Skype CEO on Aims, Growth, Risks and Motivation

A very useful interview here with Tony Bates, the UK-born CEO of Skype which is in the process of being acquired by Microsoft. Technology firms and brands continue to be a superb source of business lesson case studies and examples. There is much in the interview which students ought to add to their notes - particularly A2 students wanting some research-based evidence for their exam essays.

For example:

- Corporate aims / objectives: Skype currently has 170 million active users; the aim is to reach 1 billion. A great quote from Bates reinforces the strategic importance of this growth objective

“Our goal and mission is to become a global communications service provider and reach billions, not hundreds of millions, and we won’t stop until we get there”

Students might consider the ways in which Skype can develop and promote their product range in order to meet this objective.

- The importance of setting stretch goals and taking “calculated risks” - and using these to help focus and motivate his staff.

- The challenge of reaching break-even and then generating an adequate return on investment for a business model that has huge fixed costs. According the interview:

“Although 35% of customers claim to use Skype for business, just 6% pay. In 2010, revenues were $860m, with $264m in operating profits, but the company still reported a loss of $7m.”

Microsoft value Skype at around $8bn - is that justified given those recent financial results? How can Bates persuade a greater proportion of customers to pay for a revenue-generating, premium service?