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!
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
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?
there was a treasure map inside.
duh.
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.
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?
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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.
Similar story: A couple of years ago I upgraded the motherboard, CPU and RAM on my main PC. I then shifted the old mobo/CPU/RAM to my spare "expendable" system. The hardware I took out of that system was old enough (the CPU was a K6-2), and wouldn't work with anything else I had, that I figured I'd just sell the lot on eBay rather than break it up any further.
Silly me, as I discovered during the auction that people were surprisingly interested in it... and that auctions for equivalent RAM were selling for quite a bit more. It seems that the type of RAM was getting hard to find, and therefore in higher demand, so people who took the effort to look at the item description figured they were getting a great deal. I probably could've made three times as much if I'd split the set apart and sold the RAM separately (and clearly labeled).
Was I a victim of eBay, or of the bidders? Nope, just a victim of my own lack of research.
Really? I was under the impression that corporate governance was a serious problem. Management has considerable authority to run shareholders meetings, and it's very difficult for even majority shareholders to remove members of the board of directors.
My source for a lot of this is an article from The Economist back in May (link, but you'll probably have to pay to read it.) Basically, it says that although shareholders have considerable rights in theory, in practice the rules are set up to favor management. This is considered a good thing in some circles, who believe that professional management should trump non-expert shareholders, but in at least some cases it makes accountability difficult.
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!
In Ontario, Canada, he would be out of a house.
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!
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!).
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.
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.