Since being pushed out of MySpace, Chris DeWolfe has tried to raise money to roll-up social games and compete against Zynga:
DeWolfe is likely looking at very small gaming companies run by a handful of stellar developers but that lack the legal, business development, and dealmaking resources to make any kind of a dent in the current social-gaming market.
Social games are a red hot space, with Zynga allegedly generating $100-250M in annual revenues.
If this all sounds familiar, it’s because DeWolfe’s former boss Ross Levinsohn was also planning on raising money and rolling up assets when he left Fox Interactive Media. Levinsohn, of course, joined forces with former AOL boss Jon Miller and instead merged their venture capital operations with ComVentures to become Velocity. Today Miller has left for News Corp’s Digital Chief and Levinsohn has renamed Velocity Fuse. One thing he learned wasn’t obvious was the whole roll-up strategy.
Roll-ups sound great in theory and every time I mention rolling up video assets (the industry I operate in via WatchMojo) investors get hot and heavy, but the truth is, just because sometimes creative/technical types lack the “legal, business development, and dealmaking resources to make a dent in their market” doesn’t mean roll-ups make sense from a strategic, operational, financial or tactical perspective.
You have to be able to manage a lot of personalities and egos, above all, and then once that is done (if that can be done), then you have to make the numbers add up.
Then again, don’t be surprised if Levinsohn invests in DeWolfe’s venture, who knows.
DeWolfe still has a better valuation landscape today than the one facing Levinsohn when he left FIM, but either way, DeWolfe should avoid suffering from hubris and biting off something that is easier to chew if he plans to catch lightning in a bottle twice.
The authors of “Curse of the Mogul”, namely Jonathan Knee, Bruce Greenwald, and Ava Seave, allege that media moguls are a bunch of idiots, basically (note to their lawyers: yes, I am paraphrasing).
Via Business Insider:
For instance, News Corp acquisitions in the past decade, from the Journal to MySpace, have not gone over well. News Corp wrote down $3 billion on the Journal, and MySpace is pretty much worth zero at this point.
I understand MySpace [2009] < MySpace [2005] - granted, but still, am I crazy or was that not a great deal: Google paid Fox Interactive Media $900M to serve text ads on the digital properties of News Corp. because it wanted to block Microsoft and Yahoo! from landing the MySpace inventory.
News Corp. paid $580M for Intermix, which owned MySpace.
Today MySpace is no longer the largest social network out there, but it remains a very fierce player in music and entertainment.
I fail to see how it was a bad deal, even if its value keeps falling over time.
This week, MySpace.com launched a branded microsite to promote Coca-Cola’s “Open Happiness” campaign. The key theme of the microsite reveals The Formula for Happiness. The microsite includes interactive features with a focus on Music, Fashion, Video Games and Movies, as well as daily prize giveaways and one grand prize of an all expense paid trip to MySpace’s upcoming “The Release” show. Each section required relevant content that reflected the brands message of “Happiness”. WatchMojo.com had the privilege of providing original and exclusive video content to power the microsite’s Fashion Section. WatchMojo was challenged to find entertaining and informative fashion videos that closely matched the overall feel of Coca-Cola’s brand and message and would help increase user engagment. WatchMojo scanned its complete library of content to single out the best fashion videos we had to offer. The result, WatchMojo’s content integrated flawlessly into the microsite, adding precious value to Coca-Cola’s “Open Happiness” campaign.
You can see the microsite that went live Thursday August 20th, 2009, here: The Formula for Happiness
MySpace is about to buy iLike to galvanize its leader in music, and the deal, if it goes through, is a sign of the times for 2 reasons:
1 - At a rumored $20M price tag, the deal is anything but a hit, from TC:
The company has raised a total of $16.5 million from the founders, Scott Banister, Bob Pittman, Vinod Khosla and Ticketmaster to date. But their last round of funding was in 2006, where Ticketmaster put the bulk of the capital in via a third round of financing that valued the company at a whopping $53.2 million.
In Q4 2008 Ticketmaster wrote down a number of their venture investments, including a $5.8 million charge for iLike. Internally, they valued that $13.3 million investment at just $7.5 million. Last month we reported that iLike was considering a new round of financing that would cash TicketMaster out of the company.
But, music is a bitch to monetize and everyone is facing down rounds… which is a major threat to VCs, in my opinion, as entrepreneurs will rather walk than see their already squeezed ownership stakes get diluted even further.
2 - Distribution over Destination
You will see more and more companies look to extend their reach outside of their owned and operated properties. iLike is the top music application on every social network (including Facebook) aside from MySpace, which owns MySpace music.
Ultimately, with the exodus of talent from MySpace, I think a major driver here is the talent that will come with the deal, namely: Ali Partovi, Hadi Partovi and Nat Brown, and the underlying technology.
Apparently, 83% of Top 100 Marketers advertise on Facebook, is this a result of social media being effective or does it have to do with Facebook being so huge that marketers have to be on it, the way they had to be on portals in the early 2000s and had to be on ABC/NBC/CBS previously, etc?
I think Facebook’s success with advertisers mimics MySpace’s success in that the biggest social media company will do well due to reach and size, but all others will suffer. Just look at the number of casualties in the ad-supported social media spae and you can come to your own conclusions.
MySpace today fired 500 of 750 employees internationally. This is on top of the 500 people they fired from a staff of 1,000.
I know the idea of starting a company and opening offices is growth, revenues, job creation and profits, but you cannot encourage entrepreneurship in an environment where laying people off is impossible and so punitive to the employer.
Unlike our recent domestic restructuring announcement, what we are announcing today is a formal proposal we intend to implement, rather than an executed plan. As required by laws in countries where we operate, we will not implement the plan until we have consulted with potentially affected employees.
Read more.
Navigation, Content and Communication
Google would be navigation, clearly they won that game. They are now moving towards communications, with things like Gmail… but as email morphs into social networking, they are now moving into that space more and more.
This is why I think Google and Facebook are the real enemies or combatants in that space.
I don’t see MySpace and Facebook as competitors… and this kind of supports my argument that moving forward, MySpace will be increasingly a competitor to Microsoft’s MSN.com and Yahoo.com, which both aggregate content and editorialize it. This also explains why MSFT invested in Facebook, not just to avoid Google from buying/ investing in Facebook, but also as a proxy to fight Google on the communications front.
MySpace will be an entertainment hub, Facebook will be a tech platform, basically, used largely to communicate. Long term, even if Facebook seems to be more valuable, MySpace will generate far more revenue.
AllFacebook asks: did Van Natta not have a (hey it rhymes!) non-compete?
Today MySpace has annoucned that Owen Van Natta, the ex-Chief Operating Officer of Facebook has been appointed the role of MySpace Chief Executive Officer. It’s approximately a year and two months after leaving Facebook and one has to wonder, did Owen Van Natta have a non-compete? He clearly has substantial competitive intelligence and while he may not know the latest information from inside Facebook, he at the least has deep insight into the way the organization functions. The announcement comes as no surprise given that MySpace has been leaking the information for the past few days, but now that it’s confirmed it will be interesting to see what comes of this. MySpace would most likely not hire Van Natta if they expected a costly legal battle with Facebook. At this point it appears to settle many old scores as Mike Arrington writes.
Non-compete’s are not really enforcable in California, for one, however, they cover three things:
- term
- scope
- location.
Incidentally, I got sued by MySpace’s parent News Corp., who bought IGN, the company that bought my old company. I won… so I will repay them the favor now and say that if Facebook is thinking of suing MySpace, they should not bother.
Yes, for sure, the scope would make MySpace competitive with Facebook, as would location.
However, if Van Natta has been away from Facebook for 2 and a half years, then chances are that the term has expired, and frankly, if it hasn’t (ie. if the non-compete lasted for say three years) then jurisprudence would suggest that that would be too long for a Web business.
Now Facebook could argue and counter that Van Natta was too important of an executive to be allowed a shorter term, granted, so if they were hiring me for advice on how to win in a potential lawsuit, I would argue that if it is true that Van Natta was passed up for the CEO/COO role in favor of Sheryl Sandberg and as a result Van Natta’s responsibilities changed or shifted, then he was a victim of constructive dismissal.
To get more info on non-competes, read this.
Whenever a company has looked at acq-hiring Mojo Supreme (WatchMojo.com video site, BloggerMojo.com network of blogs, MetaMojo.com search technologies and StreetMojo.com database products) they ask me for a list of suggestions regarding the strategic value and integration plans.
Call me crazy, but reading Jason Calacanis’ email re: The First Ten Things the New CEO of MySpace Should Do, I couldn’t help but thinking that this was awfully similar to one of my “1+1=10 game plans” I submit as part of the song and dance, and in fact was Jason’s email to new News Corp. digital head honcho Jon Miller’s after Mr. Miller asked him: “hey Jason, we’re looking for a new guy to run MySpace, what would you do?” Mr. Miller bought Jason’s last company Weblogs Inc. for $25M when he ran AOL.
Whether Jason is really in the running or he’s simply found a way to play the media into thinking he’s in the running it’s moot; it’s good PR and buzz-building and he’s once again showing he’s quite adept at it.
Good for him. I highly suspect Owen Van Natta will get the job, mainly because he is coming from the company that stole MySpace’s mojo, that being Facebook.
In a few minutes I will post you an example of what I mean, check again soon.
Here is my sales pitch to CBS dating back in 2007, enjoy, I removed about half of the content and left the “strategic value” part.
Live coverage of ad:tech San Francisco by David Shabelman.
In a roundtable on the state of the digital advertising industry at the ad:tech conference Wednesday morning, panelists emphasized that even with all the knowledge Web sites can gather on their users, challenges remain in digital marketing.
First and foremost, panelists emphasized that content remains king and that the message being delivered to consumers remains an important factor, though it must also be followed up with a great product. Carol Kruse, vice president of global interactive marketing for The Coca-Cola Company, said “if the story isn’t compelling, it doesn’t matter how well targeted it is, people aren’t going to look at it.” One of Coke’s most successful online efforts is a fan page on Facebook that wasn’t even created by the company, but has attracted millions of users that enjoy the product.
Neil Ashe, president of CBS Interactive concurred, saying despite all the information it has on its users, “the most measurable medium is the most difficult to understand.” While CBS is able to do effective advertising on its video game Web site Gamespot, he admitted it still is learning how to better serve products like Coke.
One solution, they said, is to enhance a consumer’s experience with the message rather than be seen as a disruptive. As an example, Coke worked with CBS in its online efforts that surrounded college basketball’s March Madness. Rishad Tobaccowala, CEO of digital consulting firm Denuo (a part of Publicis Groupe), said advertising agencies must increasingly work with not only with their clients, but also with the technology company delivering the advertising.
Panelists also mentioned how mobile platforms are becoming a larger part of online marketing programs. Jeff Berman, president of sales and marketing for MySpace said the site has seen a five-fold increase in mobile traffic over the past year. Suffice to say, no word on the rumors that his CEO Chris DeWolfe was stepping down as CEO of MySpace.
For more coverage ad:tech SF, visit our overview page here.
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