— Another great piece by Andreesen Horowitz founder, Ben Horowitz: Programming Your Culture is a smart take on an important topic, filled with common sense. I also loved this line: “The world is full of bankrupt companies with world-class cultures. Culture does not make a company.”
Much has been written about Microsoft’s surprise purchase of Skype for $8.5 billion. I liked this take, from Ben Horowitz, one of the investors in the group that bought Skype from eBay back in 2009. Then, they paid slightly more than $2 billion, so not a bad return for a couple of years work.
However, this part of Horowitz’s tale really stood out for me: how Apple and Google mounted direct attacks on the Luxembourg-based communications company—and yet fell short. Horowitz writes:
Google offered a free competitor to Skype’s U.S. paid product and a heavily discounted competitor to Skype’s international product. Google then aggressively promoted these cheap products to their enormous Gmail user base by forcing every Gmail user to view Google’s Internet telephony advertisement before allowing them to access their email.
And what was the result of this effort? Horowitz asks.
Skype new users and usage growth has accelerated since Google’s launch.
Skype faced similar aggression from Apple. Horowitz writes:
Apple built video calling right into the iPhone, making their Facetime product the default offering for iPhone users.
And what were the results in this instance?
50 million users have downloaded Skype’s iPhone product since the release of Apple’s Facetime.
I’m not entirely convinced there’s a direct correlation here (that aggressive moves by one company directly led to a boost for the other), but it’s interesting to wonder why two companies, playing all the right moves, failed to make a dent in a much newer competitor they should by rights have been able to crush. Then again, NYT tech reporter David Pogue points out that Skype has an installed user base of 170 million customers every month. Skype is hardly gnat-sized, and a platform’s existing ubiquity is key to its ongoing success. So what else could Google and Apple have done to have made more impact?
Now it just remains to be seen if, as Pogue and others have pointed out, Microsoft will manage to snatch defeat from the jaws of victory and provide Apple and Google with a success they weren’t able to fashion on their own.