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.
Yes, I love the first part with the good old rumors and accusations. It reads like an episode of the real housewives of OC.
Is it even worth buying the book after reading this post?
All the pertinent info is basically listed here…
Good stuff Arrington. Sucks how much the founders got after the acquisition of MySpace.
http://www.clif...ez.blogspot.com
I’d rather hear more about the software/hardware. Like how did they manage to get off Coldfusion? What was their policy blocking outside URLs? How does their database work? Etc.
With the “$30 million for two years” employment deals, they seems to have done pretty well from it overall, they are certainly not short of money.
Love it
Put these guys down in the books of Internet Lore, never to be forgotten.
Excellent read.
“DeWolfe meets with Facebook founder Mark Zuckerberg to talk about a merger, but Zuckerberg wants $75 million. DeWolfe passes.”
How many startups have faced that type of proposition? (And end up kicking themselves…if it’s true offcourse)
I think often it’s a bit of a catch 22.
If MySpace bought Facebook on a non-performance basis, as many acquisitions are done, Zuckerberg probably would have left shortly after and then the investment would quite likely have never been worth as much as Zuckerberg has made Facebook worth now.
If you pass on the offer, though, then Zuckerberg does awesome stuff w/ Facebook…but even if they were to have bought Facebook, they probably would have assimilated the traffic into MySpace’s platform, and maybe Bebo or MyYearbook.com would then have filled the void that Facebook served with the its slant towards privacy.
Also, it could just be my wrong impressions, but Zuckerberg and DeWolfe seem somewhat like cultural opposites. Perhaps the book will mention more of the reasoning of both sides about the acquisition offer.
Awesome, post and writeup! I’ll be buying a copy ASAP.
Thanks.
I hate to respond and am a huge fan of Techcrunch. But, to be clear, I left Newscorp voluntarily and continue to have a great relationship with Newscorp. I hope the book reflects that accurately; I have not seen the book.
Pretty scary book, thanks for the clarification.
These two sites spiral around each other as they grow, creating some seriously juicy gossip.
SLANDER IZ HAWT!
I hate to respond and am a huge fan of Techcrunch. But, to be clear, I left Newscorp voluntarily and continue to have a great relationship with Newscorp. I hope the book reflects that accurately; I have not seen the book.
“…and a wrinkle cream business.”
yep.
… so is that why we’re seeing the “Smarter than BoTox” ad at the top of this page?
Hydroderm is their wrinkle cream product.
Wonder what happened to their “Tootin’ Cousins Bathtub Duet” website where computer enhanced babies pass gas while singing in the tub.
see: http://www.clickz.com/3520856
“Besides MySpace.com, Intermix comprises some 50 other branded joke and inspirational Web sites such as Flowgo.com, a site featuring low-brow humor such as “The Tootin’ Cousins Bathtub Duet” where computer enhanced babies pass gas while singing in the tub.
Intermix also owns a marketing network reportedly providing approximately 60 million subscribers with dozens of email newsletters on topics such as sports, news, technology, entertainment, business, and finance.
The Alena division packages and distributes healthcare lines that include Hydroderm and Body By Jake CarbManager.”
Wrinkle cream and Asian porn…
Now, there is a movie somewhere in there.
Somebody call Bollywood, quick!
dont forget to throw in computer hacking, spam, spyware and attorney general. i cant wait. lets not forget the power and influence the domain name had to do with myspac success. i would like to know how that was acquired and who chose it. that was the greatest decision ever made for myspac. hopefully the book mentions how the “MY” (personalized natural language location phenomena) has forever scarred and permeated the web ever since.
http://www.sees...LBVaQ0sYP/watch
myspac is proof that when properly positioned the power and value of a natural language location based personalized domain name can be priceless.
My Locator .com – Natural Language Location
Myspace is terrible, read more here
http://www.seiz...ook-vs-twitter/
Thanks for the newsflash, champ. Give your sekrit source another nickel for me.
You have quite a lot of things wrong there.
“To start, these are the top three social networking websites out there on the web today,”
You must be new here.
Twitter is small. Classmates is ~4 times its size. Not to mention international social networks like Zhanzuo, Odnoklassniki, etc…
Being unmanageable is not a stigma! Always rock the self-reliance.
Um… doesn’t News Corp. own WSJ’s parent company?
yep.
but the WSJ, of course, is above reproach. so they can do things like write books about companies they own.
another company that failed to get facebook for relatively cheap before the facebook monster explodes. but myspace founders made many mistakes i see from the quotes.
This is 5 years too late. I don’t care any more. I think a lot of people feel the same exact way.
The ONLY way I would buy this book is if Duc Chau was interviewed and he explained his bad design decisions in great detail.
There was absolutely no sane reason to base it on MSSQL and cold fusion. NONE. Especially since Duc used Perl/MySQL at L90 where he started working after DeVry.
I can imagine it was all Chris DeWolfe’s fault as he was the leader of the response base consulting team.
Oh, remember that time that 2 kids from NY told Tom Anderson that they had an exploit that they would run on MySpace and wanted to charge him 100k in security consulting fees?
Then Tom Anderson tricked them into flying to LA to talk to him and the LAPD arrested them at LAX?
Is that covered in the book?
I was always curious about the details about that one. Usually a security team patches vulnerabilities instead of setting up elaborate cross country plots to destroy teenagers’ futures.
I was curious about the motivations behind that.
What about all the take down notices MySpace sent to various unrelated social networking websites in 2004-2005. They claimed that social networking was their concept and that they would shut all the sites which were similar to theirs down.
Does it cover the deal they worked out over the friendster patent on friend of a friend?
ttp://www.techcrunch.com/2006/07/07/friendster-awarded-patent-on-social-networking/
http://www.ther...cing/print.html
I found it. What it doesn’t report is that Tom talked them into going to LAX personally.
I believe this was the old flash 8 exploit where if you had getURL() with a carriage return and line feed in the word java script it would execute the javascript anyway. 2 kids did 3 years of probation over that because of Tom’s scheme.
19 and 20 respectively doesn’t really tell us they’re “kids”, does it? Maybe a little bit overenthusiastic
If it was a Flash exploit, why didn’t they go to Adobe (or then Macromedia?)
Charging $100,000 for ’security consulting’ sounds more like extortion to me. Patching vulnerabilities and prosecuting extortionists are not mutually exclusive.
Could be an interesting read
So it is a good book, worth the read? Or is all the good stuff in the post and I can save myself the time?
“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.”
So Zuckerberg would have sold it for $75 million in 2004, but he wouldn’t sell it for 1 billion later? Ok….
It looks like Zuckerberg began believing the hype. He did get a $15 billion valuation out of it.
hiii all
a very good blog here
I did not understand why people write books about some thing that will be changing so fast that makes the book out of date as soon as it is published.
Well, they got Tom’s Asian fetish in there. I hope it mentions his social awkwardness and love of music. The higher-ups being disgruntled (Whitcomb, Berman, ect.) about getting screwed out of a huge payday is very true. Lots of resentment still hangs in the air there. The modifiable HTML being a flaw was something the security team is still probably trying to figure out how to control, yet still allow. Looks like a solution is to make it look more like Facebook.
Thanks for the preview, Michael. Of course, there is much more is in the book, including the requested interview with Duc Chau and the hackers that Tom lured to LAX. Find out more on my Web site, http://www.JuliaAngwin.com.
Oh that’s so awesome.
I hope you never do a book on me!
So this is Tom and DeWolfe’s iCon ???
On one hand this is cool, then on another you feel bad for them because they lose their privacy.
I think the book is missing one HUGE part of “myspace” story.. I was combing through my old emails the other day and found that Myspace.com used to be a site that one could upload files to share. I still have those early ‘registration emails’. I never used it but the email is dated Feb 19, 2001
So did the founders buy the domain from someone else or did they own the domain to begin with? Which in case the story may have to change.
Having invested several years of my life to this story I’m glad Angwin picked up where I left off and is bringing everything to the publics attention. While I was not interviewed, or read the book yet, knowing everything I know and never published and what she’s probably stumbled upon is more than enough to make any honest hard working person cringe. The pure essence of MySpace since day one has been nothing more than spam, corruption, greed, and malice.
http://trentlap...nski.com/?p=290
where did all of greenspans money go? rosenblatt is now truly crushing with Demand Media and yet Greenspan is faltering with his new media empire Live Universe…my how the tables have turned.
Yeah, this seems like a pretty boring book.
I used to work at Intermix and have to say that Rosenblatt gets major props. Before he came on board, there were a few round of layoffs and our stock options were worthless. I still remember his first day – he took us all across the street to this bar, bought everyone drinks and said, “This time next year, we will be profitable again. I promise you.” We were all so beaten up from the previous year and all of Greenspan’s craziness that I don’t think any of us actually believed him.
Well, exactly one year later, we were all across the street at that same bar, and our options were worth a good deal and the company was thriving. I’ve worked at many dot coms and heard a lot of bogus promises, but he delivered – plain and simple. But I doubt that gets any mention in the book…
great post mike !! a pleasure to read and fascinating too. can’t remember the last time i felt the urge to carefully read a blog in detail.
you should summarize more startup books in tech crunch !!
Re: The fact that “this book received zero participation, zero access, and zero fact-checking from MySpace” …. just means that Julia had enough credible third-party sources not to require their assistance.
99% of people on myspace don’t read books.
How are sales doing? The actual story sounds pretty juicy/interesting, but like so many people say… its level of interest isn’t the same as when myspace was really king…
I didn’t know about the founders’ shady history, but it makes sense. We think of social networking as a friendly service for us, but I think it’s pretty clearly about profit. Thanks for the post, I might go get the book.
Oh they’re definitely in it for the profit, I just didn’t know it was this obvious when they were starting. Sounds like it was unlikely anything would ever get done, much less become the most popular site in the US (at least for a while.)