Thought Experiment: What if Facebook, Skype and PayPal Merged?

Many people don’t know that Bostonian William Crapo (Billy) Durant founded General Motors, and if you ever go to the old General Motors Building in Detroit, you will see his initials emblazoned on the coat of arms in the eaves of the building.  Durant was the visionary who crashed together the Buick, Oldsmobile, Chevrolet, and Cadillac companies, just to name a few.  Due to his financial aggressiveness he controlled but then lost GM twice and it was finally taken over by Alfred Sloan, who built it into the world’s most successful enterprise of its day.

Imagine if we had a Billy Durant of bits who could bring together Facebook, Skype and PayPal.  Such an entity would become –  the world’s first self-organized conglomerate.  With 350,000,000 million users in Facebook it would become one of the world’s biggest phone companies overnight, while bringing significant, growing and profitable revenues to Facebook.  (Skype’s 3rd quarter revnue for 2009 was $185 million, just before it was purchased for $2.75 billion by a group of private equity folks lead by Silverlake Partners.)  We all know that friends, even today, want to talk sometimes.  Moreover, Skype is an especially cheap alternative when a person is in a remote country using a cell phone.  When I was recently in Romania, I used Skype to call because it cost $.03/minute when my cell phone was $4.99/minute.  This means that adding Skype would continue to grow Facebook in developing countries very quickly.  Also, as cell phones are more capable – and the Apple iPad becomes a reality, more and more calls will flow over Skype.

PayPal could bring a fantastic engine to provide both real dollars, and the burgeoning market for virtual currencies and gifts.  The digital gift market in Facebook is reported to be $40-50 million dollars and growing rapidly.  PayPal could create both “real” and “virtual” credits, which could be traded among the members of the community.  In addition, if PayPal were willing, they could provide a reasonable reputation management system.  In order to deal with financial fraud, the company has a pretty strong system to determine if someone on the network is legitimate, or not.  This type of risk assessment could become a feature of this new ecosystem in which you could see the reputation value of a person — if they wanted to expose it — as vetted by PayPal.

I believe such a triumvirate could launch a global community and commercial market which would change the way that commerce is done.  Facebook already is becoming the “single sign on” system for new sites because they make it easy for you to “sign on using your Facebook ID”.  Imagine if Skype adds telephone & video conferencing, and PayPal payments and reputation — the sky would be the limit.

I think all businesses have to look carefully at the power of self-organization, because self-organized systems usually work faster because they act more like a market and companies  are more bureacratic than market like in terms of their speed and coordination.  Firms need to be getting experience working with, marketing to, and transacting among these new markets because somewhere out there is today’s W.C. Durant — just waiting to assemble the new, self-scaling organization which will change everything!

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