The Rise and Fall of Myspace: A Cautionary Tale for Entrepreneurs

Myspace was the social media pioneer that soared to incredible heights before crashing back down to earth. Its story is a rollercoaster of monumental growth and epic failure. For entrepreneurs, Myspace offers important lessons on capturing fleeting opportunities while remaining flexible and innovative.

The Founding Vision

Myspace was founded in 2003 by Chris DeWolfe, Tom Anderson, and a team of pioneers seeking to create an online community for discovering music and meeting friends. At the time, it stood out by allowing users to customize profile pages with HTML and share music.

DeWolfe has said his vision was "to build [a] napster for profiles and friends." Anderson, known for making the first Myspace profile, described it as "a social networking site before social networking existed." Their startup culture was dynamic, moving fast to ship new features.

Rapid User Adoption Fuels Success

Myspace gained traction by focusing on attracting musicians. Bands like Arctic Monkeys found fame through the platform by connecting directly with fans. This organic growth led to a tipping point in 2006, when Myspace passed Google as the most visited U.S. website with over 54 million monthly U.S. visitors.

Myspace Visitors Vs Competitors

By its peak in 2008, Myspace had:

  • 75.9 million global monthly active users
  • 67.5 million monthly unique U.S. visitors
  • Nearly $800 million in annual revenue
  • A parent company, News Corp, that purchased Myspace for $580 million in 2005
  • A valuation of over $12 billion as a media darling

For a brief time, Myspace was the place to be online. Its meteoric success seemed unstoppable.

New Competition and Product Stagnation

However, the tides quickly changed when Facebook emerged as a serious competitor. Myspace failed to adequately respond to competitive threats and product mistakes that eroded its leadership.

By 2009, Facebook overtook Myspace as the leading social network. By 2011, Myspace traffic had dropped 31% year-over-year to just 35.9 million global monthly visitors. It was losing its audience to superior user experiences on Facebook, Twitter, and Apple‘s app store.

A lack of innovation, site performance problems, security flaws, and buggy mobile apps are cited as factors in its decline. Myspace simply failed to continue delivering what users wanted.

Lessons Learned

The dramatic saga of Myspace‘s rise and fall provides several lessons for entrepreneurs aiming to build the next big thing:

  • Seize opportunities quickly – Myspace shows the importance of capitalizing quickly on a promising idea before competitors do. They executed well initially.
  • Expect competition – Success inevitably breeds competition. Maintain vigilance and don‘t underestimate threats. Myspace was slow to respond.
  • Adapt or die – Creating an amazing product isn‘t enough. You must keep evolving to please fickle users. Myspace stagnated while Facebook iterated.
  • Move fast – With technology, you either stay ahead of trends or get left behind. Myspace failed to keep pace.
  • Deliver a fantastic user experience – Products must be high-quality, easy to use, and support business goals. Myspace struggled here.

Myspace went from dominance to irrelevance within a few years. But by learning from its mistakes, entrepreneurs can build products that stand the test of time.