Remember MySpace? Juicero got killed when people realized the hardware was worthless. Theranos was straight fraud. But how did MySpace die? Here are 5 lessons startups (and investors) can learn from MySpace.
1) Public image problem: if you are a consumer-facing company and your reputation turns into the ghetto of the internet it’s hard to shake it. Guard your image, protect data and crest safe places. MySpace didn’t do that. Ironically, Facebook was looked upon as the nice neighborhood on the social web vs MySpace being the hood filled with prostitutes and fake accounts.
2. Use venture money so the pressure to drive revenue doesn’t stifle product development, iteration or quality. MySpace was acquired by a company whose main focus was revenue from ads and it killed them.
3. Failure to execute on engineering/product development. They should have picked five to ten key features and focused on them instead of dozens that were buggy and never worked well. It’s called over-enthusiasm and under-execution.
4. They were acquired by Newscorp and those guys are the opposite culture of who MySpace catered to. The culture of old-school killed this very new school business model. Be careful who you partner with, get funds from or get acquired by.
5. Founding team: most people in the entertainment industry vs technical people. They got out tech’d at the end of the day and VC’s saw it coming. Good business fails with bad leadership. But good leadership can turn around bad businesses.
So no matter how much traction you have, how much you’ve raised, if you take your eye off the ball and make any of these mistakes this can be you. Founded in 2003, took off and was purchased by News Corp in 2005 for $580 million. By 2006, was the top social network in the country. A few years later, lost that to Facebook, which opened up its site to all customers in September 2006, and would overtake them in April 2008. In three years, Myspace lost over forty million unique visitors per month, lost both co-founders and now it’s basically done. Stay thirsty! #kemetinstitute