The folks who brought you Kazaa have a new hit called Skype—and a plan to set phone calls free. If the telcos want to fight back, they’ll have to find them first.

Near the center of the walled medieval district of Estonia’s capital, Tallinn, sits the NoKu bar. It’s almost impossible to find, on a cobblestone street behind a pair of old, unmarked wooden doors that unlock only with a magnetic keycard, and up a set of rickety stairs. In Estonian, “NoKu” is an acronym for “young culture”; the private club is full of twentysomethings in jeans, drinking local Saku Original beer to rock music. The bar’s name has another meaning: Read as one word, it’s slang for “penis.” Both the hidden nature and the cheeky attitude of the place fit perfectly with the company I’m here to meet.

Almost a dozen computer programmers and engineers are gathered around a large wooden table in the back of the bar on this bitterly cold mid-December night. They work for a startup called Skype, which produces software that allows people to make free, incredibly clear voice calls from their PC to any other PC in the world. “We’re building the next great communications platform,” declares Andreas Sjoelund, a product manager who has shuttled to Estonia from his native Sweden. Next to him is white-bearded Kaido Karuer, the eldest of the group at 34. The rest include a few Estonians straight out of college and a dark-haired Russian who, when Estonia declared independence in 1991, chose not to ally himself with either Russia or Estonia and is now stateless. Just about all the Skypers are in their mid-20s and perfectly fluent in English. And every one of them is confident that what they’re doing will make telephone companies irrelevant.

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