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How to innovate in zeros | Jonas Kjellberg on how Skype eliminated costs and took the company to a $2.6B exit – in just two years

2018-04-25 | 🔗

If you’re familiar with Tony’s renowned business seminar - Business Mastery, then you know it’s nothing like your average business growth conference. Business Mastery is 5-day immersive seminar where you go to build a platform for explosive growth. Tony takes you on a deep dive into the business growth strategies, systems and resources that you need to take your business to the next level. You learn the innovative strategies that industry leaders like Apple, Zappos and Facebook have used to build massive success. You address the critical factors impacting your own business and learn how you can refocus and realign with a winning business strategy and psychology to compete and innovate in any economy. Because when it comes to business, it shouldn’t be about surviving, it should be about thriving – having absolute mastery, ownership of purpose, and fulfillment like no other.

In this episodes, we’re taking you to a special segment within Business Mastery, where Tony holds a panel discussion with leaders behind today’s fastest growing companies. And this time, you’re going to hear from Jonas Kjellberg: serial entrepreneur, author, investor and most notably – the co-creator of Skype.

Jonas is the ultimate game changer. He’s driven by a deep-seeded passion to shake up the status quo. While others may focus on changing one variable at a time, Jonas has his sights set on changing as many variables as possible. This mindset has led him to take a number of risks and make a lot of big bets – some of which failed spectacularly, and some of which became massive successes like Skype.

Tony and Jonas talk about the evolution of Skype, and how it became one of the internet’s most revolutionary businesses, disrupting the telecommunications sector in a way no one saw coming. Jonas reveals what he has learned from his past failures, and the key lessons he’s taken with him when it comes to eliminating costs, customer acquisition, why every company should be ready to embrace change and pivot on a dime.

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
If you're listening to this talk cast, it means you're ready, no more than ready to have a major breakthrough in your business, your hungry for change and your hungry for growth, and that's why you're feeding her mind right now with all this valuable information, but to drive those changes to be really smart about what you're doing and to make the right choices before you take massive action, you need help from someone who's been there. Someone isn't a coach you through it. Even just someone to get. You started on your journey, that's why twenty robins is offering free one to one business strategy session from one of his top business coaches: six hundred dollar value completely free, no strings attached! That's right! If you're listening right now, you can go to Tony Robin Stockholm, Slash CEO and signed up for a free session with a member of trains team whose help business owners, like yourself
we're coming obstacles and set them on the path of success. Everyone welcomes the tuna Robins podcast, I'm your host any york if you're familiar with Tony's were now and business seminar, business mastery. You know it's nothing like your average business growth conference business. Mastery is a five day. Immersive Sumner, where you go to build a platform for explosive growth. In these next few episodes were taking you to a special segment within business. Mastery were Tony holds up hill discussion with the leaders behind today's fastest growing companies. Today, you're going to hear from Yonah Coburg he's a serial entrepreneur, author investor and most notably the creator of Skype unit.
Is a very special individual. He somebody who's driven by a deep seated passion to completely shake up the status quo, while others might focus on changing one variable at a time. Units has his sight set unchanging. As many variables as possible? It's this mindset that led him to take a number of risks and make a lot of big bets, some of which failed spectacularly, some of which became massive successes, like Skype. Tony union us talk about the evolution of Skype, how it became one of the internet must revolutionary businesses disrupting the entire telecommunication sector in a way that no one saw coming. Your nose reveals what he's learned from his past failures and the key lessons he's taken with him when it comes to eliminating costs, customer acquisition and why every company should be ready to embrace change and put it on a dime.
Where'd you please deliberately woke up to tourists. Cowper glens. Thank you here. This is exciting for me personally, as I'm such a fan of using entrepreneur, because while you are known for Skype, you're, just a serial lots of northern just keeps ripping it open every time anybody get lucky, maybe and maybe get lucky enough to get home run, but I don't know that lux enough, even for that, but the dude, the number of times you ve done it's amazing. So you for other people. I don't know you'd be Credit Campos Mobile, and you saw that the vote You did the player player- I I guess a social sharing type, a site which are sold the Yahoo he built Icloud and saw that the apple along Skype just as little thing on the side. So first, given for what is accomplishes unbelievable and no
what is your secret sauce? How is it you're able to consistently find ways to produce companies that touch people around the world, and I think I m not afraid of losing, and I want to change the game of the industry. I think No, I look at you, know, industries that make a lot of money, and I wake up that morning and say how can I really got their business beside I'll take profits for them because they are their hierarchy. They do their things in any way in the customer, maybe want something different Austin. I make a mistake and things Those sideways sinner, slight knew play your eye or can it works? You know all companies that we're sideways. So if you ever have a company that go sideways CALL Yahoo, because with
A persuasive they buy everything off revolving around, thereby flags problem. You know the viral videos, you tell me the thinking that went behind Skype and how you came about because came about making that Ireland will. I think you know I just be important, biggest failure in life. I was the CEO company called like us and then another little. Company sewed up in Palo Alto called Google. I was a bummer so that can work out. So I met some of my old friends and expressing your nose. They just in all, also were had another company called Cosette. That also in sideways they had a technology which was a peer to peer sharing technologies. We start another company called jolted. No one really cared about that so we tabled at it and we start another company called Skype, which was, moreover, bull by work
wifi. So we built this phone client, so you could call and it didn't really work out either so, but after it it's in your rethinking the business model and taking away in all the costs. We actually got it moving and we were just amazed when we sold it. We were still thinking. You know that Microsoft re well will come, kill us you saw that wasn't doesn't reason, scope came out. Did you so in two thousand five July, two thousand and five year to ten years later, results that for two point, six billion a number of years little level, and there it was bought by Microsoft later for over eight billion. So you be were too happy about the acquisition, so they sold it with a good premium in a bit later. Not bad for them. So so tell me when you look at eggs worldlings, I saw in some of the interviews with But I was fascinated by is that you have
philosophy of of basically innovating and zeros yeah, we'll use.
Lights or here, but I think one of the main things for you as an entrepreneurs and unjust. I think you are you're amazing, but I think one of the key things for me is to really challenge the cost side, because in a lot of business is there is a lot of costs and it's not about making things free is basically taking wage costs. I can give you an example for Skype, normal tell call they would invest in a lot of infrastructure. We sought. Ok, how could you get the customer to pay for it? So he said: okay, you already paid for your internet, so we found our first Cyril second thing: telco company. They need a lot of switches, so we said the interesting thing here is that the cpu power in these switches was actually the same as in your personal computer. So he said why don't we let your personal computer call the coals,
found another Cyril, so we can have cost for that. Second thing, third thing is to be: do good quality for Skype. You need a lot of Cisco servers. I don't know how many here actually use Skype. Wow, that's cool First, we want how many use Skype before Microsoft up the product as a lot of people as well. So can you remember the time when you use your computer? You left it on came back three hours later, you computer with super hot and Microsoft, and the processor was going a hundred percent. Do you remember it because if that's the case, your computer had just become a supernova and all the traffic was roused did through your computer, so we didn't have costs for the network because we thought there's a lot of computers connected.
The internet, but not being used, so we thought you know sharing is carrying out a lot of government buildings out of there. There is a lot of entrepreneurs, you know whatever big companies and we just use their your computer at night and trust or did all the calls through. So you don't have any network cost same thing with customer service. I knew running Telecles customer service could stand for you know twenty percent of the costs. The challenge here is my problem was often when I talk to customer service. I was more pissed after I condemn before so I came to the conclusion you know: there's a negative delta by having a customer, Sir So we said, let's make it impossible to call Skype and we found another Cyril there's a side effect as well, because you know the tax authorities don't know where
go either, but that's a second love. Where were you Also do it the other way, though some times if you care cause cuts euros yeah when you try to regard it as it gives us an example that I think apple has done a really really well, instead of just coming out with a new computer, you fall near think: ok, normal computer is three hundred dollars. How can we sellers for three thousand, because that comes back to their perspective or what Delights, yes, is not about your that's another key areas and also about yes is, basically you need to build a best product in the world and not just do it a little bit better but really rethink what you wanted to do. What's that delight, what takes your product beyond competition So you can actually go home to moral and add, is zero to your price tag and people still loved and by a basic as you're doing as well, thank you very much for giving me an example where you ve done that with one of your companies I haven't really rock the boat yet so, but I'm still,
Did your mother costs why things Falander, which is the equivalent of samples? We need real, lower the price there, but we thought you know the whole cost structure again or call tell me when, when you are building Skype, While some of the biggest challenges ran with early on and how did you guys all them, we had no money, we couldn't mortgage our houses anymore. We were fighting the biggest telco industry in the world. I think we never thought we would ever get through
you know it's like just another, we'll just get by another day could see where this takes us. So I think that the challenges Skype as well as the story- that's very seldom told, is how do you get customers same thing there we can afford marketing. So we had no close. We needed to innovate and customer question, so we thought what happens if we do a small pop up button after you done it good call, and if you click that, but if you remember that we went in since it was a download Google Chrome, we open your inbox and we sent a male to every one of your contact. Saying hi, I just started using Skype its a great service. I would be happy to call for free with you and we sent the lot of males while the viral factors must have an incredible, Do you think we were like? I didn't? You have like a million users the first month now to quite nearly three years to get twenty thousand on for too long.
Renders the good morning did till we look that's because again, decent. We may end up on stage and told everyone about that Norway taller product was Ireland, brilliant. We had neither joining the bottom. Anyone says zestful. We actually had to cancel it, but that's just another story: how you need to innovate and customary with sufficient, because if you want growth, that's where you need to start so, basically taking away costs of your business, rethinking call structure innovating in cereals and then basically thinking beyond of your those are my three things are pretty great grief rings now also talk about this idea of friction free storytelling. We get her a moment about that. Well, I I I today I work for the Boston, consulting group and I only have one question when I talk to the boards of seals and is a very simple question is basically what are you selling health needs? you could get a straight answer from these two are rarely if ever very rarely is like. Well, you know, Mister Milburgh is very complex.
Do we have with fifty thousand users and their blubber business units, but in the end most successful companies have defined a fiction free storytelling and there are very good defining it in. I often use the story of Harley Davidson and they they struggle to bed until they decided. What we sell is the ability for forty three year old accountant to dressed in black leather ride through small towns, and our people be afraid of him,
it's not going from aid, be motorcycles. Baby now lost thirty minutes weak and that's what they are selling rip. You don't get that's very hard because most of the staff think you're selling motorcycles here same thing was h m. You know they define, then they invented the whole. The fashion industry. By saying you know, we're gonna be fashioned company with its euro less on the price tag, if Prada has stores and Fifth avenue so to weave good, she uses supermodel. So do we and but we're gonna have a sea or less than the price tag, and then everybody gets it because I think you know you talked about tee more of your own. If your team doesn't know what you're selling, how should they know what to give to their customers? So it's very simple perspective. So
Ask yourself: what are you selling, what its failure mean? Dear, I think I hate failures. Let's be honest about that. There's a lot of conferences, arable we gonna fail. I hate figured I'd, feel it happens. To me all the time, but I like taking a risk and if you take risks you end up in the wrong places, is like any ball game. But if you don't take risks, you don't get anywhere. So for me it's it's, not the failure, because I hated its painful of losing. But for me it's it's the risk and encouraging of doing something. No one is done before being that game, changer that stronger for me than being in a performer, so on a day to day basis, so the innovation that creativity, the pudding, something out there that no one else has yeah trying that in trying to play without stiffened rules, often again,
room, but that for me, is, is not failure and I think sometimes failure is defined by if we made a profit financially or not. For me, it's more about taking a journey into the unknown, and I like doing that and then some of my friends came our EU pistol. We alot of money. They are that went to how I was quite happy with it. You know my wife was intense and the community round, but I thought I believed in this, but it didn't work. Ok back in those days. When you add nothing, though, when you didn't have enough, even the american mortgage Housing and like Skype days? How did you get yourself to take those rescue. You always a risk takers. Many people, that's their concern, that's their fear thing. You know you think too much and I ve always. You know my mother was devastated. When I went from a big corporate job, you know you have kids, you can't you start up again? But for me you know, I have one life and I want to live it and I want to do it with the people enjoy working with and for me
What was the around marketing their view? You seem to activate or at the way the people who use your services, there seems to be a constant theme. But why do you look at marketing is marketing to you in the modern age, and how do you do it most effectively? I think marketing or I would call a customer acquisition- is innovating. Custom acquisition is mostly one of the most important keys to drive, success and hears. Saying, there's no books. There is no competition that is going to tell you how they are doing it, because it's off the very easy to copies, like a combination of a law. Yes, if you know it's great, you don't like super frustrating because he can't get the door open so for me
innovating in custom acquisition, rethinking how you're doing that and taking a very, very mathematical approach on it is like a hundred, not gonna doors. Ten talks, one! Yes, how keen multiply that an understanding, your thumb all of engagement and they also Madame business to business? It can't be done. Of course it can't be done. You can just break it down the super, an engineering about it and understand how do you drive customers and in a positive way, because I think a lot of people have taken marketing taken hostage by bad marketing S. Good marketing is? We, I mean passionate entrepreneurs. There's super proud to tell about their product there, just confused that no one else is using their products
I think that's good marketing. We put a lot of passion, editing. You have one good message and then it's more: how do you do that over and over again, so that your customers has a smiling face when they get a mail or message from you for your you become wanted communicator as a button. Unwanted communicator tell me what's marketing islands, where you didn't solve it at first irresolute, whether you failed and then you finally figured it out, can you give us an example, as he Skype is a very very good example, because the problem here is its network effect? If everyone has Skype, His great, in all know everyone has. Its source is good. There's a problem is when no one has its in the inverted effect. Yes, so you need to help that you know you know to create your own locked. How do you get that done and I think in that case we found a way of working with email marketing, because we sent me from your inbox and some people also dates in also
and the service was great. The norm really go pissed saw you know we worked out. We worked a lot with tv, but in many cases have not been able to unlock custom acquisition because of fallen back to the traditional ways of doing marketing. In that become super expensive. You get caught in Google's financial trap trap people out there in the world. There are often them thinking about that. There's one silver bullet that you know. If you there is not you know. You need to have a lot of things going on constantly measuring things, so I don't think Parthenon as opposed to a single legs, two or three ways of marketing, and if you do that, maybe you find in one or two things that really drives from acquisition. But for me that is sometimes the hardest challenge. Tom looked custom acquisition for any business. Do you always
businesses in advance about their ability to scale we're we're too scaling come in the temple of your evaluation of a business opportunity. My business of that comes into these three things. First, of course I need to feel that these two great product and it can change the world. Second, I think I look at the cost side. If you haven't innovated in cereals, you don't have a cost advantage. The beauty with innovating in cereals is old so that you can often scale exponentially eel here that from European Bee here from Ebay, Facebook, Google, because if you really thought your cost structure, you can grow much faster right, so so that super important that element of you can call competitive advantage. You can call it in the text book and then the third thing is basically, how have you unlocked cost
acquisition and a new innovative way where the customers are happy with messaging? Tell me about Icloud. What was the concept for that originally? Did you originally designed to sell the somebody like apple or or european, designing as accompanied keep no yeah? Of course we decided to teach you keep it. No one really believed in cloud computing and cloud storage. At that point in time I thought you know this is the future. You know why running around with a heart is, you know, seems stupid. Now, it's common, but at that point in time it wasn't. We started built an operating system that you can actually use wherever you were good idea, but it only took really often India and other places where people use an internet cafe, and then we move. We got a lot of patents and we were super happy about general going going forward with it and now one day, Apple called who said you know like to buy you guys we're like our round a good.
RO the linen like now, and this is our checkbook pretty please we should grant, could give us? Not only can we take those patents do real leader thing. What are they, therefore, that I and all with Apple there like super cool whereby but planting I couldn't tell you because those gonna calls up. What's this: three one final question or bring up the next people. What what industry is right? disruption. Now, in your mind, what's an industry that are you? Maybe considering where you're looking at that, you think I'd, really, you could add value and disrupt the current. I think yet, I think food, the food industry in all its is clearly run by some small local mystic. Big player. So I think rethinking that perspective is gonna, be super important. I think health care to some extent is also broken.
And the numb and playing around with in all, basically also, how do you work with teams unity here we are working with white boards and how do you work with your teams? I think that it is a topic that came up and I'm I'm invest that as well, you know, how do you interact with human beings? Basically, you been teaching, but how could you do that in a more efficiently so those are my three big disrupts, but again you know I'm off the wrong, so don't I got no one's worry about that. If you were to give one these, advice to not nor above the most important rights that was either given to you are the most important vice you'd give today. What would it be a commitment you know get out of bed, and you know look yourself in the mirror and say this is going to be the best day of my life put up on US are you go there and he tried to change the world because doing that every day will take you faces and two pivots don't stay too long within the existing idea, bring your friends in you know. If the customers don't love it, there is a problem tried to read.
Conciliating, oh dont, be afraid of moving your business beyond, because good businesses is constantly changing. That's so you don't get stuck, Your idea. Is spent four years drain, all your cash don't get there. You see it as a failure, but constantly tried to iterated move on. The beauty here is that by doing so, you get to places where you wouldn't be going and there you can make the other solutions that will may be unlocked. Other things too, had you haven't seen sense like sunsets, for starters, lays down the attorney rabbits pack cast his directed and hosted by Tony Robins in New York material director and occasional host. Our executive producer is carry some Jimmy carve a home in Asia. Devoting our digital editors special thanks to marry bucket and Diana cock for their creative review.
Transcript generated on 2020-04-04.