Wall Street Journal editor Julia Angwin’s tell-all book about MySpace is set for official publication on March 17, 2009. We’ve got our hands on a draft of the 268 page book. Some of the more interesting stories are below (you can pre-order it here).
The book, which is really being published a year too late, goes into excruciating detail about the history of MySpace, its founders Chris DeWolfe and Tom Anderson, and others involved in the business. Most of the details are already public knowledge, but there are a handful of facts that I didn’t previously know about. Or mere rumors that Angwin presents as facts.
MySpace is quick to point out that they had no involvement in the book at all. All they’re officially saying is “This book received zero participation, zero access, and zero fact-checking from MySpace.” It’s clear from the tone of the book that Angwin’s sources are primarily or solely people who’ve left the company, many of whom have a bone to pick with MySpace or parent company News Corp.
The first half of the book highlights some of the shady practices of the MySpace founders in the early days. The site launched at 5:37 p.m. on August 15, 2003 on a lark – DeWolfe was looking for a new business to replace revenue from ResponseBase, an advertising company that is alternately described as peddling spyware and spam. The original idea was to copy Friendster but let users create any online persona they chose (Friendster was deleting fake profiles as fast as they could). That freedom, combined with reasonable load times on MySpace (1-2 seconds v. 20 seconds for Friendster), allowed the nascent site to get a foothold that it is yet to relinquish. These days, Friendster has been pushed to Asia and has little U.S. presence.
Tom Anderson’s real age and youthful hacker activities are well documented in the book. Anguin talks about an obsession Anderson had with “an attractive Asian-American in the finance department” that led to a request that Anderson work from home for months. She also says Anderson was involved in an Asian-focused porn site even after MySpace was acquired by News Corp., a potential PR nightmare, but that Rupert Murdoch (CEO) and Peter Chernin (COO) brushed aside concerns and swept the incident under the rug.
Dewolfe is portrayed as a charismatic big picture executive who focused on growth and keeping MySpace in the Hollywood limelight. He made a crucial mistake in 2003 to start MySpace as an internal project for the company he worked for, Intermix, which cost him tens of millions of dollars down the road. But he was able to create significant independence for MySpace and the team within Intermix, including having separate offices in Santa Monica and a separate board of directors. He is portrayed as fiercely independent and unmanageable, mowing through four bosses since launching MySpace. Greenspan, Rosenblatt and Ross Levinsohn all eventually left eUniverse/Intermix/FIM. Peter Levinsohn, his current boss, has managed to keep his job.
The MySpace corporate structure prior to its 2005 acquisition by News Corp. is described in detail. Ross Levinsohn, the former President of Fox Interactive Media, is given most of the credit for identifying and closing the deal from News Corp.’s side. A key part of the story is how little DeWolfe and Anderson made from that sale. The story tracks back to 2003 when they (along with other execs like Josh Berman) were owed a few hundred thousand dollars from parent company eUniverse for an earnout in connection with the earlier acquisition of ResponseBase. In the hope of getting those dollars, the team didn’t leave to start MySpace as a new startup. Instead, they launched it within a company they owned very little of. That decision would cost them tens of millions of dollars in 2005.
One of the most interesting stories, however, is a report that MySpace could have acquired Facebook for just $75 million in early 2004, but passed on the deal as too expensive.
Other key tidbits from the book:
Tom Anderson didn’t sign up for MySpace until September 2, 2003, more than two weeks after it launched.
A key competitive advantage of MySpace in the early days, the ability for users to change the html of the site, was originally a mistake. When execs saw how much people liked to fully personalize the site, they left it alone.
eUniverse founder Brad Greenspan’s alleged follies and unbalanced personality are well documented, particularly his ouster by the board of directors in late 2003. Greenspan has launched a litany of unsuccessful lawsuits against various parties in the years since then.
April 2004 – MySpace opens the site so that any member page could be viewed publicly (before that it could only be seen by friends). Traffic skyrockets.
January 2004 – Richard Rosenblatt becomes CEO of MySpace parent company eUniverse. Has to immediately deal with an eUniverse spyware investigation by NY Attorney General Elliot Spitzer.
March 2004 – Six month old MySpace surpasses Friendster as most trafficked social networking site. Revenues were $135,000/month. MatchNet makes offer to buy MySpace for $40 million. Rosenblatt renames eUniverse to Intermix Media.
August 2004 – MySpace adding 23,000 new users/day and had as many as 90,000 users logged on simultaneously
October 2004 – Friendster offers 50/50 merger, MySpace offers 80/20. Deal never happens.
November 2004 – MySpace has 5 millionth registered account and turns its first monthly profit.
November 2004 – Viacom shows interest in acquiring MySpace for $30 million – $40 million.
December 2004: Intermix raises $11.5 million from Redpoint for 25% of company, valuing MySpace at $46 million. DeWolfe and other founders cash out $3 million. Unusual option put in place that defines the future of MySpace: If Intermix sells to another company, MySpace must come along and would receive a fixed price of $125 million. MySpace founders DeWolfe, Anderson and others owned 1/3 of MySpace at that time. Angwin says “In fact, it can be argued that DeWolfe’s decision to accept the fixed price of $125 million was the biggest mistake of [DeWolfe’s] career.” DelWolfe negotiates separate provision giving him the right to try to sell MySpace independently from Intermix if the price was more than $125 million or if MySpace filed to go public.
December 2004: NY Attorney General Elliot Spitzer prepares lawsuit against Intermix for spyware and privacy claims. Separate case against Greenspan initiated.
February 2005 – MySpace traffic growing 6% per week. DeWolfe meets with Facebook founder Mark Zuckerberg to talk about a merger, but Zuckerberg wants $75 million. DeWolfe passes.
April 2005: MySpace has 13.5 million monthly visitors. In an interview with BusinessWeek, DeWolfe says “We’re crushing it.”
April 2005: Spitzer demands $50 million settlement for claims and files lawsuit. Intermix has $7.5 million in cash. Rosenblatt realizes he has to sell Intermix fast. Hires Michael Montgomery as investment banker. AOL’s Jim Bankoff expresses interest in acquiring MySpace.
June 2005 – Intermix settles with Spitzer for $7.5 million to be paid over three years. Greenspan later agreed to pay $740,000 in separate settlement plus $50,000 conation to antispyware efforts.
June 2005: Viacom and News Corp vie for acquisition of MySpace. Viacom too slow, News Corp. does marathon weekend deal to buy company for $580 million. Ross Levinsohn from News Corp. leads deal from their side. Tom Freston leads from Viacom. MySpace hits 17.7 million unique visitors.
June 2005: Intermix agrees to be bought by News Corp. for $580 million. MySpace founders share just $21.4 million. DeWolfe also gets $1.5 million for Intermix shares. Redpoint’s Yang, angry about not being told until after the deal was done, makes $65 million on $15 million investment. Angwin gives Rosenblatt huge credit for selling the company just a year and a half after taking the CEO role.
July 2005: DeWolfe signs employment agreement giving him $30 million over next two years. Anderson also gets $30 million for two years. Josh Berman, Aber Whitcomb, Colin Diagiaro and Kyle Brinkman share another $15 million over two years. But biggest winner of deal is Brad Greenspan, who makes $48 million on the deal. Rosenblatt makes $23 million.
Fall 2005: Viacom again loses to News Corp. in IGN acquisition. News Corp. adds 50 million unique visitors in six months of acquisitions.
Fall 2005: Greenspan launches counter-bid for MySpace before deal officially closes. No one listens.
Fall 2005: Levinsohn and DeWolfe meet with Zuckerberg again, who now wants at least $750 million for Facebook. No deal.
November 2005: Christos Cotsakos reviews FIM as News Corp. consultant, suggests FIM isn’t a good fit for Rosenblatt.“It’s just that your future lies in another way,” he says. Rosenblatt was “crushed,” stays on as a consultant for months. (I’ve heard very different versions of how Rosenblatt left the company).
April 2006: Levinsohn receives anonymous tip that Anderson is running a porn site called teamasian.com. Private investigators confirm that Anderson was involved in it and had received checks from it. Chernin confronts Anderson, who says he never cashed the checks. Levinsohn suggests moving Anderson to China. Chernin and Murdoch disagree and sweep it under the rug.
July 2006: MySpace has 54 million unique visitors. MySpace buts search out to bidding, gets $450 from Microsoft, $750 from Yahoo, nothing from Google. FIM exec Jim Heckman leads negotiations, Angwin says. He gets Microsoft up to $1.12 billion but too many string attached. Accepts revised Google bid of $900 million
November 2006: Chernin moves to oust Ross Levinsohn, who leaves later that month. Peter Levinsohn, Ross’ cousin, replaces him and is DeWolfe’s fourth boss since 2003. MySpace dethrones Yahoo as most trafficked website on Internet.
Mid 2007: Rosenblatt buys back most of Intermix’s assets, other than MySpace and a wrinkle cream business, for $18 million for Demand Media.
October 2007: DeWolfe and Anderson agree to extend employment agreements for $30 million total over next two years.