GROWTH THROUGH ACQUISITION

Microsoft Buys Skype

Tech giant acquires the Internet phone service for a staggering $8.5 billion. Plus how to fix your worst product, and the rest of the day's news for entrepreneurs.
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Each day, Inc.'s reporters scour the Web for the most important and interesting news to entrepreneurs. Here's what we found today.

It's official: Microsoft buys Skype. After weeks of speculation, Microsoft announced this morning it has acquired Skype for a staggering $8.5 billion cash, reports Mashable. While Skype lost $6.9 million last year and is in $686 million of debt according to their SEC filings, Microsoft was reportedly attracted to the company's loyal 663 million user base, $8.8 million of whom pay for the service. Skype will be thrown into the Microsoft systems mix which includes Xbox, Kinect, and Outlook. Microsoft CEO Steve Ballmer headed up the deal, which reportedly closed Monday night.

Is the price right? Setting the right price for your product or service is critical to the success of a start-up or small business. It's something entrepreneurs often fail at, and the Wall Street Journal reports that's because there's no one universal formula that yields the perfect pricing structure. And if a price is set too low from the outset, it's tricky to fix, because customers get accustomed to low prices. "Price is one of the biggest images of your product or service in the market," says Julie Meehan, author of the book Pricing and Profitability Management. Check out the Journal's gallery about how ModResoration, a furniture-repair company based in Brooklyn, New York, sets prices for some advice on how to do it right.

How to fix your worst product. As most companies learn the hard way, not every product release will be a success. Just ask Chris Brogan, founder of Kitchen Table Companies. In a post on OPEN Forum today, Brogan describes the process of fixing an underperforming (re: failing) product. "We're still not sure which of our assumptions isn't working," Brogan writes. "Did we market poorly? Did we have a lack of credibility in the space? Were we priced wrong? Was our content uninteresting or packaged wrong? You can see that there are a lot of levers to pull in testing this out." Eventually, Brogan realized the product wasn't getting enough traction, so he decided to use a daily deals site to promote it. "I'll get back to you on how this all goes," he says.

Another Internet Boom Bubble? 'Ludicrous' says Business Insider CEO Henry Blodget in this interview with Jen Rogers of Reuters.



 

What's your power style? New research shows a link between childhood and your signature power style. "The behavioral dimension of your power style stems from the way you learned to deal with your caregivers as a unit to get what you wanted in childhood," says Maggie Craddock, author of Power Genes and blogger for the Harvard Business Review. Craddock says there are four distinct power styles: The Pleaser, Charmer, Commander, or the Inspirer.

Buyosphere ditches the cookies. Can online commerce survive without tracking its customers every move? Buyosphere thinks so. The recently renamed and redesigned startup was featured on Mashable yesterday with its C2B (consumer-to-business) communication flow that allows consumers to share their preferences with the company directly rather than reverting to more covert, and fairly creepy, data collection methods like cookies. While Buyosphere admits it cannot control what and how much its customers share, the public's increased appreciation for privacy will likely put Buyosphere ahead of its cookie-crunching competition in the not-so-distant future.

Entrepreneurs schooled by rock stars? Rock stars are much better at building a wildly loyal fan base and getting people to an event than entrepreneurs. VentureBeat compiled the four best lessons entrepreneurs should learn from the live music industry, especially when it comes to tapping technology to grow an audience. Creating deeply emotional and engaging content, and being authentic about it, will make your fans shout for an encore.

Marc Andreessen shakes up Silicon Valley. Don't miss The Wall Street Journal coverage of how Marc Andreessen, co-founder of Netscape, has broken into deals for tech darlings like Facebook, Twitter and Groupon. Armed with an extensive network of contacts and his own quirky style, Andreessen is even associated with driving up prices--and ultimately, multi-billion-dollar valuations.

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Last updated: May 10, 2011

NICOLE CARTER | Staff Writer | San Francisco Bureau Chief

Nicole Carter is Inc.'s San Francisco bureau chief. She was previously an editor at New York Daily News, and her work has also appeared in Consumer Reports magazine.




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