Monday, January 30, 2006
Interview with Richard Rosenblatt, Intermix and MySpace
My interview this morning is with Richard Rosenblatt, former chairman of MySpace, and former CEO of parent company Intermix. Intermix was recently awarded Best Merger and Acquisition by the Los Angeles Venture Association, where I ran into Richard. Intermix was acquired for over $650M in July by News Corp. Richard is now consulting for News Corp. I talked with Richard a bit about the acquisition.
BK: Thanks for the interview, and congratulations on the purchase. I'm interested in hearing the story on how the whole acquisition by News Corp. came about. How did the acquisition come about?
RR: Hello and thank you for the time. Michael Montgomery, a local investment banker, approached me to see if we were interested in some strategic alternatives. Having just completed the Spitzer challenges I thought it was time to potentially look at strategic partners to either invest or acquire us. I was talking to a number of large media companies about Intermix and Michael mentioned FOX and a few others as alternatives.
BK: Did you run a complete process?
RR: As you'll see in our filings, we were approached by Fox and a number of parties. However, because of the complexity of the Myspace options we did not hold a public auction, but did maximize shareholder value in a number of ways.
BK: Was News Corp. specifically looking for a company like Intermix, and why were they interested?
RR: They were looking to grow significantly in the Internet space and needed a sizeable acquisition to compete with the other media firms. After a couple of meetings, they saw Intermix as a unique opportunity to enter multiple businesses all of which were profitable and growing.
BK: It seems like MySpace was a great move. How did MySpace come about?
RR: MySpace was started here within Intermix, about two months before I became CEO. It was a fledgling website with under 100,000 visitors.
BK: Did you invest strategically to grow MySpace?
RR: Yes, when I met with the management of MySpace, I took a look at business and thought the idea of community was very powerful. I had recently helped build superdudes.net, a virtual community around causal gaming and tole playing, so I had experience with a similar model. The idea was really powerful, and I felt like the idea of creating a community for teens around music and self expression made a lot of sense.
BK: How did you grow MySpace, and did you spend marketing dollars to get the word out on the site?
RR: The growth in MySpace was 100% viral.
BK: How big was the business in MySpace when you were acquired by News?
RR: We were acquired in July and had about 17-18M unique visitors
BK: Intermix was really a mess when you first joined as CEO, with an SEC investigation, accounting restatements, and lawsuits everywhere. How did you manage to clean things up?
RR: We just methodically addressed the issues, one after another. We focused on cleaning up the business, changing the business models, addressing lawsuits and all related issues head on.
BK: What parts of Intermix was New Corp. interested in - was it true they really bought the company for MySpace alone, or were there other parts of the company they wanted?
RR: News was interested in company as a whole, and our three main divisions: MySpace, Alena (marketing analytics and e-commerce), and our general media network, which is made up of about 30 different websites. It just happened MySpace was fastest growing piece so that's what they focused on.
BK: Finally, what's next for you now that Intermix is becoming a piece of News Corp?
RR: Right now I'm going to continue to consult with them, help them to grow MySpace, Alena and the network. But I'm starting to look at what could be the next opportunity in the media space, and I'm talking to a lot of different people and trying to figure out what I'd like to spend my time on.