That’s a unique and in many ways successful business model that indeed many of the most popular companies on the Web are exclusively built on, however, we saw what happened in the Dot-com boom and bust. For a monthly fee that totals around $96 a year per user, the company offers premium support and video chat services. The revenue model is based entirely on up sales. The principal software offering from Skype is called Skype Out, a free video, chat, and VoIP conferencing platform that allow users to make international and local calls with anyone, anytime. Skype’s business model is counter intuitive to the fundamentals of a solid business plan. In other words, if you plan on buying a car from Henry Ford, you’re already expecting to pay X number of dollars before you even approach a salesman. For more than 100 years, companies that go public offer a product or service in exchange for an explicit fee. Let’s be realistic and put Skype’s business model into perspective. The business model is fundamentally flawed. Here are 5 reasons why I won’t be investing in Skype when shares hit the public market: Lest the dot-com bubble just a decade ago, now would be a good time to remind ourselves and other technology investors that relentless growth is not always an indication of a bulletproof opportunity. There were a total of 276 million registered users by just 2007, about 400 million by the end of 2008, and today, Skype has logged an estimated 560 million individual accounts.

Founded in 2003 by the same two Swedish Entrepreneurs behind Kazaa, the peer-to-peer file sharing program, Skype is a software application that allows users to make free phone calls over the Internet, and the growth has been so explosive it could make a Facebook founder’s cheeks blush. The company is the epitome of the successful technology startup. Skype Technologies S.A., a Luxembourg-headquartered packaged software and VoIP software provider headed by former Cisco executive and YouTube board member Tony Bates, filed their ADR prospectus with the SEC in August of 2009 and sparked a flurry of interest from all corners of the investor playing fields.

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