When a smart, ambitious executive who isn’t the CEO leaves a company, it isn’t necessarily a sign of trouble. Sometimes that executive isn’t performing all that well, or he/she wants to see if they can make it at their own startup where they call the shots. Top execs leaving to start their own companies is the story of Silicon Valley.
But when bunches of them leave, watch out. With obvious exceptions, like a sale that results in a lot of liquidity being sloshed around the founder ranks, fleeing talent is an indication that a company is about to go sideways, or worse. There’s a reason why most of Yahoo’s executive talent bailed out in 2007 and 2008. And that’s just a high profile example. Whenever we hear about multiple executives leaving a startup, there’s always trouble brewing.
Today’s news that MySpace’s COO, SVP Product Strategy and VP Technology are leaving to take some time off and then start a new company isn’t an exception. I know each of these guys personally, and they are all highly talented execs with a lot of competitive fire. MySpace needed these guys. Sure, they’ll find replacements. But the real news is that they voted with their feet, and decided that now is the best time for them to branch out on their own. The fact that we’re in the middle of one of the biggest economic downturns that any of us have seen just reinforces the point – the sun is setting on MySpace. There’s no way to deny it any more.
MySpace had a banner revenue year in 2008, and they are still by far the largest social network in the U.S. But within a year Facebook will have taken that trophy. And it may not be long after before Facebook revenues eclipse MySpace, too.
I won’t go through all of MySpace’s missteps, but there were a few big ones. They’ve generally trailed Facebook in taking risks with new products (News Feed, self serve ads, Facebook Connect), and they made a crucial strategic mistake in how they handled international expansion (Facebook gets its own users to create local translations of the site, MySpace opens offices in every country they want a presence in – guess which one scales).
And the things MySpace did right, they didn’t capitalize on. MySpace Music, so promising a few months ago, remains in slow motion development for new features. And it only works in the U.S.
But worst of all, MySpace is bogged down in a ridiculous corporate structure. MySpace reports to Fox Interactive Media (FIM), which in turn reports to News Corp. FIM appears to be, little more than another layer of bureaucracy to slow things down. We’ve heard repeatedly that FIM head Peter Levinsohn and MySpace CEO Chris DeWolfe both try to exert direct power over MySpace, leaving employee’s heads spinning. DeWolfe theoretically reports to Levinsohn, but in reality he’s Murdoch’s guy. FIM’s original purpose was to acquire a variety of Internet companies, but those days are gone and we can’t figure out what it actually does any more besides muddle things up at MySpace and get in the middle of petty turf wars. Their best bet would have been to leave the damn thing alone and let DeWolfe do his thing.
Add to that the fact that MySpace employees have no stock incentive to stay, and its no wonder top talent is fleeing. Founders Chris DeWolfe and Tom Anderson have employment contracts that come up for renewal later this year. Unless News Corp. pays them a bundle (their current contract pays them an aggregate of $30 million/year already), they’ll likely be gone before 2010, too. They may have already made the decision to leave, which would make today’s defections unsurprising.
This is the way of things with tech startups (remember that MySpace is only 5ish years old). In this case FIM may have acted as a big speed bump in MySpace’s race with Facebook, hobbling them and ensuring that it wasn’t even close. But the result is the same. And good news comes out of this – all of these talented execs and engineers will start and grow new companies, and the cycle continues.
Well,
If Chris De Wolfe votes with his feet then its to time say farewell to the social network where I got to learn CSS/HTML
It gave tutorial on how to use social networks. And its time to leave.
It was like American army trying to hold all the Iraq.
Myspace taught all net users how to use facebook, to be specific. Wonder why TC did not tag it DeadPool…
Moron, the Iraq analogy had nothing to do with anything, plus your comment is retarded. STFU.
20 somethings realizing that they can start their own business?
smart execs start businesses…ultimate igniters
It’s a shame that MySpace sold out to FIM.
Imagine if they had just waited a few more years. Surely that bureaucracy would be less and the founders would have gained so much more (in terms of money + freedom etc).
yeah but then they’d still be reporting to Brad Greenspan.
http://www.tech...pan-still-nuts/
things certainly would have been more colorful.
they didn’t have much of a choice. apparently, the way the myspace/intermix deal was structured, if they didn’t sell by such and such a date, then intermix would lose out on mo’money. or something to that effect…
but, if i were greenspan, i’d be pissed too. yeah, the guy’s a little crazy, but he knows which side of the dollar is green, and how much myspace was REALLY worth. actually, i wonder if the guys at intermix are kicking themselves, realizing that they could’ve had platinum-plated ferraris, instead of just gold-plated ones, if they’d just held out a little longer. after all, intermix was just a spamhouse, but they took the overwhelming majority of the boon when rupert decided to dabble in internet.
sh1t, can’t you leave the man alone?
Jesus christ. Delete this, go on. Delete it.
I’m on your side Brad.
You’re girl is way prettier than Paris Hilton.
Sorry, grammar error, that should say
Your girl is way prettier.
why don’t you write about Facebook execs constantly leaving? you always have biased stories:
http://www.busi...-to-quit-2009-3
From an outsider, it seems curious that these guys would leave less than 2 months into some of the exciting new leadership coming in like Cortney Holt running the show at MySpace music. However, it also is important to note that these are smart, ambitious guys and I think that they’re young enough to where they want to go off and create their own brands and products. This is a great time to do it and many early stage entrepreneurs know that although it’s difficult, this is a time to go out and build a great team. If someone like Amit Kapur came up to you and said they were starting something – chances are, you’ll be listening and taking notes.
MySpace will remain a flagship brand on the internet for sure and I think that much of its power is in its ties with media (music, tv, movies, etc.), which in many respects, differentiates itself from other social networks like Facebook and Bebo.
While there are many successes and failures of MySpace worth looking at – anyone that has spent 20 minutes looking at the media industry knows that there is a lot of turbulence in it. With firms like Warner Music Group taking 30% hits and then going off and starting wars with YouTube content creators over rights, etc. or NYTimes on the verge of bankruptcy. I think it’s awesome that guys like him are in a position to maybe make a change in the space and create a successful company (especially weighing in the intangibles of network and blessings from a few years in the internet media exec scene).
I wish them the best of luck and hope they succeed.
Biggest mistake was dismissing .edu’s as a solid basis for networks. Shoulda copied it immediately before it spread like wildfire.
from first hand experience, I don’t blame these guys, I hope they bring me with them. And after the preview of there road map of what they intend to release, I can’t see how anybody can be excited about whats to come. Myspace is an advertising/marketing company first, and far from a tech innovator.
I agree with the .edu comment – seems like much of the great early innovations (berkeley unix, anyone?) came from the educational sites.
Goodbye Myspace Leadership {seesmic_video:{”url_thumbnail”:{”value”:”http://t.seesmic.com/thumbnail/XQsQe6q63g_th1.jpg”}”title”:{”value”:”Goodbye Myspace Leadership ”}”videoUri”:{”value”:”http://www.seesmic.com/video/oTXNq9e0Rr”}}}
thanks Collin. Good video comment.
Arrington, have you noticed how all your friends are douchebags? Get the connection yet?
Hey Collin,
Just a few years back, MySpace operated very “in-power” and arrogantly.
There was a point when MySpace was so hot, starting a self-serve advertising model would have taken them through the roof. The advertising model was already shown to take Google through the roof but the MySpace guys just rested on their laurels and got caught up in wanting to be “rock stars” while not paying the right attention to the real rock stars drawing pages on their site.
The ignorance to user and developer growth on MySpace led to everyone just waiting for an alternative platform, when Facebook revealed its constant evolution, eventually there were features on Facebook that many of us now find hard to resist.
Simple, when your COO, strategy guy and tech guy take off to start their own thing, they are not starting it to play nice. Why give you great ideas to a company where you only get a check when you can start your own company with those ideas and get the ultimate exit check.
Get a fucking haircut.
Watch your language! You kiss your mother with that mouth?
what if they team up with Chernin?
wtf , have you at all considered the fact that these exec have messed up and that is the main reason for them to leave, this is an all time classic you make a couple of bad decisions and then you quickly bail before they show
not these guys. they’re smart and talented. jim was one of the guys that was instrumental in scaling myspace. essentially, myspace has written the rulebook on scalability, in large part to jim and a few others.
so true – for whatever reason the valley gossip rags always get this inside out… the sr “talent’ leaves after f’ing everything it all up – or due to lack of real skills to politically maneuver within the ranks to have a real impact or change… so they leave… but titling them as ‘talent’ is ass backwards… as an example – name any ‘talented” ex-Yahoo Vp that either did something interesting while at Yahoo! and/or left in 2000 or 2007/8 and what their talents have created since?
Talent at large tech companies is generally inversely proportional to the spot on the org chart…
Welcome Back Mike…
Yeah welcome back Mike. You keeps it real regardless of backlash. That’s something the world is totally lacking right now.
But the big assumption here is that “talent has left”. It is also likely that these guys were pushed out to make room for fresh, more senior talent that would be more economical for MySpace to employ. These three guys were passionate, but they were also very young and inexperienced, and MySpace was much smaller when they started.
When a young tech company has high revenues and growing competitors, its time to push aside the 27 year old COO and SVP of “product strategy” to make room for some bigger muscles to steer the ship.
good comment, rob. well thought out. now, here’s how the world really works:
no company in their right minds would push out the guys that scaled it. fox certainly isn’t that company. this isn’t a corporate shell game. you can do that kind of stuff with marketing and sales folk, because they’re a dime a dozen. with the technical talent, it’s suicidal.
rupert doesn’t get tech, but he’s not stupid. far from it. he’s smarter than you and me put together. fox doesn’t play stupid replace-the-execs games with the technical talent. period.
It’s like the big first-generation web destinations – Lycos, Tripod, Excite, AOL, etc…
Sold/evaluated/traded for billions, but were not quick enough to adapt.
I believe the bureaucracy is what’s wrong with myspace. Facebook seems a lot more agile and able to adopt new trends much faster.
Facebook also spread internationally much better then MySpace did, especially over here in Europe.
one of the glorious mistakes myspace made was in trying to fill up seats with just about anybody. they hired people that should’ve never been hired, relying on a lucrative employee referral program that had everybody referring anybody. it was all about filling headcount, becuase if myspace didn’t, they might not get that headcount next budget. a LOT of people got in that shouldn’t have.
While Rupert Murdoch is still alive, I would never bet against Myspace.
I’ll take a look back in a year, I don’t think this is anywhere near as bad as it is being portrayed (the sun is setting?). I guess that’s the fun thing about predictions.
From a demographic perspective I interact with old people on FB and young ones on MS. I don’t think FB has anything magic in terms of the site usability or features that MS couldn’t catch up on or leapfrog (that they haven’t is not a good sign but it’s not impossible at all). So I don’t think anything’s inevitable.
Someone should do a roundup of TC predictions by the way and how they’ve turned out. Like when Commission Junction and Linkshare were finished by Google’s entry into their space. I am sure most are on but that was one in particular I disagreed with.
myspace & talented. that’s a hard to swallow combination.
On the translation mis-step, you have that wrong. MySpace didn’t open offices internationally for translation, are you serious!? They did it for localised marketing and sales.
i probably could have written that more clearly. but the point i was trying to make is that Facebook scaled internationally much more quickly at a much lower cost.
It’s still a point you make that doesn’t fly.
MySpace scaled up its revenue and users internationally, facebook only scaled up its users.
Facebook is also now establishing international sales offices as they start thinking about revenue. You can’t make decent sales in countries you don’t have a physical presence in.
Is this Chris or David?
“The Smart Execs Leave Before The Fall.” . So who is leaving techcrunch??
how long did it take you to think that up.
now that was damn funny…
Well, you left, and sadly came back. Smart you ain’t.
You missed that the VP of Customer Service also left MySpace. Might want to check you source
“In the world of business, you should sell when you shouldn’t and buy when you shouldn’t… “
The problem with MySpace is that it can’t define what it wants to be. It wants to be everything to everyone and be a walled garden still.
Jack of all, master of none.
Social Music is the only thing it can master now that facebook is steam rolling everyone.
It should be the provider of social music services on the web+mobile, and do a brilliant job of it, including on facebook.
The smart Yahoo! execs bailed in 2000, not in 2007.
MySpace lost face. Happened for me close to a year ago when they switched my user interface to Japanese – without asking, just because I happen to live in Japan. I could not find how to switch back to English, login did not work any more and two mails to support were never answered. Farewell.
Where MySpace succeeded is that it allowed its users to make their crazy-looking pages and leave indecipherable messages to each other, but that is ultimately also its downfall. Even with its big numbers, it appeals to a limited audience. I can’t stand to look at almost any MySpace page.
When Facebook opened up to everyone, with its much cleaner design, that’s when people older than 30-35 said “Oh now I get this social media thing”, as they reconnected with people they hadn’t seen in years, posted pics of their kids, etc. Where MySpace seemed and seems like it’s for the kids, Facebook has successfully given the impression that it is for everybody. (Down the road the old people may chase the kids from Facebook of course, but so far it’s not looking that way.)
So true. MySpace design was a dog’s breakfast but when they realised it they didn’t have the guts to change it because users were already too attached to their aweful designs. Facebook was a necessary evolution. And facebook weren’t afraid to change the design when it started to get top heavy
Hopefully someday soon someone will do the same thing for Squidoo!
I think I’ll stick with predicting success or failure based on revenue and not a couple guys changing jobs. The only mistake myspace can make is trying to play catch up on every little feature that facebook offers. If they keep it simple, they’ll keep raking in the revenue while facebook keeps trying to figure out how to make any money at all.
all the readers know
how much Michael Arrington loves Myspace .
Yep, Arrington’s a simple kind of douchebag. Life for him is completely black and white. Google good, Yahoo bad; Facebook good, MySpace bad; Twitter good, not-being-a-pathetic-attention-whore-with-no-real-life bad.
TechCrunch FTW!
This could of course be nothing more than a company retrenching in a down market phase – expensive execs who have been around a long while are fairly standard targets.
i agree that FB, albeit more popular than ever, needs a way to generate revenue at the same rate as myspace.
I’ve primarily switched over to Facebook, but it is still full of fail as far as music is concerned. Plus, the “Terms and Conditions” thing has made me hold off on fully migrating all of my photos from MySpace over to FB.
This is a a side remark but I read the article without looking at the author and was thinking for it is written so much more excited than usual – well of course I then saw its Michael Arrington.
Thanks for being back, in all honesty all other writers are very good as well. But noone has the tone of Techcrunch as Michael does!
If you have a little cash and an idea, now is the perfect time to launch a new venture. Or, they could hang around at Myspace and decide what projects to can, who to layoff, how to grub a few more pennies of revenue. This says nothing about the relative prospects of Myspace versus Facebook; all incumbent businesses will be entering a new phase of operations. But I know the Silicon Valley crowd has always been jealous that Myspace came out of LA.
My sources tell me this is a case of three guys getting fed up with corporate stuff and no upside to make money. Putting it in perspective, i hear they are three relatively talented guys who want their bite of the apple. They made no money at MS on the sale and have no upside in the company, so they leave. Tough market to leave in, but what the heck. They’re young and have some experience. They are workers which means MS has to find good replacements. They are not rock stars however, and probably wouldn’t even get hired here at a facebook or a google, but in LA they pass for talented. Probably never hear from them again until they take some mid-level job at Microsoft. Myspace bleeding indicates major internal problems. Watch for more defections.
These are some of the few myspace execs that vote with their feet and not with their…. well….I really shouldn’t say.
myspace was on the way out 2 years ago when everyone, including techcrunch, touted it
as soon as you guys say something is “hot” it’s already way past the hot point and fading
facebook is next…in 2 years it’s a turdle also
What I don’t understand is why anyone still uses MySpace. There are not many pages (profiles) that are pleasing to the eye, in fact most are terrible. The only use I see is for bands (i.e. the original concept), all the rest don’t add any value to the site, in terms of making me want to visit the site. Facebook has done everything right in limiting the way users can edit their profiles, MySpace went too far and the result is many terrible looking sites, which are too bright, too loud, and just a mess. Also the slow process of MySpace will eventually be its own wrong-doing, and sites which are open yet keep the corporate ID will not only survive but excel.
Anyone with any talent left that place a long time ago..
Myspace was a technology and internet mogul…Right before FIM bought it.
FIM and Myspace founders drove it into the ground. These are the last significant non-founders to jump ship..
My prediction: News Corp will file for bankruptcy in 2009.
The corporate structure and legacy overhead across their brands is staggering, and in many cases, staggeringly incompetent.
When you mix competent, innovative tech people, with incompetent or non-functional corporate structures, there’s always going to be senior people taking off.
MySpace is essentially trying to be an ad agency but do not hire people that are qualified to perform those functions (i.e. creatives). If I were Jeff Berman, I’d bring in some outside consultants to figure this out before it’s too late.
Even though your article trumpets doom for the company that pays my bills, it is good to see your take on what’s going on Michael.
You have pointed out some clear ups and downs, but I do not agree with the sunset take on our future. There are more things that you failed to mention about the open stack and how MySpace is not only embracing it, but also in the forefront of pioneering it. The walled garden is opening in ways that none of us could have foreseen even a year ago.
I also appreciate your respect for these three highly talented individuals. It is so much easier to slime them as some of the comments here have than to keep an honest description of them intact with the article.
So… back to this sunset perspective, this may be the case, but the horizon holds the rise of new things not only for these three, but for MySpace as well.
Keep writing about the story as it unfolds. I’ll read on even if the doom point of view gets stronger.
Amen brotha!
Hrmm, robbie. Posted by facebook connect, oh the irony?!? Zing!
there weren’t any other options to connect with.
hey michael! howz about some love for OpenId?!
Why is the walled garden opening now and not a year or two years ago (i.e. what’s different between now and back then)?
Yum… I love it when business speculation is taken as fact. Eat away boys, there’s plenty more where this came from…
In the internet world, if something isn’t trendy anymore, it’s proclaimed as 100% likely to fail in the future. Right? From that perspective, *every* business is destined to fall, the only variable being how long it takes. So what’s the point?
Oh, wait, there isn’t one. This is just a status update, no?
Ok, here’s more speculation: Chief Systems Architect Dan Farino will join them.
http://www.link...om/pub/3/81/971
Jim and Dan worked together at Stamps.com. When Jim came on board with MySpace he convinced Dan to help resuscitate MySpace’s overloaded systems. MySpace wouldn’t be alive today if it wasn’t for them. Loosing Dan would be a hard hit for them.
Dan did what? lol..
Talk about telling embellishing. Dan started in Sep 2005. Well after the growth and scaling phase. Good try though.
Silly programmer, I started just after him- growth and scaling kept us awake all night in late 2005 well into late 2006.
In many aspects- it is still a nightmare today.
i’m surprised media relations hasn’t stepped in. these posts appear to be dominated by employees, present and past.
wil, play nice and don’t be bitter.
That is so true.
I wonder if they still have all those ex-media planner hacks in “sales dev” pitching corny, cliched ideas to clients.
Sure, the execs at Myspace may bolt. While it’s difficult to recapture the pure volume of growth with a new site, building something like a Myspace or Facebook takes very detailed methods. Spam engine (myspace) or methodically getting the buy-in from Universities (Facebook) – both methods have proven to be very effective, over time.
However, new ideas are better than dying on the Myspace vine.
I always thought MySpace was too crowded, as in their layout with all of the ads and links everywhere. Didn’t really care for it.
hmm.. . but didnt these executives preside over the mis-steps you just mentioned . . .
executives cant take credit just for the good stuff . .. but be responsible for overall results . . .
plus the three of them pretty can call the shots on all major decisions.. . .
All I will say is that I left MySpace because of how both Product and Technology were managed and the environment the “higher ups” created. The guys leaving are great guys, but maybe some new blood will inject some life into the company.
If they hire champions of innovation and creativity it will be a boast to MySpace. If they hire corporate puppets to be controlled by dewolf and anderson and the folks at FIM/NewsCorp they will spiral deeper into whatever dive they are in.
This makes the most sense.
This is why I read TechCrunch. Anyone can report news (”3 Execs Leave MySpace”) but nobody analyzes it better than you and can tell us what the news MEANS and its implications for the future and the industry. Keep up the good work, Mike.
more fuel for the fire…. http://newteeve...es-chen-others/
made me wonder…what ever became of Friendster?