Skype’s Last Call

To me, Skype was THE internet-based phone and video service in the mid 2000s. It was simply the one and only service that “everyone” used to video call, especially internationally.

Peter Shankman, serial entrepreneur and founder of Source of Sources, shares his experience that sums up many folks’ interactions with Skype:

But the reign of Skype has been over for a while, and Microsoft recently confirmed that Skype will no longer be available to use starting in May.

To mark this end of an era, I’m thrilled today to interview someone who wrote the book on Skype - no, really.

Among other roles, including authoring Managing Priorities and co-hosting the Traction Heroes podcast, Harry Max is the author of Skype: The Definitive Guide.

And Harry graciously agreed to stop by Beck on Tech today to share his experience of being on the ground floor while Skype took off. Read on for one of the most interesting interviews I’ve ever done!

How did you first get involved with Skype?

I first got personally involved with Skype when they were getting ready to launch the beta version of the app for Microsoft Windows. My brother was the seed investor in the company. In addition, Skype licensed my online voice-of-the-customer suggestion box called Public Mind, a SaaS tool other innovators like Blogger, Foveon, Handspring, and Metricom were using to get real-time insight into what customers were asking about. You could think of it as a precursor to Kickstarter or UserVoice. Public Mind gave the Skype team real-time insights to see which features to develop. For instance, it helped them determine the demand for the second Skype client so they could choose whether to build Skype for Linux versus Mac. And finally, Addison Wesley, the publisher, knew about my connection to the company and asked me if I was interested in writing a book. That led to a trip to Estonia and London and eventually some consulting work at the very beginning of Skype for into the Enterprise world.

Do you remember your first Skype call or the first time you saw the product? What did you think?

I definitely remember my first Skype call. It was magic. Having had experience with Telcos and Telephony from working in the networking group at Apple, I immediately recognized the profound power of peer-to-peer conversations enabled by the Skype network over the Internet.

What was the atmosphere like in those early days? Did you have a sense Skype would become as large as it did?

The startup atmosphere in post-USSR Estonia was electrifying. In concert with everything being built out there, Skype’s London office opened my eyes to new possibilities in the startup world. I didn’t conceive of Skype ever being large per se, but it wasn’t hard to imagine that it would be wildly successful.

What was the biggest technical or business challenge Skype faced in the early years?

The biggest challenge seemed to be how Skype was going to make money. It’s one thing to provide a free app that allows people to make free international calls and leave a channel open to communicate worldwide at no cost. However, finding ways to get people to spend money when the core service is free is another thing.

I know you had worked at many tech startups at the time. How did Skype’s culture compare to that of other tech companies at the time?

It really opened my eyes. It was exotic. In my experience, Skype was the first remote-oriented workforce. I remember people being in vastly different locations but leaving open a Skype channel so they could talk whenever it was convenient just because it didn’t cost anything. The friction of making a phone call was gone. And the cost of leaving the line open disappeared.

Your book, Skype: The Definitive Guide, came out in 2006. How did that book come to be? And how did Skype’s internal team react to the book?

As I mentioned above, a friend and mentor of mine at Stanford was on the editorial for Addison Wesley, the publisher. He knew about my connection to Skype, the Skype investor (my brother), and the founding team. He asked me if I’d be willing to write a book. The thing is, I had a full-time job at DreamWorks Animation at the time, so I wasn’t in a strong position to do it on my own. It was a team effort with my co-author, Taylor Ray. It was exciting. Going to Estonia and spending time with Niklas, Janus, Geoffrey, the developers, and my brother allowed me to demystify how Skype worked, unpack the security model, and explain the magic of peer-to-peer computing for consumer applications. The Skype team was integrally involved in the development of the book. A huge shout-out to Kurt Sauer, the founding CISO, for ensuring I understood how it all worked. And I was blessed to have Niclas write the Foreword.

From your point of view, what do you think fueled Skype’s rapid growth? What could a startup learn from it today?

It’s pretty straightforward. The two things that fueled Skype's growth were a truly elegant end-user experience and a viral growth engine built into using the application. Put simply, if you wanted to talk to somebody over Skype, whoever you wanted to talk to had to install and use the application, which exponentially grew the power of the network.

And when I’m working with startups now, I’m always looking for the answer to the question: How is using this going to prompt other people to use it so that it grows exponentially rather than being some kind of secret weapon that you want to hide for yourself?

How do you think the eBay acquisition (and later Microsoft) changed Skype’s trajectory?

I think the two acquisitions were quite different. I think the early vision for eBay‘s acquisition had a lot of potential. I remember hearing a story about Pierre Omidyar, eBay's founder, saying that he wanted to buy Skype to be more like Madonna than Bette Midler; that is to say that the Skype purchase would allow eBay to reinvent itself and not just be a one-trick pony. I don’t know if Pierre actually said that, but it stuck with me. Regardless, I’m not sure how sound the idea of integrating Skype into the eBay community or interaction model was. While that idea made some sense, I do think eBay could have turned Skype into what Zoom is today.

Now, the Microsoft acquisition is an entirely different story. There are multiple challenges on that front, starting with Microsoft's historical tendency to add a lot of cruft and complexity to an application, which was counter to the DNA of Skype's user experience. I've read that internal politics and competition with other Microsoft offerings like Teams complicated matters significantly more.

Did Skype have a chance to compete with WhatsApp, Zoom, or FaceTime if things had gone differently?

Yeah, sure. As I said, I think Skype was the leader. If anybody could have knee-capped WebEx, it was Skype. There's no question - they could’ve been what Zoom or FaceTime has turned out to be today.

Did you see or worry about signs of Skype’s decline before it became apparent to the public?

Almost immediately after eBay purchased Skype, it became clear eBay didn’t understand the relationship between the Skype app and the peer-to-peer network it was built upon. Given that, there was a good chance that Skype would never become a first-class citizen in the eBay ecosystem.

What’s one under-appreciated aspect of Skype’s legacy in the tech world?

The most under-appreciated aspect of Skype’s legacy in the tech world was the app's ability to punch through firewalls. The app didn’t get all hung up in network security. It just worked. It was magic. Wasn't it Arthur C. Clark who said that any sufficiently advanced technology is distinguishable from magic? Skype was certainly that.

How long after you stopped working with Skype did you still use the product? Did you feel like you were “cheating” if/when you used a different video conferencing platform?

I used Skype for quite a while after I stopped working with the company, but I’m struggling to remember when and under what conditions I started using other applications more or Skype less. I think it started to unravel after Microsoft got ahold of it. I do remember the transition feeling a little awkward. Logging in and password management got challenging. From an "Am I cheating?" point of view, not so much – I didn’t have the same connection with the company given the sale to eBay. And another thing. I wouldn't say it soured on the app, but I didn't feel the same about Skype when I saw how much money the Skype founders made but how little wealth was generated for those who helped make the company a wild success. I'm not talking about myself, mind you. I guess I just have different values about wealth creation. Call it whatever you like.

If Skype had a “What If?” moment where things could’ve gone differently, what do you think it was?

The "What-if" moment could very well have been eBay or perhaps Microsoft investing in rather than acquiring Skype.

If you could tell today’s tech leaders one lesson from Skype’s story, what would it be?

Niklas communicated his vision in words: Free telephony. If I had to choose just one lesson, it would be for leaders to communicate their vision with that level of clarity and simplicity.

Thank you so much for stopping by Beck on Tech, Harry! What a story.

-Molly Beck

P.S. This Week’s Sponsor is Tech UP!