Skype Founders Pondering IPO Don’t Need ’Love’ From Andreessen

By Edward Robinson and Joseph Galante Jan. 14 (Bloomberg) -- One night in 2007, employees at Skype Technologies SA decided to send a message to their new corporate parent, EBay Inc. They picked up the desk of Henry Gomez, an EBay senior executive and Skype’s president, and moved it to a far corner of the company’s London office, says a former EBay senior manager. The prank underlined how relations had deteriorated between Niklas Zennstrom, Skype’s co-founder and chief executive officer, and the online auction giant, which had acquired the startup two years earlier. In September 2007, he quit as CEO of the Internet phone company. Two years later, Zennstrom and Janus Friis, his fellow Skype co-founder, have elbowed their way back into the company, Bloomberg Markets magazine reported in its February issue. In September, they waged a legal fight against EBay and a buyout group led by private-equity firm Silver Lake that had acquired control of Skype for $2 billion. The suits alleged that the consortium and EBay had unlawfully used the founders’ copyrighted software that they’d licensed to Skype. The consortium and EBay denied the allegation. In November, Skype’s new owners cut Zennstrom and Friis in for a 14 percent stake and two board seats, and the duo dropped their lawsuits. “They were not going to let Skype get away from them; that’s their baby,” says Yvette Alberdingk Thijm, a former senior content executive at Joost NV, an online video company that was also co-founded by Zennstrom, 43, and Friis, 33.

                          Largest IPO

     Now Skype, which lets users call each other for free over the Internet, could be headed for the largest initial public offering of a technology company since Google Inc.’s 2004 IPO, says Paul Bard, director of research at Greenwich, Connecticut- based Renaissance Capital LLC.
     Skype has soared in popularity since it started in 2003 and boasts about 548 million users worldwide, more than Facebook Inc., MySpace Inc. and Twitter Inc. combined. Skype earned $165 million in operating income in 2009, a 42 percent jump from 2008, Thomas Weisel Partners LLC estimates. If Skype increases its profits to $400 million by 2013, it could go public at a valuation of $4 billion, says Bard, who specializes in IPOs.
     “Investors would have a big appetite for a profitable Internet IPO with its growth and scale,” he says.
     Zennstrom and Friis will have to get along with some of the most powerful personalities in technology to deliver a hot IPO.

Skype board member Marc Andreessen, the computer scientist who helped engineer the Web browser and usher in the Internet boom in the late 1990s, is working on the company’s growth strategy. A director at Hewlett-Packard Co., EBay and Facebook, Andreessen owns a Skype stake of about 5 percent through Menlo Park, California-based venture-capital firm Andreessen Horowitz LLC. Bloomberg LP, or a subsidiary of the company, is an investor in the Andreessen Horowitz fund.

                        “Ongoing Battle”

     Egon Durban, head of European investments at Menlo Park- based Silver Lake, is also playing a lead role at the Internet company. And EBay CEO John Donahoe will have a say in Skype’s direction; his company retained a 30 percent stake.
     Phillip Phan, a business professor at Johns Hopkins Carey Business School in Baltimore, foresees difficulties in the boardroom between Zennstrom and Friis and their fellow stakeholders.
     “It’s obvious that the founders have an emotional interest in the company,” says Phan, who teaches corporate governance. “I suspect you will see an ongoing battle in the executive suite between the founders and the rest of the partners.”
     Zennstrom and Friis refute this assertion. “That skepticism is entirely misplaced,” their spokesman Tom Rayner wrote in an e- mail. “Niklas and Janus have a huge and genuine respect for their new partners, with whom they are very much looking forward to working.”

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