Christos Cotsakos has the opposite of the Midas touch. Everything he touches seems only to implode. This happened to E-Trade back in 2000-2002 when he was the CEO. Cotsakos was famously replaced after enriching himself with a $78 million pay package during a year the stock tanked 53 percent (see chart detail at left). He had to give back some of that money, but kept enough to live lavishly in Florida and pour millions of dollars into an ill-conceived social network for international swingers called Moli.
Never heard of Moli? Don’t worry. It also just imploded. Moli was a me-three social network that was founded in 2006 way after that train had left the station, and didn’t launch publicly until January 2008 at DEMO. The main differentiating factor, if you can call it that, was the ability to show different profiles to different sets of contacts (personal, business, family). The site never got above 2.5 million visitors a month, according to Compete (see chart above). And we have learned from several former employees that most of its staff has been laid off, from a peak employment of about 55.
There was a big round of layoffs last September, when all but 15 or so people were let go. Last week, most of the remaining employees were cut loose. The site is still up, but it seems like there are only a handful of people left keeping the lights on hoping for a sale. That is unlikely to happen. We are placing Moli in the deadpool. (And something tells me many more social networks are headed there as well).
Although the company (officially called Mainstream Holdings) reportedly raised a total of $56 million, including $30 million just last January, one source tells us that most of that money was never actually disbursed to the company. And in fact investors from the $30 million round, which included Wall Street billionaire Kenneth Langone and Home Depot founder Bernard Marcus, refused to release the second tranche of funds after the stock market started to go south. That led to the September firings.
Really, anyone could have seen this coming a mile away: A no-name social network run out of Florida, backed by a guy known primarily for his greed—what did the investors think was going to happen? Oh wait, I forgot, Kenneth Langone is a big believer in greed. The business model, apparently, was to sell deep profile and targeting information to advertisers. The problem was that Moli needed users before it could sell their personal information. The company also sold e-commerce tools to subscribers so that users could try to sell things to their friends. Hmm, I wonder why nobody wanted to hang out there.
Today, nobody picks up the phone at the West Palm Beach headquarters. And e-mails to company executives, including to president Judy Balint, go unanswered. The site seems to be sponsored by SECFilings.com.
Here are some screen shots for posterity:
Are you saying there is no room for niche social networks? Community focused, sports focused, religious, food, etc?
The problem is nobody really makes it easy to try out these social networks. If you are building a social network you have got to embrace data portability because most users won’t fill out another profile. You would also likely need an aggregation feed so a person can keep up to date on things because Facebook is where are friends are. If possible a talk back feature.
I still think the best place to start would be by building an application based social network where you connect Facebook to Myspace to firefox to iphone. Like a subcity within these sites. A guild of sorts.
Personally, my guess is that the days of new self-styled social networks are over for now. There’s still plenty of room for sites that meet particular needs, and I’m sure many of them will have social features, as long as they provide real benefits to users.
However, I don’t know a single early adopter who feels they need another social network as such. The early majority are already well established in the existing ones, and the late majority is getting dragged in to wherever their friends are. You’d need order-of-magnitude improvements to get the early adopters to switch away, and that’s very hard to do unless one of the big players messes up badly.
So I’d encourage entrepreneurs to focus on finding a real user need and meeting it, without worrying much about the shiny thing of the moment. And they should certainly avoid chasing yesterday’s opportunity. The time to start a social network was 2003, when Friendster was new and fresh (and bobbling their play), not today.
@William Pietri “You’d need order-of-magnitude improvements to get the early adopters to switch away, and that’s very hard to do unless one of the big players messes up badly.”
You contradicted yourself. If a entrepreneur find via a order of magnitude of improvements to get early adopters to switch. That in itself is the same as big players messing up badly.
I mess up all the time. Like this moronic, retarded comment. Sorry.
@Anti Matter: I believe that’d technically be a redundancy, not a contradiction.
However, the case I was trying to draw attention to is not a pure 10x innovation, but one where a major or dominant player has a weak or declining user experience, creating an opportunity where none existed. I was thinking of Friendster, which lost their first-mover advantage that way, or Twitter, which came dangerously close. Poor execution can bring a competitor’s need for innovation down from an order of magnitude to a small increment.
It’s true that failing to innovate sufficiently is also, in some sense, a big mistake. One could certainly say in retrospect that the other search engines failed to invest sufficiently in innovation to prevent the rise of Google. But that’s a much harder failure to spot at the time, whereas any well-run business should be able to spot their product getting worse or users getting dissatisfied with what’s there.
@William Pietri
Yeah I see your point. But I saw it as a contradiction as it appeared to be either or. However you explained yourself well when you stated “It’s true that failing to innovate sufficiently is also, in some sense, a big mistake”.
Do not pay attention to the homo who pretends to me. HeShe seems to have become a huge fan of me whenever I post.
a simple case of a business cashing out. there allowed to do that.
DeadLocator.com
Nicely done. You guys are masters of the well-earned beating for hubris-filled Internet pseudo-moguls and wantrepreneurs. Bravo.
Hey, easy now. Some of my best friends are hubris-filled Internet pseudo-moguls and wantrepreneurs. They’re great guys once you get to them.
“my best friends are hubris-filled Internet pseudo-moguls and wantrepreneurs” — You have wayyyyyyy too much time to waste….
what happened to this story here
http://www.tech...e-ads/#comments
It seems to have gotten burried… better that way anyway
thats a pretty fast dip in traffic from 2.5 m to 0 in a month WTF happened
Maybe they stopped paying for ads, etc to drive traffic to their site.
ding… we have a winner….
What happened in July? 2.5 million visitors a month (which is pretty good) to 18,000, were they buying all their traffic?
They had 2.5 million visitors in April through July because they had a huge music competition. It was a smart move but by the looks of it, people did not see the value on the site after the competition.
What does the company “being run out of Florida” have to do with anything?
In this case, the location says something about Cotsakos’ priorities. It was run out of Florida because that is where the rich guy backing the company lived, not because the company thought it could get the best talent there. In fact, a great many of the employees were transplants.
Florida is a tax haven.
sorry to be a nag, but posting screenshots that clearly show you haven’t used the service before don’t help the post much. thanks.
I’m not alone.
LOL
Too bad. It’s not over until it’s over… The site is still up!
due diligence.
I don’t think that proves anything. Thedistance betweenfailure and success in a start-up can be very small and his next tr can be a great success. Also, I personally love niche social sites.
my comments at http://www.commentino.com/orim
As I said before, there are too many “me-too” duplicates in this Web 2.0 bubble. I would be surprised this is only the beginning. Too much money to burn. Probably from liquidity excess from housing bubble and Wall Street leveraging. Now, taxpayers are paying the dues.
Lar lose stock options in collapse of Moli.
LAR
GET
ANGRYYYYYY!
social network for swingers?
My goodness, Erick, your writing skills are really poor. Can’t say I’m much impressed by your analytic skills either.
Wow. Selling user profiles to advertisers while their tag line was “Control Your Privacy”. They trademarked that, check the screen shot. Douchebag alert.
http://www.fuck...timecom-fucked/
The only thing you missed about near-time is that not only did everyone get laid off, they voided all contracts and stole everyone’s severance. Each employee had a guaranteed 4 weeks pay for severance and they just stole it
Here’s the part you missed – the company was around for 2 years and went through $26 million that they did have. That’s well over one-million per month in spending. Someone got rich, and it wasn’t the laid-off employees or the low-level investors. Probably the third party advertising that was feeding their growth.
Couldn’t happen to a better “wantrepreneur”. Let’s see who else gives that guy money for another investment.
Looks like Cotsakos isn’t giving up yet: http://www.penn...onventures.com/
LOL, the partner list on the right is the same team that helped destroy MOLI…
I don’t understand how a social network with that type of funding didn’t gain any traction, why did usership fall off so much?
As with all startups…it is clear that the full story isn’t known here. Everyone in this business that has been around for awhile knows that “things aren’t always what they appear”. And the reporter didn’t try very hard to get any comment from the company. Too bad she had to go back 10 years to get her tabloid newshook. Companies with come and go and we will see a lot more in the next year…Moli isn’t the first nor the last.
Is newsshook a word?
Web or Bust is correct, and its a bad economy. Certainly one where companies are trying to watch their spending. However, spending upwards of 30 million on a site that really doesn’t appear to have any distinguishing characteristics and the best thing you can say is also the worst thing…they had a top 1000 site but to have that fast a falloff down to the 60,000th in a month shows they really were all smoke.
Did you work there, Web? You seem a little defensive…that is, after all, their style: http://www.sabr...artbreaker-you/
Where is Doug Nassaur when you need him?
A question that I have been pondering about this:
How on earth does a social network get 2 million hits on it’s site, and then no one returns only a few weeks later?!?!? Seriously, the law of averages says that two months after people visited, some would return, just out of curiosity.
Does anyone think that they were faking all of that traffic?
Heath –
Duh.
Frank
Paid Search-PPC goes a long way when you just pushing eyeballs on to a home page. Clearly nothing stuck to the wall
I’m not surprised. Look at SocialTrak for example, they offer the same service and have boot strapped everything using Elgg, got the public to help beta test and with $0 funding achieved what Moli have.
Open Source software like Elgg will change how we all look at social networking I think it future.