The rise and fall of Skype

The app that hit 170 million users and sold for $8.5 billion — then lost the pandemic to Zoom despite a 17-year head start.

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By The Numbers

$8.5B

Microsoft's acquisition price

170M

users at Microsoft purchase

36M

daily users by 2023

What They Nailed Early

Built the first peer-to-peer voice calling system that made international calls free and actually worked better as more people joined. Hit 100 million users in three years through pure virality — if I wanted to call you, you'd sign up.

What Changed

eBay bought it for synergies that never materialized, then Microsoft paid $8.5B but couldn't decide what Skype should be. They cycled through redesigns copying Snapchat, neglected the core product for years, and shifted focus to Teams before the pandemic hit — leaving Skype unprepared when demand exploded.

Where it Landed

Shut down May 2025. Zoom captured 50% of video calling during COVID while Skype shrank to 36M daily users. Revenue collapsed from $750M to $8M annually. Microsoft officially killed it after 21 years.

The Principles

Product clarity beats feature bloat. Skype couldn't decide if it was social network, voice platform, or Snapchat clone — Zoom just made calls work flawlessly.

Buyers who don't understand the business overpay and destroy value. eBay and Microsoft paid billions for imagined synergies while founders who understood the tech walked away rich twice.

A 17-year head start means nothing if you're not customer-obsessed. Zoom's founder answered Twitter complaints personally while Skype added emojis nobody wanted.

Builder's Takeaway

3 warning signs your acquisition will backfire:

•

You're buying for 'synergies' customers never asked for (eBay/Skype integration)

•

Sellers understand the tech better than you do (founders retained IP, got paid twice)

•

You can't articulate the customer problem you're solving (Skype became everything, excelled at nothing)

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