Built the first social network that let anyone customize their space — ugly but addictive. Owned the music scene by making it dead simple for bands to reach fans without knowing HTML. Hit 100 million users by 2006.
What Changed
News Corp bought them for $580M and locked them into a $900M/year Google ad deal that required plastering ads everywhere. User experience died. Meanwhile, they couldn't innovate because every decision had to maximize page views to pay Google. Facebook moved fast; MySpace was stuck optimizing for quarterly revenue.
Where it Landed
Sold for $35M in 2011 — a 94% loss in six years. Lost over $545M on the deal. Site still exists as a broken graveyard with 3M monthly visitors versus Facebook's 3 billion.
The Principles
1.
Revenue deals can become golden handcuffs. The Google contract forced them to destroy user experience just to hit quarterly targets.
2.
Old-world thinking kills new-world businesses. News Corp treated the internet like a newspaper — maximize ad space, think in quarters, not decades.
3.
Technical debt compounds like financial debt. Building fast is fine; never refactoring will eventually break you at scale.
Builder's Takeaway
3 warning signs your growth deal is a trap:
•
If hitting revenue targets requires degrading the product, walk away
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Long-term contracts that prevent experimentation are poison at scale
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Technical shortcuts work until they don't — budget for refactoring early
