Niklas Zennstrom: “Peer-To-Peer Is Not Disruptive Today”

Last week at Disrupt Beijing, Sarah Lacy interviewed Skype co-founder and Atomico investor Niklas Zennstrom. (You can watch the full fireside chat in the video above.) Zennstrom was a pioneer in building a series of startups on peer-to-peer technology (Skype, Kazaaa, Joost), but towards the end of the interview he says, “Peer to peer is not disruptive today.”  Sometimes it makes sense to use it, sometimes it doesn’t.  Many networks are hybrid.  But what was originally a competitive advantage and a way to get around bandwidth bottlenecks is no longer so crucial.  Zennstrom learned that with Joost when broadband costs plummeted and made it more economical to just stream videos directly to users.

The other reason Joost failed was because “the incumbents did a fantastic job” of competing with Hulu.  Joost never could get the best content for its third-party network.

Skype was always big in China, and he explains how Skype cracked the market.  He also talks about how the venture business needs to change on a global basis.  “The market has changed from an investor’s market to an entrepreneur’s market,” he says, recalling back when he was pitching Skype to VCs and nobody really getting it, especially in Europe.  “What needs to change is that traditional venture capital investors are very local,” he says, “but the tech industry is  a global industry today.  You tend to see companies become global leaders or regional losers.”  It is very binary.