Skype Founder Crushes it Again
I recently spoke with Skype founder Niklas Zennström during his trip to New York City. We first met in 2005 when he and I became Young a Global Leaders part of the World Economic Forum based in Davos, Switzerland. After selling Skype Niklas decided to set up a London based Technology Investment fund focused on Europe. He was pressured to do It in Silicon Valley but ever the contrarian went with his instincts which has proven very successful. We discussed Skype, his new venture fund Atomico, unicorns that he has backed, artificial intelligence, cyber Securities, technology applied to helping the environment and what young Forbes readers should do to have their own Skype like success.
Niklas Zennström - Forbes Q&A – November 2017
Q: You were the founder of Skype please tell us about this?
Zennström: The idea for Skype came to me as I was picking up huge phone bills calling my colleagues based across Europe. I travelled a lot, and in every country I would have to buy a new SIM card for my phone and pay extortionate rates to call my team. I thought that there must be a better way. Knowledge gained from our previous ventures in peer-to-peer networks turned out to be very useful, and we built Skype pretty quickly. We launched it in August 2003, and the exponential growth happened almost instantly. We had one million users after the first month. By January 2005 we already had 20 million active users and were gaining 5 new users every second. It was crazy. eBay ended up acquiring Skype in September 2005 for $3.5 billion. In 2009 my co-founder and I participated in an MBO with Silverlake, and then subsequently Microsoft acquired the company for $8.5 billion. What I am most proud of after all this is that I still hear people’s stories about how Skype changed the way they connect with their family and loved ones abroad. Today I do not own any parts of Skype and I am no longer part of the company, but I am still a happy user!
Forbes: So now you can do whatever you like so what motivated you to start Atomico?
Zennström: It was very difficult to raise money for Skype and my previous ventures in Europe. At that time, the strongest ecosystem and virtually all of the capital was in Silicon Valley. I was offered investment many times during my years as an entrepreneur but always with the caveat that I move my company to the West Coast. Although we managed to dispel this myth with Skype, I wanted to use my success to empower the next generation of European founders to prove to the world that great companies can come from anywhere.
Forbes: Do you have any unicorn stories for us?
Zennström: Atomico has a few unicorn stories, and even Europe’s first decacorn. The most recent unicorn story is quite a special one for me, though. Rovio, the Finnish gaming company that is famous for creating Angry Birds, recently went public at a valuation $1bn. We invested back in 2011, inspired by its team and impressed by the gaming ecosystem in the Nordics (which would also eventually produce our decacorn, Supercell!) Rovio grew fast and had particular success in China, becoming one of the most recognized media brands in the country. This was indicated by the amazing performance of the Angry Birds movie, which scored the third-biggest opening ever for an animated film in China. The IPO was in September this year and was a great moment for Kati Levoranta, Rovio’s CEO, and her team. It was a well-deserved outcome.
Forbes: Please tell us your thoughts on Artificial Intelligence?
Zennström: Artificial Intelligence is a discipline that has truly exploded over the last few years, disrupting everything from autonomous vehicles to radiology. We saw something similar with mobile. Over the last decade, mobile has been the single most transformative technology. It has left no industry untouched. Today, we use our mobile to control everything from how we communicate to how we eat to how we move around cities. The mobile wave has created incredible businesses, such as Spotify, Supercell, WhatsApp, Klarna and many others. Today, if you’re not on mobile, you’re not relevant. Going forward, we think this is going to be the same for AI, and that it will have similar enabling effects over the next 10 years and beyond. We think AI is going to be used to create huge companies that transform our lives all over again. We're proud to have invested in several businesses that either have AI at their core or are empowering this new revolution, such as Graphcore and Mapillary.
Forbes: What are your thoughts on cyber currency?
Zennström: Watching cryptocurrency evolve and commercialize over the last seven years or so has been fascinating. The potential applications of the blockchain could be extraordinary, and will likely revolutionize a lot of sectors. This is what we believe at Atomico, and we are looking for long-term opportunities in the space. What is harder to be convinced by, right now, is who will be the winner among all the protocols and ICOs out there. Technical limitations of the technology today in terms of the transaction capacity and speed of protocols, governance mechanisms, security and so on, all pose challenges going forward and it is not clear which of these new challengers will pull it off. The technology maturity and discussion about crypto today is similar to what people were saying about the Internet back in the early 90s. The hype, however, is more like the late 90s. This time, crypto companies are raising capital via ICOs, rather than IPOs. Picking the eventual Alphabets and Amazons within this new ecosystem will be super difficult, but those who can do it successfully will be part of something huge, provided they can stand the volatility!
Forbes: How do you feel that technology can contribute to sustainability and positive developments for the environment?
Zennström: Sustainability challenges are important to Atomico and to me personally; I take them very seriously. They are some of the largest and most imminent problems the world faces. I am confident that technology entrepreneurs are the people leading the most revolutionary progress. Atomico has recently invested in three companies that are taking on some of these challenges. Lilium is building an electric, VTOL jet, which can travel up to 300km/h and has a range of 300km. When their jet hits the skies, it will revolutionize the urban environment and transportation, as we know it. Farmdrop is connecting local, sustainable food producers with consumers directly, enabling grow-to-order transactions which is a new way of handling the food chain. Finally, Memphis Meats are creating clean meat - real meat produced by cultivating animal cells rather than raising and slaughtering animals. Their product is better for the environment, animal welfare and human health than the output of traditional meat production, and requires up to 90% fewer greenhouse gas emissions, land and water than conventionally-produced meat. I am excited for what the next generation of founders will achieve to make the environment stronger.
Forbes: What would you say to young Forbes readers that are aspiring entrepreneurs on how they can have their success like you did with Skype and other companies you have been involved with?
Zennström: When I was a founder, I was what I describe as naïvely optimistic. I believed this was one of my most important traits. I took on the music and film industries with Kazaa, and then I took on the world’s telcos with Skype. If I had not been optimistic and a little naïve, I would have convinced myself I was crazy for even trying and the ideas would never have got off the ground. Believe me, enough people tried to tell me as much over the years! If I had not believed it was possible to change the telco industry and take over 1/3 of the international phone traffic – well, I wouldn’t have tried, and the world might be a slightly different place. I encourage all aspiring entrepreneurs out there to not be scared of shooting for the moon and taking on huge problems. These are often the challenges that need solving the most, but without those willing to try we will get nowhere. Being a little naïve and optimistic can go a long way.