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EcommerceBytes-NewsFlash, Number 1423 - December 01, 2006 - ISSN 1539-5065    3 of 5

eBay's Skype Unit Undergoes Reorganization

By Ina Steiner
December 01, 2006

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Skype Journal reported on Tuesday that Skype underwent a reorganization in which all marketing functions will be moved to London, and 14 staff have yet to find another job at Skype or another eBay company (http://www.skypejournal.com/blog/archives/2006/11/skype_recentralizes_marketing_in_london.php).

Word of the reorg spread when writer Om Malik picked up the news on his blog, and said changes included the "axing of the entire business development part of the company" except for a handful of country heads (http://gigaom.com/2006/11/29/skype-fires).

Malik reported that there has been a steady exodus of senior executives "in what has been described as the ebay-i-zation of the company" and that he has heard some "sparse rumors of discord between the old timers and the eBay crowd."

If so, that would fit in with what happened at PayPal after eBay acquired it in 2002. In his book, "The PayPal Wars," Eric Jackson talks about the culture clash between eBay and PayPal, comparing PayPal's fast paced "email-centric" way of getting things done and its entrepreneurial culture to eBay's management through "Byzantine meeting protocols." He attributed some of the conflict due to a generation gap. As eBay took control over the acquisition and instilled its culture upon PayPal, there was an "exodus of talent" from PayPal, Jackson recounts.

eBay also planted its own executives at the top the organization chart of Skype, which is also an entrepreneurial company. In a recent article in the International Herald Tribune, writer Kevin J. O'Brien addresses the point. "Skype had cultivated an image as a renegade "disruptive technology" outside the corporate mainstream, much the same way that MySpace had before its purchase by News Corp. and YouTube before it was bought by Google. Whether mavericks can maintain their mystique and flourish as part of a big company is still a question mark" (http://www.iht.com/articles/2006/11/12/business/skype.php).

However, in the Epilogue to Eric Jackson's book he says, "In spite of the mass exodus of talented personnel from PayPal, the combination of eBay and Paypal seems to have energized the short-run financial results of both companies. Revenue from PayPal and eBay soared in the quarters following the merger, thanks to an increase in PayPal's auction volume cause by its integration, which likewise sped up inventory turnover on eBay as money moved much faster. This mutual acceleration strengthened the hands of both the auction giant and its new payment subsidiary."

There may be synergies between Skype and PayPal, as eBay is wont to say, but synergies between Skype and eBay.com are slow, at best (http://auctionbytes.com/cab/abn/y06/m11/i27/s02).

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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