mySpace Founders Forced Out on Executive Pay & Culture Clash

Another scoop for TechCrunch, who reported over 24 hours before AP, the Wall Street Journal, and Reuters on the breaking story that mySpace co-founders Chris DeWolfe and Tom Anderson are being ousted from top management positions at the company and will likely step down. Though their contracts were not due to expire until later this year, the pair were earning $30 million USD per year at News Corp. A look at the forthcoming changes and the deeper reasons leading to the break points to serious trouble at mySpace.

“MySpace CEO Chris DeWolfe and News Corporation’s Chief Digital Officer Jonathan Miller, announced today that, by mutual agreement, Mr. DeWolfe will not be renewing his contract and will be stepping down in the near future. Mr. DeWolfe will continue to serve on the board of MySpace China and will be a strategic advisor to the Company. Additionally, Mr. Miller announced that he was in discussions with Tom Anderson, MySpace’s president, about Mr. Anderson assuming a new role in the organization. “

“The company did not immediately name a replacement, and a company spokesperson declined to comment, but some speculate that former Facebook COO Owen Van Natta is a leading candidate.”

According to traffic statistics, mySpace is still the largest social network in the US, but was down in membership overall 4% on the year, while US membership for Facebook rose 78% in March alone. Typically, founders leaving a site after a sell out to a corporate conglomerate means that the site is surely losing its original message, community, spirit, and philosophy. Huge changes have come to the site with the relaunch of mySpace Music; for underground pop and hip hop networking, promotion, clubs, concerts, and the like, mySpace is still the undisputed champion. Yet as it becomes a platform for mass, mainstream, commercialized music and video distribution, maybe Anderson and DeWolfe weren’t the best point men for the job.

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Rackable Acquires Silicon Graphics after Second Bankruptcy

Breaking News – Silicon Graphics International (SGI) files again for Chapter 11 bankruptcy and Rackable announces that they are acquiring the company for $25 million USD. On first response, this sounds like a great deal. SGI can eliminate and restructure a large portion of their debt, and Rackable gets a huge bargain on one of Silicon Valley’s all time great companies. In 1995, according to Wikipedia, Silicon Graphics was valued at roughly $7 Billion USD – selling at less than 1% of that merely 14 years later. SGI’s problems are similar to those of Sun, Cray, and even IBM… historical makers of mainframe supercomputers unable to keep up in R&D / relevancy vs. Intel / AMD / Nvidia.

What will happen to shareholders of SGI stock is unknown – it looks to be a wipeout with total loss of value there. Trading of SGIC stock was suspended by NASDAQ around March 12^th, 2009 – the company was appealing the decision, but (even though no official announcement has been made yet) it looks like it will probably stay de-listed and the assets / trademarks of SGI will be absorbed in Rackable. When it comes down to business plan, SGI seems to have been making some great process in building high-end, custom servers with Intel’s new Xeon chips.

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