Scott Durchslag joined Skype last week (June 30) as chief operating officer, reporting to President, Josh Silverman. I caught up with him Monday while he was in Luxembourg for a meeting of Skype’s leadership.
I first met Scott a few years ago when he was an executive at Motorola, the mobile phone pioneer based in suburban Chicago, and I was a tech columnist at the Chicago Sun-Times.
He made a name at Moto, having led a turnaround of the company’s South Asia business, where his team doubled revenues to billion. As Chief Strategy officer who architected the successful 2002 turnaround strategy, the RAZR phone was launched which became the best-selling mobile phone in history, helping double Moto’s market share to 24 percent. Scott was also the force behind Motorola’s shift away from proprietary software and toward consumer experience-based designs.
The self-described “consumer product guy” was involved in major deals with such partners as Kodak, Microsoft and Google.
The 42-year-old Chicago area native, who has an MBA from Harvard, left Motorola about a year ago, soon after the company lost Mobile Devices President Ron Garriques to Dell.
He laughed when I asked him whether war-torn Yugoslavia, where he was a freelance journalist, or Schaumburg (Motorola’s headquarters) was more dangerous. He wisely kept his counsel.
He has been busy in the past year with some private equity deals and the birth of his second child.
He shared some thoughts about the Skype opportunity and where it’s headed.
Howard Wolinsky: What message do you have for Skype customers or potential customers?
Scott Durchslag: For those who are currently customers, the message is: We are so thrilled that there are millions of people who love Skype and we want to thank each and every one of you and continue to delight you. For some of our customers who would like more help from Skype, we hear you and watch us respond. There are clearly some things we need to do to be more responsive to the customers who are having problems, in ways that they find helpful.
And to people who are not yet customers, the message is: “This is an incredibly easy, high-quality way to connect with friends and family. Just give it a try, and be amazed by the magic of video communications and the new features that make Skype 4.0 easier than ever to use.”
We find that when people try it, just once, even as simple as a SkypeIn or SkypeOut call, jaws drop. You can just see the wonder in somebody’s eyes.
There is a third group. People who tried Skype sometime in the past and aren’t using it now. For them, I would say: “Give us another try. And see what you can do now and how far we have come. Because it’s magic. It really is magic.”
HW: Why did you decide to join Skype?
SD: Four things that got me incredibly excited.
The first thing is I got to just say the team at Skype is a remarkable and I’m not sure this extraordinary success story is fully understood. The way I looked at it, across different internet technologies, that I follow closely, it’s been the fastest growing internet technology company of all time. I think that it is incredibly well-positioned given some changes that are happening in the world to be a major leader in the internet economy. For a four-year-old business, it has grown rapidly not only in terms of revenues, but it’s quite profitable and nearly 1 billion minutes of calls have been made. And they have got this user base of 309 million people in almost every country around the world.
Moreover, it is intrinsically viral so that you can take advantage of new subscribers as they come in to be able to get them to connect to their friends and family. It helps the business have a growth trajectory that is truly unique.
An incredible amount of credit is due to the innovation behind the technology, the way they architected it with peer-to-peer to deliver the quality of the experience. Those were some of the core things that got me incredibly passionate about the product. I have been using Skype since the early days really.
When I was traveling with Motorola, this was my way of keeping in touch with my family. We could have a virtual dinner. It’s something that made a difference in my life. All I needed was a connection to the internet, and I could stay connected to my family.
That’s a very powerful thing.
The second thing is I look at the world today and you’ve got these incredible issues with rising gas prices, all this tremendous concern about global warming and carbon emissions. Skype is a green product. There is a paradigm shift that is happening. It used to be that if I couldn’t go to a meeting in person and have to dial in for a conference call or video conference, you’d apologize for not being able to be there in person.
I think we are reaching a tipping point. Soon, you’ll be apologizing for turning up in person. The numbers of pounds of carbon emissions that you personally generate by virtue of getting on a plane, to say nothing of the cost of the fuel to get you there, is making it such that these kinds of virtual connections mean that if there isn’t a really, really good reason to be there, Skype is probably the right way for people to connect. To that extent, it’s quite recession resistant. This a great way for people to take a dent out of their communications cost without having to make any kind of sacrifice on quality. The new video that we featured on the 4.0 Beta allows you do things that you cannot do any other way. It’s rare that you can find a product that can both do well as a business and also do good in the world. I cannot imagine a better way to spend my waking hours every day.
This company has a real mission to make the world a better place. It applies at the individual level of connecting families and friends as well as businesses, as well as at the global level that we’re talking about here in terms of the environment and family budgets and pocketbooks. That’s a rare combination of things coming together at one time.
The third thing is, if I put my technology hat back on, is it’s clear across mobile, and across fixed line, that there is a major paradigm shift happening in communications. It’s all about software. It’s not about the hardware anymore. Take it from me, it’s very difficult for a hardware company to become a software company. Software owns the future in communications.
Software has always been at the heart of what makes Skype great since the very beginning. Skype delivers the communications applications better than anyone else. It totally leverages these trends in communications. And that’s exciting. You want to be in a place where the core competencies of the company you are joining is where the markets are heading towards, not where it is running away from.
The fourth point is the economic version of the third point. If you look at Skype, it’s telecom revenue potential has been hardly been tapped. Telecom as an industry is a .2 trillion industry. Over the last 40 years, it has consistently been just about 2 percent of global household income. The question is: Who is coming to capture that share of the wallet that is being spent around the world.
Because of the shift toward IP (Internet Protocol) on the landline side and because of the shift toward software on the mobile side, you can start to think about having a suite of Skype products available on different types of devices so that Skype is available everywhere consumers want to communicate to capture that share. From the desktop, to the laptop, to Mobile Internet Devices, to Mobile phones, Skype can be there for you, your family, your friends, your customers, your employees, and your partners.
Once your community of friends and family and business acquaintances are all on Skype, you’ve got that client telling you what everybody’s presence is. The whole world is only one click away, and the fabric connecting us is made all the stronger.
HW: What would you tell the developer community?
SD: We want to be proactive to reach out to developers and we really want to be thoughtful as we look at taking Skype to the next level, about how do we create an innovative and successful ecosystem with those developers. If there is one thing I have learned about developers from my experience in mobile, it’s that they are at the absolute cutting edge of what can be done. Some of things we never think of are invented by some young developer trying to create cool things for himself and his friends. You really want to be able to make it as easy as possible and as economically rewarding as possible for those folks to be innovating around your product. We’ll be looking for new ways to be able to reach out to developers to unleash the power of that innovation.
HW: What is your message for Skype employees?
SD: I am excited at the opportunity to work with them. In the process of interviewing, I got to meet a lot of them. One of the most enduring impressions that was made on me was the unbelievable passion, energy and capability the employees have. It’s one of the most precious assets of Skype.
You’ve got to give due credit to the innovation created by the founders and what they did in terms of building an amazing technology and due credit to the employees who got it out there and built this incredible user community of over 300 million people.
To me, the challenge is: How can I make an impact on them and on the business? How do we scale to keep this on this incredible growth trajectory and keep it a fun, innovative place to work?
You’ve got to know where you’ve come from and what’s really great about it is to have that core strength. At that same time, you need to keep growing into a bigger and bigger business. In consumer technology, you either grow or you die.
HW: Where does Skype go next?
SD: Skype in terms of its size is in a real sweet spot with about 0 million a year in revenues. It’s not so small that you are so constrained in resources that it’s hard to matter or even get people to call you back. And it’s not so big that you spend all of your time internally focused fighting battles. Skype is ideally well-positioned if we keep it focused on developing and delivering simple, rich, utterly compelling experiences.
We will succeed or fail based on the decisions that we make now in terms of the culture that we want to build, the way the we remain true to the Skype brand while becoming great marketers, and how we create a really agile, innovative organization that can stay at this leading edge of where consumer technology really touches peoples lives. We need to build processes to scale and be able to respond to this massive number of consumers and business users. Those are the kinds of things that will kind of make or break the next level of success. It is both ours to win and ours to lose if we let ourselves get distracted.
You can get only so far from just pure product innovation. We need to take innovation into the organization. We need to take innovation into marketing. We need to take innovation into the channels. We need to take innovation into the platform and how we work with developers and build an ecosystem.
These are all major factors in figuring out how do we connect the next couple billion people in the world who have never had an experience with Skype. At the end of the day, that’s a mission that’s worth getting up in the morning to go do.
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