Why did Skype succeed and Joost fail?

2009-12-08

Skype and Joost are interesting companies to compare – they are about as close as you can get to one of those sociological studies that track identical twins who are raised separately. Skype was a spectacular success. Joost never got traction and was shut down. Both were started by Nicklas Zennstrom and Janus Friis, two of the great technology visionaries of our time. Both were big ideas, trying to disrupt giant, slow-moving incumbents.

There are likely multiple reasons for their different outcomes. Joost had day-to-day management that didn’t have much startup experience. The P2P technology that required a download made sense for chat but not for video. The companies were started at different times: Skype when there was far less investment in – and therefore competition among – consumer internet products.

But the really important difference was that Joost’s product had a critical input that depended on a stubborn, backward-thinking industry – video content owners. Whereas Skype could brazenly threaten the industry it sought to disrupt, Joost had to get their blessing. Eventually the content companies licensed some content to Joost, but not nearly enough to make it competitive with cable TV or other new platforms like Hulu and iTunes.

Real life, non-techie users care almost exclusively about “content.” They want to watch American Idol and listen to Jay-Z. They don’t really care how that content is delivered or what platform it’s on. Which is why Joost failed, and why so many video and music-related startups have struggled. Skype, on the other hand, didn’t have significant dependencies on other companies – its content, like its technology, was truly peer to peer.

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