Slashdot Mirror
MySpace CoFounder Says Purchase Was A Scam
Jonathan writes "Brad Greenspan says he's the real founder of MySpace, not Tom, and the sale of MySpace to News Corp. was a criminal act. In a nine-chapter report, he describes how this was accomplished by hiding the value of the site from Intermix Media's shareholders." From the article: "How was News Corp able to turn $327 million into $20 billion or more of value within a year? The Myspace/Intermix transaction was so low compared to other internet transactions that it is raising eyebrows by analysts and media everywhere. Everyone seems to be asking how News Corp. got such a good deal. It seems too good to be true! After signing the transaction to buy Myspace & Intermix (but prior to the closing), News Corp. itself even showed how strangely little it had paid for Myspace by immediately paying $3.99 per monthly page view for slow growing comparable IGN. News Corp. paid only .03 cents per monthly page view for the hyper fast growing Myspace. Therefore, we can conclude that the fair value of Myspace was 100x or more what News Corp. paid! "
How can you illegally sell a company? Surely both parties had to agree, right? If I agree to sell you my house for $20, I can't come back later and claim fraud. How, if both Tom, and this guys company agreed to the sale, can it now be fraud?
But this is slashdot. A slashdoter who didn't build his own computer is like a Jedi who didn't build his own lightsaber!
Stop whining you miserable bastard, you made millions of dollars.
I once sold a computer for peanuts and saw its value rocket the day afterwards.
Should I consider myself a victim?
liqbase
In hindsight, yes. Yes it was a horrible scam, but then again I meant to invest in Billy Gates when he worked out of his garage. Dammit Gates! You owe me billions!
Life is rarely fair. Cherish the moments when there is a right answer.
And I'm the founder of Slashdot. Where's my money?
Myspace will ultimately be worth nothing. Myspace is already past the height of its popularity, its just coasting on momentum which will run out eventually.
Religion is a gateway psychosis. -- Dave Foley
While I assume this lawsuit will go nowhere, I hope the judge sets up an injunction against MySpace and forces them to stop their servers while the lawsuit proceeds.
And why will the lawsuit go nowhere? You, as shareholders, are investing in the company. Unless you have a controlling share, you have little control over the company. You invested in their ability. When they sell out for less than you hoped, you obviously invested in stupid people. Stupid people give stupid results, regardless of the industry.
$3.99 / .03 cents = 13300, vastly more than 100x.
If I had that much money, I'd consider buying MySpace just so I could shut it down.
I caught the Mountain Wumpus! He gave me his treasure chest ($100) to let him go free again.
Who's holding down the F5 key on the article's site?
"News Corp. itself even showed how strangely little it had paid for Myspace by immediately paying $3.99 per monthly page view for slow growing comparable IGN. News Corp. paid only .03 cents per monthly page view for the hyper fast growing Myspace. Therefore, we can conclude that the fair value of Myspace was 100x or more what News Corp. paid!"
Based on that criteria, SmileyCentral must be worth a fortune!
Actually even minority shareholders have rights at least in the US.
Quite often there are lawsuits against the company or management for actions against the best interest of the shareholder.
Surely myspace.com's hit count is WAY higher than ign's, skewing this statistic severely. And anyway, IGN is more of a traditional "Content Provider", not a "Social networking" site.
Let's shut down all of myspace.com and call it done.
Myspace is more of a cesspool than the internet in general!
i founded myspace as a how-to site on html design etiquette. myspace was originally intended to focus on page readability, intelligent page layout, good user experience, intuitive controls, and subtle interaction. i could be overreacing, but i think something went wrong somewhere though...
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
It looks like this article is hosted on a cablemodem. itcc.hopto.org resolves to 74.67.58.67, which resolves to cpe-74-67-58-67.nycap.res.rr.com. It was probably slashdotted in seconds.
Poor guy.
.03 cents *
She's built like a steak house, but she handles like a bistro....
I've got a site ( http://www.testcompany.com/ ) that gets about 30,000 page veiws a month. Does that mean its worth $120K?
Nobody's offered me 1/100th of $120k...yet
Therefore, we can conclude that the fair value of Myspace was 100x or more what News Corp. paid!
Or can we conclude that they paid 100 times too much for IGN?
-
THat does it... I'm deleting Tom from my "friends list!!!!!!"
I bet he's no longer one of Tom's friends...
Nostalgia's not what it used to be.
Greenspan's site with his side of the story is here, for now: http://www.freemyspace.com/
= brad+greenspan+myspace&btnG=Search+News
Other news articles with similar content: http://news.google.com/news?hl=en&ned=&ie=UTF-8&q
This is not a sig. this is a duck. quack.
In Ontario when you sell a house below market value (eg gift it to family) you pay tax as though you sold it at market value.
Of course we have a fucked up market value system where they decide how much your house is worth, forgetting that it's only really worth what someone will pay.
leapfish is telling me otherwise, HAHAHAHAHAHAHA http://leapfish.com/domain_name_appraisal.php?url= myspace.com
I think he needs to quit complaining before they ask HIM to pay THEM! :D
I couldn't read the link from the posted story - slashdot'd - but it looks like (according to him) this isn't the first time that he's been ripped off in a deal with News Corp
a d-greenspan-and-why-is-he-so.html
see: http://sunbeltblog.blogspot.com/2005/09/who-is-br
and
http://www.insiderstocksales.com/insidersales.htm (cool flash if your into that kind of stuff)
It seems his myspace wasn't his space afterall...
or something like that. Guess you have to see it from his point of view
What happened to Friendster?
That is the funniest thing I have ever read, mainly for the mental picture of the coked-up teenager that wrote it.
It's racist so I should feel sorry for him, or outraged. But it's so nonsensical and all over the map that it's hard to think the author is actually racist, I can only picture that he resembles that hyped-up coffee drinking kid from South Park.
But seriously, I've never laughed harder at a slashdot forum post.
Don't mod his as Flamebait. This guy is an internet treasure.
# Erik
So they only got $327 million for it. Gee, how can they afford the rent on that?
News Corp OVERPAID!! I believe after the spammers, marketers, and the hackers making pages that will infect your computer take over it will be the biggest piece of crap site on the planet. People will have moved on.
Here is a non-slashdotted article that explains this a bit better.
s p
http://www.pcmag.com/article2/0,1895,2025069,00.a
-D
This is the epitome of MySpace drama. Literally.
The only fair thing to do is delete MySpace entirely.
Does this mean that we'll get to see a shirtless, drunken Rupert Murdoch dragged kicking and screaming over a mobile home lawn covered with broken Playskool toys and empty beer cans?
Netcraft Confirms it: MySpace is dying.
Yet another crippling bombshell hit the beleaguered social networking site today when recently discovered that its marketshare has begun to seriously slip, due to mainly to other sources of personal videos, such as Google's own service and uTube, combined with modern teenager's lackluster desire to socially network. Current random surveys indicate that a large number of new user signups over the last 3 months have mainly been middle aged single men and U.S. Senators.
You don't have to be a genious to see the writing on the wall: All the teenagers that want to be on MySpace already have accounts, and there simply aren't enough pre-teens coming of age to maintain this rate of growth. The future of MySpace is indeed bleak.
When asked for comment, MySpace founder Brad Greenspan replied "look, I just need a few weeks before you print this..."
Tequila: It's not just for breakfast anymore!
No, I'm Brian! And so is my wife!
In Ontario, Canada, he would be out of a house.
A "myspace" page, oh, whoopedy zing, how hard is that? Type some stuff, upload..wow, musta used up half a twinkie worth of calories. Careful, you might get a finger-hernia! Why, back in the day, the only "space" we had that was "ours" was the space where you stood in line for your daily beating after spending 25 hours down in the badger mines! And we.. well, we didn't like it but we put up with it!
The number of people searching for MySpace and related properties on Google is still in a nice uptrend, indicating that MySpace is continuing to grow.
Google Trends search: http://www.google.com/trends?q=myspace
Nice attempt at making up data on your own, though. Maybe it'll work next time.
my blog
I don't care how stupid the owners are, it's their company if they want to run it into the ground they can.
The managers are simply employees there to run the company the best they can, at the owners discretion.
Same theory applies to small family run companies to large multinationals. It's the owners to do with as they please.
Those circles are probaly the "expert management" and not the shareholders.
I do want a say in how the companies I own stock in are run, part of that is I choose companies with good managment teams to do it for me.
... I'm pretty sure the people capable of database work are no longer with the company.
that was his first post, and he is just another /. troll.
don't feed the trolls please.
Tequila: It's not just for breakfast anymore!
So, the claim seems to be that Richard Rosenblatt defrauded Intermix shareholders (Intermix owned MySpace) into believing that they should sell their company for a very low price to News Corp. The fraud was that Mr. Rosenblatt left out the growth rate of MySpace (1200% per year) from the earnings report. During the sale, Rosenblatt made a cool $20 million by exercising his stock options.
One question is, how did Rosenblatt profit at the expense of shareholders? If Mr. Greenspan is correct that the company was worth way more than it sold for, wouldn't it be to Rosenblatt's advantage to make the company's true worth public? In that case, he would have made even more money with his options. That is, unless the deal was somehow set up so that Rosenblatt stood to gain more from the sale of Intermix than the shareholders.
But how could that happen? Didn't the company set up the sale so that if Rosenblatt made $X per share from the sale, shareholders would also make $X per share from the sale? In that case, how can $X be good for Rosenblatt, but bad for shareholders? I can understand revenue being hidden from shareholders, but surely the shareholders demanded to see the fine print of the deal? I'm confused.
IANAL, but in the sources you've cited, it was discovered the cow was pregnant before the money changed hands. That alters the situation significantly. If the cow had already been purchased and then became pregnant, the seller would not have any recourse.
Imagine if every time you successfully overclocked a CPU, Intel or AMD asked for more money! :-)
It all comes down to the author suggesting people knew stuff about the future of Myspace that the shareholders didn't know. But with quotes like this from the report:
."
"I bet if you extrapolate the numbers into Calender 06 (using 4thQ of our FY05 as the main driver) and include 3-5mm in cost savings the ebitda is in the 40-50mm range. Can someone please take a look at that asap. We will be valued off of calender 06 numbers
"Deutsche assumed that by 2008, Myspace would generate $100 million in revenue for that year."
And the fact the company was purchased for $580mm (according the PC Magazine article), shows that the company's valuation/sales price was appropriate.
Standard fare for M&A is 3-4x current year's revenues for a company. You can't value a company based upon what it *might* do next year (because every company likes to be very optimistic about *next* year's revenues!). So if Myspace was set to do somewhere between $60-100mm in 2006, then they got somewhere between 5.8x to almost 10x their revenues. These are already extraordinary numbers.
To suggest they should've gotten 20x or 25x 2006 revenues is a number nobody would believe.
And the reason for a "quick" close? A deal isn't done until it's done. All parties usually like to close as quickly as possible on a deal because it means neither side will get cold feet. Of course both sides also allow time for due diligence, a part of which is valuation.
But valuation of companies is more "art" than it is a science. Outside of the 3-4x revenue rule, valuations can be all over the map (hi Google!).
"hate crime" laws robbed Canadian's of their right to free speech awhile back. Canada is the wrong place to look to for personal rights; they don't have them.
So Tom sold his All I know is this dude isn't in my friend list.
OSGGFG - Open Source Gamers Guide to Free Games
That's bizarre. Not all pageviews are equal. IGN's pageviews are people who are researching what games to buy, and are therefore prequalified for IGN's advertisers (and a large percentage *will* spend money in that area in the immedaite future).
MySpace's pageviews are teenagers who have little income, and who are not prequalified for any particular product or service, so advertising return rates (and therefore advertising revenue) will be dramatically lower.
I don't know about the "it was stolen from me" angle, but the pricing comparison to IGN is such incredibly fallacious reasoning that it really reduces the guy's credibility in my eyes.
-b
If I wanted a sig I would have filled in that stupid box.
Who wants to pay for ads on some twerps MySpace page? No one, unless it's dirt cheap. Who wants to advertise on a quality gaming site? Lots of people and therefore, the rates are pretty high. Using page views as way to compare two vastly different sites is just plain wrong.
He worked out of his dorm room at Harvard.
Hewlett and Packard, Jobs and Woz, and even Page and Brin worked out of garages. Gates was born to one of Seattle's richest lawyers, and probably hasn't ever set foot in a garage.
The US free market: two halves of a government-granted duopoly are free to set the market price.
Let's take a look at a company called Valueclick. Valueclick wants to buy Fastclick but for a very low price. How do they do it? They get their VCs to get a controling interest in Fastclick, paying a fraction for voting rights. Then Valueclick gets a bunch of execs to transfer over to Fastclick. They informat everyone at Fastclick how terrible Valueclick is.
Then, suddenly, they sell Fastclick to Valueclick at below market prices.
How was this accomplished. Possibly with handshakes and back room deals. No one will ever know except the rich old white dudes laughing it up on some island right now.
That's how corporate America works folks.
2 years and no mod points. Join reddit. Because openness is good.
Yes I know we are not ment to feed the lions, but what if we feed them the trolls?
http://www.orkut.com/
so you were stupid enough to sell your company for a lower price than you should have ... big deal ... how is that criminal ( unless you view stupidity as a criminal act )? Plus there is the factor of News Corp. investing a huge amount of money which the previous owners obviously did not have in order to continue the huge growth of MySpace.
...
All I have to say is another sore looser
but since you opened the door, what's puncuation? ;-)
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Didn't anyone learn anything from the first dot com collapse.......Valuing MySpace at tens of billions of dollars sounds a little bit premature.
Don't know where you got this from. Before the advent of agribusiness and dating back even to the slave trade, it was always the opposite. Young women could give you more fieldhands, young men of course couldn't.
Also, what's your problem with Federalism? Do you honestly think that the Ohio legislature, for example, knows less about how to legislate the problems of Ohioans than the federal government?
Lastly, 18 year old women have their uses. It's a good, good use. If you aren't imaginative enough to figure out what that might be, then I feel sorry for you.
The 18-25 demographic is the "most important" demographic in marketing right now. As you point out, the age group has little money, but the current wisdom is that from 18-25 people form "brand loyalties" that they'll carry for the rest of their lives.
Also IGN's audience is primarily male and tech-oriented. They probably visit other websites. There's kids out there who *only* use the web for myspace, sad as it is, and it covers both genders.
-- Political fascism requires a Fuhrer.
"You shut your damn mouth right now."
:)
This was the funniest thing I have read on slashdot in a long time.
Thank you.
I've got a bad attitude and karma to burn. Go ahead. Mod me down.
Thanks! Reading the unformatted version was hard going!