Skype will become the greatest company on earth, with or without eBay. That’s a promise, given by Josh Silverman, the new president of global communication software company Skype.

Silverman kicked off as the president of Skype from March 23. He gave me his first interview in his new position. We spoke in Tallinn, Estonia, where Skype has software development unit. Silverman had just moved to Estonia with his family, to stay here for three months. Just to get started.

It seems to me, that Skype is having somewhat interesting, but controversial times. It is a great stand-along business, but has failed to create synergies with eBay. So CEO of eBay, John Donahoe has expressed concern and suggested that eBay might sell Skype.

Everything I have ever read and heard from John about Skype is that he is delighted with our performance and that Skype is an amazing company. And who wouldn’t be delighted with Skype – our numbers on any objective metric are almost unprecedented.

With 4,5 years in the market we have more than 300 million users, we just announced 126 million dollars (US) in revenue in just Q1 this year and this is our fifth straight quarter of profitability. So we are one of the fastest adopted and fastest growing companies in history of technology.

eBay has demonstrated its support for Skype many times. Most important was the removal of earn-out. eBay paid hundreds of millions of dollars for this. It is a very strong testimony of support.

Removing earn-out was very important, because the earn-out was driving us towards wrong objectives – revenue and profit growth. When most important for us is delighting our users and achieving our full potential in the long term.

So the goal is the amount of users, not the revenues?

The goal is to be as relevant as possible to as many people as possible. To help changing the world! We are very proud of having over 300 million users, but having those users using us even more this quarter than they did last quarter is also very important. And we are seeing both: very rapid increase in number of users and also people using us more and more each quarter.

Skype has changed the ways people communicate. No doubt. But the company seems to be hostage of its success. Calling free globally, that’s brilliant. But when Skype starts asking for money, people say: wait a minute! And you become like any other greedy telecom company.

Skype has been one of the most successful companies in history. And I think the next ten years are going to be even more exciting than the first four. Skype started as a free service, allowing people primarily to make phone calls to friends and family.

Utility has increased dramatically over the last four years, so functionality such as video calling is incredibly popular. There’s a whole set of really robust functionality that goes well beyond just voice calls. We have some paid services, like SkypeOut, that allows you to call from Skype to land or mobile phone. There are some people still out there crazy enough not to be using Skype for every call!

SkypeOut has been one of the most important features that allow people to use Skype more often. We don’t view it as a way to make more money, we view it as a way to serve our users more often and allow them to use Skype for all of their communication needs. It is true that when people make SkypeOut calls, we have costs and we have to be able to recoup those costs. But we think we deliver an amazing value.

Every business, at the end of the day, is all about revenues and profits. What is the guarantee that Skype will be as successful, when starting to often more and more pay services?

Life isn’t about guarantees. If I wanted a guarantee, I’d go look in the post office! There’s a paradigm shift that is happening right now in the world in communications. That is going from hardware to software. You used to have a dedicated appliance called telephone, tied to a dedicated network, which was copper wire. That was purpose-build application.

Now we are talking about software. You have multi-purpose device, tied to multi-purpose network, which is the Internet. And that device might be your computer, Blackberry or television – any device that is tied to Internet and used for many kind of applications.

Communication will be one of the fundamental applications you will use these devices for – we aim to be the application that everyone uses for the communication! And frankly, I don’t think there’s anyone in the world better positioned than us. That is our opportunity to win.

Telecommunications is a huge 1,2 trillion dollar industry and over the last 70 years it has been about 1,6 percent of global household income. That number hasn’t changed in 70 years. As communication utility grows and cost of delivery goes down, people communicate more and more. And we have great opportunities to grow in terms of our relevance to people and therefore our revenues and profits.

What was your reaction, when eBay paid 2,6 billion US dollars for Skype in 2005?

I was really proud of eBay, because I think it takes some courage and vision for a company to be willing to take big future bets. Skype is a great bet! It is one of the defining paradigm change companies in the world today. And that’s what eBay should be associated with.

When eBay says Skype should create synergies, what does that actually mean?

Our focus is creating the best possible products, delighting our users. If synergies with other eBay entities can help, that’s terrific. But synergies are means to an end, they are not an objective itself. We have great partnership, for example, with PayPal, which is making it ever easier to pay on Skype. We are selling digital goods to hundreds of markets around the world and PayPal helps cracking this really tough problem.

We continue looking for opportunities where partnership with eBay will help serving our users better.

Skype is a telecom tool, eBay is an auctioning environment. What kind of synergies these two very different companies could possibly have?

I am not focusing on synergies, where they are nice to have. If there is anything that eBay companies can help us with, to deliver really fantastic experience to our users, we’ll go for it.

In which markets Skype is most popular?

We don’t disclose figures by country. Skype is as global as the world. What amazes me is that with more than 300 million users our penetration rates are still low in many of the largest markets. So there is so much room for growth.

In which markets Skype booms the most?

We are truly global. If you take our top ten countries together they still are not representing mass portion of our users. We don’t spend much time analysing individual markets, nor do we target products to individual markets. We try to build the greatest products on earth and assume that people from all over the world will find them useful.

At the end of the day the fundamental needs of Americans, Chinese, Egyptians and Estonians for communication are surprisingly similar.

In Q1 2008 Skype earned 126 million USD in revenue and added another 33 million new registered users. Have you defined any goals for these figures to grow?

We don’t spend time on forecasting and goal setting, because we feel that if we continue being focused on building really great products and disruptive innovation, everything else takes care of itself.

Will Skype become a telecom company?

Skype has never been a telecom company. We are software company. That is the future of communications and that is certainly the future of Skype. I mentioned the paradigm shift from hardware to software. It is nice of me to say that, but what does that actually mean for people? Well, in the old world I dialled a number, in many countries it was a ten digit number. And that rang a physical address in your home.

In the present world I dial a device, which is your mobile phone. I still have to dial a string of digits. In the future world I dial a name. I dial Toivo. Wherever you are, whatever device you’ll be using, that is where I’ll be calling.

The way we communicate on those devices will be different as well. In the old world we had a voice call. In the present world, if we look at how people communicate with Skype, we see an interesting microcosm of what the future will look like. Video calls are very popular and once you get used to them, you never want to go back to voice.

There’s also multimodality – when you are having a video conference, there are also chats going on between members of the meeting. And we are sending file transfers back and forth; work together on Power Point decks or review code together. That is how the future of communication will look like. And owning a dedicated appliance, a physical phone, will not matter anymore. What will matter is brilliant software engineering, great user experience and making these really robust applications super simple to use.

When will calling a name become global standard for communications?

The sooner the better.  In fact, I can’t understand why people still want to dial these ten digit numbers. I don’t think they do!

What obstacles to you see on the way?

It takes time. Philosophically, the problem of addressing people is fascinating. 200 years ago, in many countries, people didn’t even need last names. Because everybody in your village knew who you were. You were Toivo, son of…Villu. That was enough.

With the development of postal system you suddenly needed the last name. But still it was enough to know that you were John Smith from this town. That was enough for the post office. Now, when truly global communications, such as Skype, are in power, there are few billion people with internet access in the world. So you need to distinguish this Josh Silverman from hundreds of Josh Silvermans around the world – and believe me, when your name is Josh Silverman you really feel this pain! String of digits is not a very rich way to do it, but Skype ID has great potential to become global address of people around the world.

Imagine Skype user three years from now – what kind of „skyping options“ he or she has?

Video will be more important as people have large enough desktops. But even more, as mobile phones with larger and larger screens are coming out. The other thing we are going to see is the concept of multimodality conversations. Things like multi-chats, screen-sharing, file-sharing etc become more popular.

Skype has development unit in Tallinn. Are there any other reasons, besides historical (Skype was founded in Estonia) for the unit to be located in Estonia?

I think it is a pretty good reason that our history and heritage are in Estonia. I chose to spend my three months, as the new president in Tallinn, because this team is so incredibly important to what Skype is. This is the place where our products are built, where „rubber meets the road“!

How would you describe Estonians?

Estonians commonly bring their heart and head to work every single day. They are super passionate and even super stubborn. Estonians have strong view of what they think is right and they are not afraid to say it. They are independent-minded and do not need someone standing over them telling what to do.

Are there any other reasons why Skype likes Estonia?

Estonia is a very small country, but it has a terrific talent base and long traditions of technical excellence. No secret, Estonia produces world-class computer scientists and we think we get the best and brightest.

The culture here is not „tell me what I have to do and I will do it.“ The culture here is „tell me what we are trying to achieve and I will figure out a way to achieve it better than anyone else.“

So the cost-efficiency is not an issue and Skype will not relocate its development unit to India or China?

The relevant cost of labour is not a driving factor for us. I expect Tallinn to be the heart and soul of where our products are being built for a very long time to come. What is cost-efficient is having really great and passionate engineers who can develop fantastic products. That is not a numbers game! 20 engineers are not necessarily ten times better than two.

Skype has had problems in Estonia with importing talents from outside EU. Is that still worrying you?

It will always be our biggest problem. Our ambitions are always larger than any one country and its talent pool can support. We have more than 25 nationalities represented in the office today, making us one of the most cosmopolitan offices in Estonia. I think our challenges will tell a story of what other Estonian companies will face in future.

There was a huge internet bubble 7-8 years ago. Are you seeing something similar today?

I was right in the heart of last internet cycle. Everything, that was said during the last cycle about how internet was going to revolutionise everything, was right. Except the timing.

Internet was going to change the world by 2001. Actually we are talking about 2011-2015 and we are right on track. Changes never happen that quickly. Many really fantastic companies grew during the depths of last cycle. And what is common to all of them: they met a really deep need and they met it in really great way.

At the time when Google was founded and was getting going, many people thought it was a pretty silly idea. People asked, who are these arrogant guys, walking around and talking about search? Search is a commodity! It is done! But founders of Google knew it was a very useful thing. And Skype is also a very useful thing. As long as we focus on solving real needs of people and doing it much better than anyone else has, we are going to do really well. And economic cycles do not matter much.

You have worked for the US senator Bill Bradley at the beginning on 90’s. What was your job?

I was a junior level policy person and I loved it! I worked on health, education and welfare policies and when you are coming from college, it is the most fun thing to do. You are changing the world, by writing laws! Although my wage was so low, that I qualified for about 40 percent of all the welfare programs I was working on. The job served me really well. Because when you work for a senator, now matter how complex the issue, you need to be able to articulate it in one page. Pros and cons of the national health reform – one page! In Skype we sit at the centre of disrupting massive set of industries. And we have to be able to still down for people, what is happening and what we are doing.

You could have become a politician, but ended up in IT. Why?

So I spent two years working for this truly great man. But at the end of the day he is just one of hundred senators writing laws. And if you are lucky, you wrote those three lines of that thing, eventually becoming law in five years from now. I felt removed on having impact to people’s daily lives.

We all get to be in the world once. And I really want the world to be better place because I was here. It is not about making money. In Silicon Valley, where I come from, it is not hard to figure out, how to become really rich. And then you are one of thousands of rich people walking around. What you do next?
The chances of having a real impact to the world, those don’t come around very often. That is what I wanted. And honestly, I can’t think of any place in the world better than Skype to do that!

Silverman has passion for salsa dancing

Silverman has served as CEO at Shopping.com, following a variety of management positions at eBay, including serving as Managing Director for Marktplaats.nl/eBay Netherlands; and leading the launch of eBay’s European Classifieds business.
Before joining eBay, Silverman was co-founder and CEO of Evite, the leading social event planning site on the Web. He has also held management positions at ADAC Labs, Booz Allen Hamilton, and started his career on the staff of U.S. Senator Bill Bradley.
Silverman graduated Magna Cum Laude from Brown University with a Bachelor of Arts. He also holds a Master of Business Administration from the Stanford Graduate School of Business, where he was an Arjay Miller Scholar.
Silverman admits to a passion for salsa dancing, theatre and almost any kind of sport — especially sand volleyball. These days, when not in the office, his exercise regimen includes high-speed chases of his three-year-old and one-year-old around the house. Occasionally he also breaks a sweat playing Guitar Hero.
Source: Skype.net

100 000 000 000 minutes of free calls

Skype HQ is located in Luxembourg, the company has branches in Europe, USA and Asia. All together Skype has 500 employees, 300 of them work in Estonia.
In Q1 2008 Skype had 309 million users worldwide, 58 percent more than in Q1 2007. Since the launch Skype had provided all together 100 billion minutes of free calls. Skype is available in 28 languages.
Skype was founded in 2003 by Niklas Zennström and Janus Friis. Software was developed by Estonians Jaan Tallinn, Ahti Heinla, Priit ¬Kasesalu and Toivo Annus who now manage their start-ups investment group Ambient Sound Investments.