How Organizational Culture Killed MySpace
Yesterday NewsCorp sold MySpace for $35 Million, just six years after plunking down $580 Million for what was -- at the time -- the king of social networking sites.
I have no doubt that a raft of social-media gurus will write in-depth analyses contrasting the fall of MySpace with the rise of Facebook. I'm sure there will be lots of buzz about their different strategies and the product decisions made by both companies. I bet there will be lots of focus on features and bells and whistles. Facebook will be lauded for their open-API's and MySpace panned for their stagnant design.
But don't miss the real story here: Organizational Culture Killed MySpace
Let the social-media gurus argue about the strategies and product features that killed MySpace. But behind the failed strategies and behind the stagnant design and behind the lacking feature set -- behind all of it are people and teams.
MySpace failed because of culture. Its people failed to innovate. Its teams failed to execute. MySpace failed to capitalize on a huge headstart in social media.
Consider a recent commentary from Sean Parker (former President of Facebook and founder of Napster): "There was a period of time where if [MySpace] had just copied Facebook rapidly, I think they would have been Facebook. The network effects, the scale effects were enormous. There was so much power there."
There's a good chance that the culture clash from being acquired by a traditional public media company like NewsCorp directly contributed to its downfall. In 2009, the founders of MySpace (Chris DeWolfe and Tom Anderson) appeared on The Charlie Rose Show. When asked "Are you happy you made the deal?", DeWolfe responded: "Um …," and took a gulp of water. Recently DeWolfe said:
"I think any time a startup is acquired, there's always a certain amount of culture clash. There are more meetings during the day with a big company. There are three different levels of finance that you need to go through. There are people that want to meet with you in other divisions, and it's a professional courtesy to see how you can work with them. So from that perspective, you sort of end up taking your eye off the ball."
And it looks like we might get a look behind the curtain from employees themselves. Shortly after yesterday's firesale, a group-writing project called "Real MySpace stories" appeared on the internet. The site begins by saying:
"The rise and fall of Myspace will be one of the more interesting tech stories for years to come. Nobody knows more about how and why things begin going wrong than the people who worked there everyday. We need to tell our story... This is not about News Corp executives, analysts, or other armchair quarterbacks - but real stories from the employees of Myspace."
This is not an uncommon story. It doesn't just affect mergers between old and new media or mergers between public and private companies or mergers between established and startup businesses. We're in the middle of a broadbased study on the effects of the cultural alignment between 5 acquiring hospitals and 5 private specialty surgical practices and look forward to sharing more on what we observe.