The Best Deal Of 2011, So Far – A16Z Sale Of Skype To Microsoft, $6 Billion Profit For Two Years Of Work

The Best Deal Of 2011, So Far – A16Z Sale Of Skype To Microsoft, $6 Billion Profit For Two Years Of Work

 

In 2005, eBay bought Skype from founders Niklas Zennstrom and Janus Friis, for $2.6 billion. It could neither manage nor integrate it to its services.Instead of becoming a boom to help eBay make money, Skype became a distraction. Skype is a software application that allows users to make voice and video calls and chats over the Internet. It is hugely popular and has about 600 million users from 400 million in 2009.

 

In Sept 2009, eBay sold it to the duo of  Andreessen-Horowitz and Silver Late Partners for $2.75. Two years later, the latter companies it sold to Microsoft at $8.5 billion. So, within two years, these companies made $6 billion.

 

It takes uncommon vision to get such deals done.  Skype was actually losing money. It lost $10m in 2010 and $418m in 2009. Yet, the AtoZ and Silver Late were able to get that hefty price from Microsoft. Two years, $6b, this is a vision and insight any mortal needs.

 

Never mind Microsoft. They seem to get these deals right. When they sent more than $240m to get about 1.6% stake in Facebook, the world quipped. Today, that deal is more than $1.3billion if the valuation of Facebook holds as per SecondMarket. And if they lose all this money, Windows generates more than $15 billion with nothing to dig or build. Just print CDs and deliver software over the web. Microsoft can absorb it without any qualms.

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