Skype Founders Mull Buy-Back and Digg on the Defensive
BY Max Chafkin
Skype founders may buy back the company. The New York Times reported Saturday that Janus Friis and Niklas Zennstrom have been trying to raise $1 billion to buy Skype from eBay. Friis and Zennstrom founded the low-cost calling service in 2002, selling the company to eBay for a staggering $2.6 billion in 2005. Skype's popularity exploded--the service now boasts more than 400 million users and 8 percent market share--but eBay has struggled to make money off of it. What would a founder buyout mean for the company? Fred Wilson says it'd be a good thing: "I've said this many times on this blog and I'll say it again. Big companies mostly mess up entrepreneurial companies when they buy them and it really is best that companies like Skype stay independant and run by their founders if that is possible."
So, what is an entrepreneur anyway? In his column in this week's New York Times Magazine, Rob Walker examines the nifty little business run by 23-year-old Northeastern University senior Dominic Coryell. The $950,000 company is called Garment Valet and it arranges for the pickup and delivery of laundry and dry-cleaning. With the constant stream of political rhetoric about the importance of entrepreneurs in America, Walker wonders if our notions entrepreneurship may be a little skewed. Walker writes: "'¦Coryell notes, "the thing about entrepreneurship is that nobody knows what it is." To some, it means dreaming up a magic-bullet idea that becomes the next Google or Facebook (or at least shows enough potential to flip to a buyer like Google or Facebook). And then there are "the people who are more kind of operators at heart," he says, "who get involved in the complexities of an operation."
Entrepreneurs tackle nicotine addiction, but the FDA balks. It looks like a cigarette, delivers nicotine like a cigarette, and, according to smokers I've talked to, it actually kind of smokes like a cigarette. But the FDA is investigating the new breed of electronic cigarettes, according to NPR's Morning Edition. E-cigarettes, which are made by a Florida company called Smoking Everywhere, are stainless steel tubes with a battery that heats up a nicotine solution. Customers get the feel of smoking by taking a drag of the resulting vapor. (Since they're technically smoke free, you can apparently smoke them indoors.) Smoking Everywhere claims on its product that it's "a healthier way to smoke," which immediately raised red flags. The FDA does not have the authority to regulate tobacco, but the agency has refused to allow e-cigarettes, e-cigars, or e-pipes to cross the border until they're approved as new drugs.
Why you shouldn't cutback during a recession. Though the temptation to lay low during a recession is certainly understandable, as this column by the New Yorker's James Surowiecki points out, you might want to think again. Surowiecki points to a variety of studies that have shown that companies who increase ad spending, make acquisitions, or boost R&D spending during recessions end up significantly better off than their competitors. And now may be a great time to launch a new product: Surowiecki points out that Miracle Whip, the transistor radio, and the iPod were all introduced during downturns.
Digg faces backlash. Just over a week ago, the social news site Digg released a new feature that made it easier for people to submit stories to the site. The DiggBar initially got great reviews from tech bloggers, but then the backlash started. Delicious founder Joshua Schachter wrote a post skewering URL shortening services, search engine guru Danny Sullivan warned that the sites using the Diggbar would see their search engine rankings plummet, and blogs began blocking the service. Meanwhile Kevin Rose of Digg, who Inc. profiled last November, has said Digg isn't trying to hurt other websites, and Digg's John Quinn defended the service in a blog post.
Escapism thrives in the recession, but how much do consumers want to pay for video games? With 15 percent growth in 2008, the gaming industry looks strong on paper. But Matt Gilgenbach, who showed off his new video game "Retro/Grade" last month, tells Marketplace that now is hardly an ideal time for a launch. The high cost of game software (action games with top notch graphics can cost $60) is making consumers blanch. So where is that growth coming from? Casual games that you can download online or through your game console. They generally cost less than $20 each and are often free. A big winner in the boom in casual gaming, according to Marketplace, has been Seattle's Big Fish Games, which has seen revenues double every year and which is looking to increase its workforce by 10 percent.
Thinking of Buying a Franchise? Taking on a franchise is quite an investment, the success of which depends on the quality of the business behind it in addition to your own business savvy. The Washington Post lists ten questions to ask yourself before taking the plunge, from how many other franchises the company has to the business and legal history of the company in the Franchise Disclosure Agreement. For more on buying a franchise, read on at Inc.com here