I said last week it would be interesting to see how the Skype story about firing executives ahead of the Microsoft acquisition would play out. And this week is proving me right, though in unexpected ways. With the latest developments, the Skype story has turned into a full-blown blogger proxy war. Third party bloggers are making arguments for and against Skype while the main players sit on the sidelines feeding the bloggers ammunition for their cases. What’s most interesting in this is that Skype appears to making no effort to manage the story openly in the mainstream press. Blogger proxy wars aren’t unheard of, but letting that be the only avenue you pursue in managing a situation is unusual and bears watching for lessons.
As a reminder, last week’s story focused on eight executives being let go by Skype ahead of the acquisition. Skype gave little real information about the move. That naturally begged questions that third parties were happy to try and answer, suggesting the motivation was greed on the part of Skype’s owners, the private equity firm Silver Lake Partners. Apparently someone at Skype or Silver Lake wasn’t happy with that story and “unnamed investors” started giving interviews explaining that it wasn’t greed, that the firings were part of a planned restructuring by the CEO. Most notably, this explanation was never delivered by Skype through any official, named sources. Skype opted to let the unnamed spokespeople carry their key message, something most of us would strongly recommend against (and I did last week).
Now, another phase in the story has come out, with a former Skype executive, Yun Lee, who voluntarily left, detailing how vested stock options were yanked back by Silver Lake after he left. He doesn’t argue that they had the right to do that, but he is making the case that it’s sketchy thing to do. His story handily picks up and builds on the “greed” narrative that started last week. Because Skype didn’t actively work to shut down that narrative, it is fertile ground for Lee’s claims and, predictably, his claims are taking hold.
On the heels of last week’s tactics working poorly for Skype, they are, amazingly, following the exact same playbook. Skype’s official spokesperson has again issued a vague statement at the start of the cycle that fails to address the questions and concerns that reasonable people might have. Again, more detailed information about Skype’s point of view is coming out through interviews with “unnamed investors”. And once again, we’re not hearing that more detailed information come from any official, named sources at Skype.
At this point, this somewhat bizarre, disengaged public relations strategy on the part of Skype and Silver Lake has turned this story into a proxy war. There are bloggers/reporters like Sarah Lacey and Henry Blodget who are talking with these unnamed investors and themselves making the case for why Skype acted in a reasonable way. Meanwhile, lining up on the opposite side, you have Michael Arrington and most notably Felix Salmon who has written on this three times in the past two business days and used “evil” in every posting title.
It can be argued that Skype’s approach has succeeded in keeping this story out of the mainstream press generally. Aside from an article last Friday at Bloomberg Businessweek which has Skype’s only official statement, there’s not been much coverage. But it would be a mistake to count that as a clear victory. Damage to reputation doesn’t have to be widespread to be harmful. Felix Salmon’s most recent post on this touches on the impact of this all on Silver Lake’s reputation. While he doesn’t think Silver Lake will suffer, an Investment Banker who Tweets under the handle EpicureanDeal calls out the harm this will have to their reputation within their business community and that could be very bad for Silver Lake.
It remains to be seen how this will sort out. But Skype and Silver Lake’s failure to openly engage on this story means they’re relying on the skill of their blogger proxies and luck for this not to end badly for them. That’s not an approach I would ever recommend. As I said last week: Skype should go out and tell their story openly and engage with the mainstream press who have written about this. That doesn’t preclude arming their blogger proxy allies: it supports it.
UPDATE: Kara Swisher over at AllThingsD has a posting with information from an internal presentation that bolsters some of the arguments in favor of Skype’s and Silver Lake’s position. But, yet again, this appears to be information being passed on background directly to specific bloggers/reporters. There’s still no public statement of the case by a named Skype or Silver Lake spokesperson.