Ho John Lee’s Weblog

Intermix Media, which is mostly MySpace.com (plus assorted spyware), was purchased by News Corp for $580MM yesterday.

A look at how the investors (VantagePoint and Redpoint) did by Bill Burnham:

For VCs, this sale is significant because it represents the first real payday in the social networking space, a space that to date has seen lots of VC hype but very little returns. Just how big a payday was it for VC’s? Thanks to the fact that Intermix was a public company it’s possible to take very educated guesses at how the VCs made out. There were two main VCs involved in MySpace/Intermix. VantagePoint had been involved with the parent company for some time, while Redpoint recently invested in MySpace itself.

Paul Kedrosky notes:

Oh my, but the MySpace.com acquisition for more than half-a-billion dollars is going to cause a VC-driven content train wreck. We already had startups falling out of trees making MySpace comparisons, now they’re going to be thick on the ground, with the “MySpace of X” and the “MySpace of Y”, and the “MySpace crossed with Google”, etc. etc. I shudder to think how many VCs will fund MySpace-alikes through a thought process like the following…

MySpace is an interesting phenomenon for many reasons. It’s wildly popular among the teen-to-mid30’s bracket, and is also largely invisible to people outside that group (i.e. 35+). It’s not quite a dating service, although this is clearly one of the core attractions of the site, along with music, gossip, classifieds, and blogging. It fills a lifestyle niche in a way that echoes the boom days of America Online, but rather than chat rooms, message boards, and a first glimpse of the internet, MySpace is drawing in many new users for their first experience with blogging, social software, and Web 2.0. It also draws some of the same criticism, of being insecure, hacked together, and technically lacking. Despite this, they’ve grown to a massive level of traffic and corresponding ad revenue in a short period of time. I don’t generally get how to make money on social web sites, but ad revenue on 7.5 billion page views (more than Google) I understand. All this while being virtually unknown to at least half the people I talk to.

This entry was posted on Tuesday, July 19th, 2005 at 11:22 am and is filed under Finance/Investing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.