I hope you don’t find the title misleading or confusing, so here is the real deal. Skype founders are lining up a slew of private equity investors to buy back Skype from Ebay while StumbleUpon has apparently already bought their business back from the ecommerce biggie. Ebay had bought Skype for over $2 billion (or was it 4) in 2005 while they purchased StumbleUpon for around $75 million in May 2007.
The Skype Story:
According to Reports, Ebay itself invited Skype founders to propose a buy back of its VOIP product which apparently is loading on losses for the company. It has already seen a write down of close to $1.4 billion in value with Ebay. The Telegraph reports that KKR, Providence, Warburg Pincus and U2 frontman Bono’s Elevation Partners are reportedly backing Scandinavian entrepreneurs Niklas Zennstrom and Janus Friis to buy back Skype from Ebay with all of them chipping in a total of $1 billion.
The StumbleUpon Story:
The story is not very different from that of Skype, founders roping in investors, raising money and buying back their baby from its foster home. The new company is backed by Sherpalo Ventures, Accel Partners, and August Capital besides the co founders Garrett Camp and Geoff Smith.
In their press release announcing the deal today, Camp said, “We are grateful to eBay for its guidance. However, we realized there were few long-term synergies between the two businesses. It is best for us to part ways and focus on our respective strengths. This change makes it possible for StumbleUpon to continue to innovate and focus on becoming the Web’s largest recommendation service.”
The Ebay Story:
What’s going on with Ebay? Given the recession I would have thought Ebay should be doing brisk business as it is an excellent alternative to cheaper shopping deals.
In both the case of Skype as well as StumbleUpon, the reason cited by the firm in attempting a sale has been the discord of the two services with regards to their fundamental business of ecommerce. Lack of sunergy is the term they use. What were they thinking when they purchased the two businesses in the first place shedding billions?
Both Skype and StumbleUpon are services that I really like a lot and believe that they add immense value fundamentally to the web, I mean free phone calls and the a button for idle surfing are killer innovations. And if getting out of Ebay means better innovation happenning for these tools then I am all for it.
