Northzone VC Paul Murphy: why the best startups are 'bought not sold'


Microsoft’s acquisition of Skype was one among its largest acquisitions of the previous decade, and for Paul Murphy, who labored on the deal, it was an indication of the very best practices for a enterprise.

The $8.5 billion acquisition took place as a part of an irreconcilable second for Microsoft. Regardless of being one of many largest firms on the planet, with billions on its steadiness sheet and hundreds of workers, it couldn’t create a product pretty much as good or profitable as Skype, forcing the acquisition.

This was a lightbulb second for Murphy who spent eight years at Microsoft and is now a basic associate at Stockholm-headquartered VC fund Northzone.

“It taught me that the very best firms are purchased, not bought,” he informed Enterprise Insider in an interview. “They’d a enterprise mannequin that could not be replicated, even by Microsoft, and I take the identical method to investing, I need to spend money on firms which might be one among a sort.”

Murphy served as chief of workers to Kurt DelBene, president of Microsoft Workplace, on the time of the Skype deal. He created presentation slides, speeches, and analyses to assist get the deal signed off by the board and sat in on high-level conferences as a part of the acquisition.

Microsoft CEO Satya Nadella.
Drew Angerer/Getty Photos

Skype had a longtime buyer base, good consumer expertise, nice software program and a robust software program staff which made it a necessary buy for Microsoft — even at one thing of a premium. The identical will be mentioned of Spotify, based on Murphy, which went public final 12 months having basically modified the music business.

The corporate was a part of Northzone’s portfolio till 2018 and now serves for example of a enterprise mannequin that refused to repeat others to succeed. Everybody from Apple to Jay-Z’s Tidal has now tried to maneuver into the streaming market as shoppers transfer away from proudly owning music.

That disruption and bold considering is vital for Murphy, who was previously CEO and cofounder of video games firm Dots. “I got here to spend money on Europe to work with loopy bold founders who need to construct firms which might be going to steer globally,” Murphy mentioned.

He says that his funding in Berlin-based electrical scooter agency Tier is an effective instance of a enterprise which takes the proper of threat.

“These guys are a kind of firms the place you are still taking a leap of religion, however they’ve all the things they should succeed,” Murphy added. “As an alternative of attempting to make just some cities worthwhile, they’re taking the riskier method, competing with incumbents and beating them by focussing on unit economics and execution, aiming for a world management place.”



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