TechCrunch talks about the pitch and the financials that News Corp is using to try and sell MySpace. Arrington says the site is projected to lose $165 million during its 2011 fiscal year. Unlike the Flip camera, perhaps this is one entity that should simply be shuttered.
One day soon MySpace will likely become a Harvard Biz School case study: a once-dominant company that was mismanaged, beset by a formidable competitor and then declined precipitously. It will also be used to illustrate something I’ve spoken about regularly: the “perishable” nature of brands online.
Another likely candidtate for the B. School case studies list is SpotRunner. I was discussing SpotRunner yesterday with several people at AD:TECH.
In early 2008 there were a number of companies circling the then very hot company. Its valuation was a reported $300 million; admittedly small by comparison with some of today’s bubbly numbers, but still considerable.
There were rumors that WPP and Microsoft wanted to buy SpotRunner. The company didn’t sell of course. I had heard at the time that the rumored offers were too low for the company. (My information is very much second or third hand. I don’t know what really happened.) In retrospect clearly it was a mistake to decline.
SpotRunner descended into lawsuits, layoffs and is now in a quasi-comatose state — still around but a shadow of what it once was. (The WPP lawsuit alleged some really ugly stuff about fraud and misrepresentation.) Whether it was greed and arrogance, poor decision-making or a combination of all these and other variables, this company also fell from its once-high perch — though it’s not as great as the fall of MySpace.
Interestingly both SpotRunner and MySpace are based in Los Angeles. Robert Scoble actually argued MySpace’s “bet on LA” contributed to its downfall.
It’s interesting to consider which of today’s high-flying internet companies that spurned a big takeover offer will be in a similar state of decline two years from now.