Archive for the 'People' Category

Tom Anderson and Chris DeWolfe must be pretty upset today. The two founders of monster social networking site MySpace had sold it lock stock and barrel to NewsCorp for $580million in 2005. Just a few months later all of that investment and more ($900million to be precise) was recouped through a deal with Google in which it would became search engine partner for MySpace. And now Rupert Murdoch is considering swapping it for a 25% stake in Yahoo!

At the time, the deal seemed sweet: so sweet, in fact, that many observers thought Murdoch must have lost his wrinkled mind to pay that sum of money for MySpace. But then, in early 2006, Google (yes, THEM again) snapped up upstart online video site, YouTube, for $1.6billion, and its two founders, Chad Hurley and Steve Chen, found themselves a few hundred million dollars richer.

The MySpace duo fumed.

No wonder they took umbrage and started to think they’d been ripped off by wily old Aussie, Murdoch. MySpace had far higher numbers of subscribers than that Johnny-come-lately YouTube and a business model that was bringing in real cash, not just column inches. So, in June this year, Anderson and DeWolfe decided to ask Rupert for more cash in compensation - to the (name that) tune of $12.5million a year each - to stay on after their contracts expired! Murdoch has counter-offered with $7.5million each for two years and, as far as I know, the discussions are still going on.

But, hot off the press (and long awaited) news about a deal between Microsoft Corp and Facebook must be making the two MySpace founders more bitter still. Today Microsoft said it was paying $240million for a 1.6% stake in Facebook - a site a mere four years old that again has way fewer users than MySpace - valuing it at around $15billion (or 25 times the amount MySpace was sold for). Grrr! And Mark Zuckerberg, the 23-year old founder of Facebook, frees up some cash for a bit of money for pocket money (to buy a Lear Jet, for instance) while staying firmly in control. GRRRRRRR!!!!

The moral of the tale? There is none. Murdoch is a shrewd dude who saw the potential of MySpace and snapped it up as the, what now looks to be, bargain of the century. Mark Zuckerberg is half a century (53 years!) younger and is every bit as savvy. And DeWolfe and Anderson made it big, but perhaps sold out too early (easy to say in hindsight). So, sorry Tom and Chris. Buy me some Cristal and I’ll help you commiserate.

The CEO of Sprint Nextel , Gary Forsee, resigned today because of the mobile carrier’s appalling loss of subscribers and financial performance.

Why is this significant? Because in an industry that is probably the very worst at customer service, Sprint Nextel is the real pits, and the man who let this happen has finally paid the price. As we explain in the chapter in Punk Marketing called ‘The Captive Consumer,’ companies that spend all of their efforts enticing customers in with slick marketing and empty promises and then treat them like burping pigs when they’ve signed a contract with them, will suffer in the long term. The threat of early termination fees (the money a customer has to spend to be released from their contract when they realized they’ve been duped) doesn’t create customer loyalty, it just adds to the bad taste in the mouth that poor aftersales support leaves.

According to Sprint Nextel they expect to report a net loss of 337,000 monthly postpaid subscribers in the recently completed 3rd quarter. That is indeed ‘major fleeing.’ Sprint, like most of the other carriers, just havent learned the lessons of other industries who also thought that the power lay with the corporation not the consumer. Think the airlines, for instance, many of whom have suffered as customers said “pah!” to the accumulated and unused frequent flier miles in their accounts and went to JetBlue or Southwest for their friendlier service.

So, Gary, we wish you farewell. And to Sprint we say, wake up and hear the ring tone. Finally get your act together and recognize that you are in the service industry. In other words treat your customers as people you don’t want to lose. Oh, and try and find a way to reduce your staff turnover in your stores. Hmm, wonder if those things are connected?