Skype Management team is to become a visionary and "super salesperson" who can encourage partner innovation while articulating clearly what Skype is providing in return for these various revenue streams. The partnerships behind these revenue streams are critical to Skype’s success; assessing risk vs reward in establishing business partnerships will become a major management skill required to ensure achievement of their respective goals.

On the other hand they recognize that the partner’s business success itself is also critical to their success. To this end, partners must be entrepreneurs who do more than simply provide some "cool" technology. Accompanying the technology is the need to define a customer pain that the technology can address. This leads into building a full business plan, incorporating a marketing and business development strategy built around how the technology results in a value-added service for their prospective customers. And the business itself needs to have a potential to quickly ramp up to six figure annual revenue numbers.

I make these comments because, in my business planning and business development consulting work over the past 15 years, I have seen many marvelous technologies. But, in many cases, I have seen many of them falter because the entrepreneur did not recognize the need for, and role of, marketing and business development activity to achieve market awareness and business success. As I said in my presentation to Skype personnel last week:

Skype needs to:

  • build Skype brand awareness
  • provide marketing infrastructure which can contribute to the partner’s marketing activities
  • define both Skype’s responsibilities and their partner’s expected responsibilities
  • build case studies of success stories

Skype’s partners need to:

  • define the customer pain they address and the resulting vertical markets
  • define the market size to ensure they can build, over time, a reasonable size business
  • build and critique a business plan – even if it only initially covers the first year’s evolution
  • view marketing as an activity where not only Skype can contribute to building product or service awareness but also the entrepreneur can find additional avenues to promote there business and address their chosen market.

It will be an interesting ride to follow how the Skype ecosystem evolves. More detailed commentary to follow in subsequent posts.

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About Jim Courtney

Bringing over thirty years' experience in the sales, marketing and management of cutting edge technology businesses.
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