EBAY BUYS SKYPE FOR $2.6 BILLION... DFJ KICKING ASS

Wow. It's pricey and I'm not sure it's worth it, but eBay really wanted to spice up their offerings and holdings of new technologies, especially since their advance technology director bolted for Google a couple months ago. We'll see how this marriage turns out.

Draper Fisher Jurvetson is kicking ass this year being the lead investors in Baidu and Skype.

Congratulations to Niklas Zennström and Janus Friis! They definitely deserve this especially since they never realized the full fruits from KaZaA, which is still the world’s most downloaded Internet software with more than 370 millions downloads. I believe they got only $1 million when they exited since the RIAA was hot on their tails. If they were able to build it out as they wanted to, I'm sure it would have been a similar success as Skype. These guys just know how to create viral products. Amazing. Also here's my first post on Skype back in February 2004 when I first learned about them through Bill Gurley. An article that details this deal:

eBay has agreed to buy the fast-growing Internet start-up Skype in a move to add free Web telephone calls to its online auctions and fuel growth, the companies confirmed Monday.

The auctioneer said it plans to pay $1.3 billion in cash and $1.3 billion in stock for the Web communications company. It would make a further payout of up to $1.5 billion by 2008 or 2009 if financial targets are met, giving the deal a total value of up to $4.1 billion, executives of the two companies said.

eBay is renowned for an Internet business model linking millions of buyers and sellers, but its core U.S. market is maturing, slowing to annual growth of between 20 percent and 30 percent a year, compared with 50 percent international growth.

Skype, which said it expects revenue of $60 million this year and more than $200 million in 2006, has raced to the lead in the booming Net telephony market, which is being aggressively targeted by online powerhouses like Yahoo, Google and Microsoft. (full article)

UPDATE: TechCrunch has more on the analyst call by the eBay and Skype teams and a link to the powerpoint eBay used. Of course, Om has his post and some good comments by his readers here and a letter from Niklas and Janus.