Magazine

Niklas Zennstr?m


With his earnest face and smooth business talk, Niklas Zennstr?m doesn't come across as a rulebreaker. But this 39-year-old Swedish entrepreneur makes a habit of challenging the old order with what he calls "radically disruptive" technology ventures. In the 1990s he helped build Europe's leading alternative phone company, Sweden-based Tele2, which has grabbed 28 million customers from incumbent carriers in 24 countries across the Continent. Five years ago he and Danish business partner Janus Friis sent the recording industry into fits with KaZaA, a free peer-to-peer music download service.

Now Zennstr?m has done it again, and his new business could be the most disruptive yet. He and Friis have adapted the decentralized technology used in KaZaA for phone calls and launched a company called Skype Technologies that offers free talk from one PC to another over the Internet. Using it is as simple as downloading a small piece of free Skype software onto your PC and clicking on the name of another Skype user you want to reach. You can then gab away, enjoying crystal-clear sound quality. "I can stay in touch with my customers all the time," says Bertrand Fauroux, a Paris-based personal trainer who spends half his time in Los Angeles and uses Skype to stay in touch with friends in both cities.

It's no exaggeration to say the telecom industry will never be the same. Since its launch 18 months ago, Skype has attracted a staggering 37 million users -- more than Tele2 has scored in 20 years -- who have collectively spent 8.5 billion minutes talking for free over the Net. "Skype has blazed a new trail," says Ian Cox, an analyst with Juniper Research Ltd. in Basingstoke, England. The company's blazing success has also reinforced Europe's longstanding role in pioneering telecom innovation.

Zennstr?m isn't just a spoiler for the old guard. He aims to build a profitable business by enticing Skype users to sign up for paid features such as voice mail, conferencing, and calls to and from regular phones. His SkypeOut service, which lets PC users call a non-Skype user for about 2 cents per minute, has already attracted 1.3 million customers who buy talk time up front in $13 increments. Skype has just launched online voice mail for $19 a year and a service called SkypeIn that lets customers receive inbound calls on their PCs from a conventional phone for $39 a year. "The more people use Skype, the more they recommend it to friends and family," Zennstr?m says. "We are growing exponentially."

Zennstr?m wasn't born a revolutionary. He describes himself as "a well-behaved child" who studied hard while growing up in Stockholm and Uppsala. Degrees in business and computer science turned him on to technology. The three-year gig at Tele2 taught Zennstr?m a lot about telecom -- and how vulnerable the Establishment was. Eighteen months ago, he says, those telecom giants saw Skype as toy technology. Now they're scrambling to roll out their own Internet calling schemes. Zennstr?m the radical has struck again.

By Andy Reinhardt


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