Game Over...

I've moved all of my blogging over to Tumblr as I am officially sick of Blogger and wanted something more lightweight.

You can now find me at www.mikebrownjr.com

Skype is Probably Getting Sold...

I had dinner last night with a good friend from a former life who now works in Asia, running around on the M&A side in the technology space. During our drunken revelry we got to chatting about the fastest growing companies ever in the tech space from a user perspective and concluded that it was probably Skype. So this morning I was browsing through an old "MS General Tech Info" folder on my computer and dusted off a Meeker presentation from 2005 that one of my friends probably slaved over for countless hours. I chuckled as I was reminded that Mary predicted back then that Skype was on track to deliver $200m in 2006 and $500m in 2007, which was pretty close considering the time she made the forecast (actuals were $195 in 06 and ~$380M in 07) . While the company is probably the "Fastest Growing Application Ever" as Mary states, analysts estimate Skype will probably only earn about $550M in 2008 on a pretty low margin and the two companies have not really found many ways to co-exit and create "synergies," as their CFO is consistently telling the street. Overall, this has probably been a pretty shitty deal for the folks over at eBay and the fact that Draper / Rimer & Co. likely paid off a single fund with this deal probably doesn't help.

Don't get me wrong, I love the product and use it all the time. Working for a British-based company and having numerous conversations with management teams in Europe and South Africa, Skype works like a dream and is free! I'd be more than happy to pay a subscription, as I do see a ton of value in the product if it ended up being cheaper than my phone bill every month. That said, it doesn't make sense for eBay to own it. When I think dream combination, I think Danny DeVito and Arnold Schwarzenegger as twin brothers (anyone who doesn't get that reference get a clue and watch the movie Twins.) They work well together, and the combination is genius. eBay and Skype really doesn't do it for me. I just can't rationalize free VoIP calling service with online auctions, and have no idea where they thought these "synergies" could be.

Bringing it back to dinner with my Asia M&A friend, we concluded that in a sale the company will likely go back to the founders, Nicholas Zennstrom and Janus Friis. There is no doubt that eBay will be talking to everyone, telcos included, but at the end of the day I think that these guys get the model and will be able to run it as a standalone business better than anyone else. Key among running it right is really figuring out the best ways to monetize Skype while keeping a cool, friendly and unique brand. I think these guys are best equipped to handle this. Unless it gets killed due to price and/or valuation, I'd put my money on it going back to the Joost guys (no synergies included).

Business Opportunity...

Having invested in Pikum, I get questions sometimes centering around the legality of real-money fantasy sports wagering in the US as it relates to the UIGEA. There is in fact a specific carve out of the UIGEA for "high-stakes" fantasy sports and it is completely legal for any U.S. citizen to play fantasy sports online for real-money. After being introduced to Chris Russo from Fantasy Sports Ventures recently and chatting with him about this carve out, it's clear to see that this is both a huge market and no real brand has stepped up to the plate to market itself as THE real-money fantasy sports destination online that is secure, safe and legitimate. Not to put any of the existing sites in the market down, but none of them have a brand and most people that I speak to, while curious and interested, are hesitant to put money down on a site that they don't know and think is a scam. CBS Sports comes close, but they don't market the real-money element of their fantasy sports games. While this is not right for Virgin (for obvious reasons) I do think there is someone out there who can make serious coin on a real-money fantasy sports product. With the right brand, this is a serious business opportunity.

Facecard - Kind of Interesting

A couple of weeks ago someone sent me through an email on a new pre-paid credit card company launching called Facecard. The concept is pretty simple, and supposedly unique in a very crowded marketplace. Facecard, launched by edo Interactive and Mastercard, is a new pre-paid debit and gift card aimed at Gen Ys and Millennials. It's got all the same jazz as any other pre-paid (appeal to parents because they can monitor spending, teaching financial responsibility, etc.) but one thing makes Facecard stand out - "...for this plugged in group, Facecard's unique draw is its online social networking component." Users can create a profile, connect with other members and ultimately electronically send and receive funds from friends and family. My buddy Mike G over at Carrot Creative continues to talk about "social networking fatigue," and this is a classic example of it I think. The world doesn't need another social network. Period. Not even to connect with young people with a concept centering around banking. They have some pretty funny quotes that make the company sound really innovative like "accounts can be managed via the website, by mobile phone or at the good ol' brick and mortar bank. When money is transferred to an account it is available within 15 minutes - that means that kids can call their parents from the mall and have money on their card before they leave the dressing room." Most banks already have these service and this is nothing new. I'll give them props for having a Flickr page, an informational youtube video, donating to a charity, and partnering with organizations like Bonarroo - very Gen Y of them. Although they haven't done much visible marketing, the brand is very fun and hip, which could work in their favor. Overall it's an interesting concept but I wouldn't bet on them.