One of the few entrepreneurs to walk away wealthy from the dot com era is now in talks with VoIP provider Skype about a possible deal that could see the company escape a current legal battle regarding the licensing of its core technology.
As reported in TechCrunch, Skype is currently discussing the acquisition of VoIP start-up Gizmo5 for about $US50 million with its founder and chief executive Michael Robertson.
Robertson, who originally started the company in 2003, is an experienced dot com entrepreneur.
He set up the original mp3.com in 1997, a site which allowed users to listen to music from major publishers for free. The site was sued by major record labels, including the Record Industry Association of America, in one of the first outcries over internet music piracy.
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The site went public during July 1999, and raised $US344 million despite only recording revenue of $US666,000 and a loss of $US1.4 million. It was eventually acquired by Vivendi Universal for $US385 million, with Robertson personally pocketing a reported $US103 million.
He admitted in 2003 the deal made him “wealthy”.
Robertson then went on to start an OS technology company called Lindows, along with downloadable music site mp3tunes.com and software development company Ajax 13.
Gizmo5 could save Skype from potentially shutting down. The company is currently involved in a court battle against software developer Joltid, which developed the technology responsible for making Skype operate properly.
When eBay acquired Skype in 2005, it did not acquire the software, and now Joltid founder’s are pulling the licensing agreement.
Skype, which was sold early last month to a group of private investors, admitted in July it was developing new software in order to avoid being stripped of its core technology.
If it does not win the legal battle, or create similar technology, it could be forced to shut down and abandon its millions of users.
While the company has reportedly been working on developing technology themselves, hiring several VoIP experts, the project is not progressing as quickly as expected. It is reported that acquiring Gizmo5 would give Skype an opportunity to lose the court battle but continue operating its popular software.
Gizmo5, with only six million users, is not in competition with Skype, but an acquisition could see the company obtain a number of engineers and developers familiar with its own operations.