How Facebook Beat MySpace

Before there was Facebook, the social media juggernaut which is changing how we communicate – and might change the face of media – there was MySpace.  MySpace was targeted at the same audience, had robust capability, and was to market long before Facebook.  It generated enormous interest, received a lot of early press, created huge valuation when investors jumped in, and was undoubtedly not only an early internet success – but a seminal web site for the movement we now call social media.  On top of that, MySpace was purchased by News Corporation, a powerhouse media company, and was given professional managers to help guide its future as well as all the resources it ever wanted to support its growth.  By almost all ways we look at modern start-ups, MySpace was the early winner and should have gone on to great glory.

But things didn’t turn out that way.  Facebook was hatched by some college undergrads, and started to grow.  Meanwhile MySpace stagnated as Facebook exploded to 600 million active users.  During early 2010, according to The Telegraph in “Facebook Dominance Forces Rival Networks to Go Niche,” MySpace gave up on its social media leadership dreams and narrowed its focus to the niche of being a “social entertainment destination.” As the number of users fell, MySpace was forced to cut costs, laying off half its staff this week according in “MySpace Confirms Massive Layoffs.” After losing a reported $350million last year, it appears that MySpace may disappear – “MySpace Versus Facebook – There Can Be Only One” reported The early winner now appears a loser, most likely to be unplugged, and a very expensive investment with no payoff for NewsCorp investors.

What went wrong? A lot of foks will be relaying the tactics of things done and not done at MySpace.  As well as tactics done and not done at Facebook.  But underlying all those tactics was a very simple management mistake News Corp. made.  News Corp tried to guide MySpace, to add planning, and to use “professional management” to determine the business’s future.  That was fatally flawed when competing with Facebook which was managed in White Space, lettting the marketplace decide where the business should go.

If the movie about Facebook’s founding has any veracity, we can accept that none of the founders ever imagined the number of people and applications that Facebook would quickly attract. From parties to social games to product reviews and user networks – the uses that have brought 600 million users onto Facebook are far, far beyond anything the founders envisioned.  According to the movie, the first effort to sell ads to anyone were completely unsuccessful, as uses behond college kids sharing items on each other were not on the table.  It appeared like a business bust at the beginning.

But, the brilliance of Mark Zuckerberg was his willingness to allow Facebook to go wherever the market wanted it.  Farmville and other social games – why not?  Different ways to find potential friends – go for it.  The founders kept pushing the technology to do anything users wanted.  If you have an idea for networking on something, Facebook pushed its tech folks to make it happen.  And they kept listening.  And looking within the comments for what would be the next application – the next promotion – the next revision that would lead to more uses, more users and more growth.

And that’s the nature of White Space management.  No rules.  Not really any plans.  No forecasting markets.  Or foretelling uses.  No trying to be smarter than the users to determine what they shouldn’t do.  Not prejudging ideas so as to limit capability and focus the business toward a projected conclusion.  To the contrary, it was about adding, adding, adding and doing whatever would allow the marketplace to flourish.  Permission to do whatever it takes to keep growing.  And resource it as best you can – without prejudice as to what might work well, or even best.  Keep after all of it.  What doesn’t work stop resourcing, what does work do more.

Contrarily, at NewsCorp the leaders of MySpace had a plan.  NewsCorp isn’t run by college kids lacking business sense.  Leaders create Powerpoint decks describing where the business will head, where they will invest, how they will earn a positive ROI with projections of what will work – and why – and then plans to make it happen.  They developed the plan, and then worked the plan.  Plan and execute.  The professional managers at News Corp looked into the future, decided what to do, and did it.  They didn’t leave direction up to market feedback and crafty techies – they ran MySpace like a professional business.


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