Kara Swisher

Recent Posts by Kara Swisher

Myspace: A Cautionary Tale or Just a Basic Belly Flop?

A sad little period was put on the even more pathetic story of Myspace yesterday by its former owner, News Corp., which said it had lost $254 million. The media giant announced the writedown during its quarterly earnings call.

The down-the-drain social networking site generated $230 million in operating losses over the last year.

The most recent quarter was an “improvement” on previous losses — but what a way to go.

After its once stratospheric valuation heights, Myspace was sold for just $35 million to a company that included singer/actor Justin Timberlake as an investor, which just adds that last little bit of cringe to the sorry situation.

Many had long predicted Myspace’s demise — the bloom was off the rose very soon after it was the most hyped company in Web 2.0 history. But it’s still a good question to ask: Is this a case that other hotsy-totsy start-ups need to look to as a cautionary tale? Or was it simply a digital belly flop?

Well, it’s both, of course. So here are the five key things the current crop of pretty start-ups might want to take away from the Myspace debacle:

1. Stay current: One of the big problems of Myspace, as has been much observed, was its inability to keep innovating its technology and improving its offerings. While this seems simple in retrospect, consistently trading up the experience and deliverables to users is something that many companies quickly lose sight of. But in a fast-changing digital world, it is very easy to get behind very quickly.

2. Stay focused: You certainly can go in a lot of directions in life and in your business, but most companies that succeed — Apple, Amazon, Facebook — tend to stick rather closely to their knitting and do not veer off into too many orthogonal directions. Myspace, riding on huge waves of attention and hype, seemed to have a new plan and scheme every five minutes. When it comes down to it, most companies are lucky to get one amazing and significant business.

3. Stay humble: Speaking of waves of attention and hype — they’ll sink any company fast if it spends too much time swimming in their deceptively lovely waters. As anyone at the top of a curve knows, the riptide downside will come soon enough (see: Airbnb). Thus it’s important to have the right amount of attention. While it goes against a lot of marketing strategies, underplaying can often be more powerful.

4. Stay customer-focused: Another obvious rule that Myspace repeatedly broke, with its rush to add all kinds of traffic-inducing elements to the site, rather than build it for quality and layer them in later. While people joked about the circus act that Myspace’s interface became, it actually was not very funny for those using it.

5. Stay independent: One wonders what might have happened if Myspace had not taken the money and run. While the pile of money from News Corp. was perhaps irresistible, it’s hard to find to anyone on any side of this deal who did not bemoan the pressures of being inside a big company, and its negative impact on Myspace.

Facebook — which CEO Mark Zuckerberg was allowed to carefully nurture before imposing a definite business plan — is often pointed to as proof of the importance of allowing delicate start-ups the space to thrive. But there are also instances of hot entrepreneurs doing fine within a larger entity — YouTube at Google, or Zappos at Amazon, leap quickly to mind.

In the end, of course, none of this might have helped Myspace, which may have simply been one of the Web’s shooting stars. That is to say, remarkable to watch — but, in the end, also a lot more common than you might think.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work