AICPA

Launching MySpace.com

When some buddies with entrepreneurial tendencies built MySpace.com, they looked to the CPA to make their “little concept” into a viable business.

By Jerry Ross

When you’re not reading this article, chances are pretty good you’re surfing around on MySpace.com, the website that seems—at least for some folks—to define our generation. Listening to cool music, hooking up with new friends, maybe a little blogging, or playing games—it’s all there for the more than 50 million users of the alternative networking portal. The dot-com’s parent company was sold to media mogul Rupert Murdoch last year for approximately $580 million—okay, you probably knew that. What’s less well known is that two University of Southern California business school grads, including one with a CPA credential, co-founded the company. The public face of MySpace is nice guy Tom Anderson, who personally welcomes each new member of the community as their first “friend.” But behind the scenes, two old pals, stylish strategist Chris DeWolfe and financial and accounting whiz Josh Berman, helped make Anderson’s little concept into a viable company, leveraging its growth to build a niche website into a booming operation. Formerly with PricewaterhouseCoopers and also a senior analyst at 20th Century Fox, Berman believes it was essential to have accounting talent on hand during the birth of the company three years ago. “All four founders had different strengths,” he says. “My strength was both operational and financial. Any start-up company’s key success driver is a management team that can be strong in different areas, and finance is one of those key areas. Having the background of a CPA is an extremely important benefit to any emerging company.” And if that company is a new software, technology or Internet concern, then it’s even more so. “Obviously you want to have a sound product person as well as a technology infrastructure—they’re probably the major elements,” he says. “But the finance team is right behind.”

Small start-ups can grow exponentially, and so can their accounting departments. During the early days of MySpace’s development—we’re talking 2003 here—Berman wore two hats, as both chief operating officer and chief financial officer. When revenues started kicking in and he had to recruit additional CPAs, Berman knew the company had reached a tipping point. “We knew we were on the path to success, and it made sense to bring in a team to handle the volume of accounting that was necessary,” he states. Unlike many dating and networking sites, MySpace doesn’t charge its members—something Anderson insisted on from the get-go. But as thousands of users grew into millions, and then tens of millions, advertisers caught on and fell over themselves to attach their brands to the young, hip regulars who spend hours roaming the portal. By the time Murdoch ponied up to buy parent firm Intermix last July, MySpace had attracted 8 percent of all ads on the Internet, putting it in the vaulted company of Google, Yahoo, MSN, and America Online. Now that Murdoch’s News Corp. controls MySpace, the company is using the manpower of its corporate parent. These days, News Corp. handles back-office functions, such as tax preparation, billing and other financial matters. “They have years of experience and a great team in place,” says Berman, adding that MySpace is still on the lookout for brilliant employees with sense about dollars. “When someone applies at our company, the culture fit is important, but so is having the right experience working with high-growth firms,” he says. “If they came from a Big Four audit company, I’d want to know what kind of clients they were working with—was it the oil and energy companies or more of the emerging market types. We look for people used to working with flexible, super-growth entities rather than the big cash cows.” How about schooling? Berman believes every class he took at USC was helpful. So were the personal relationships he made, joining DeWolfe in other ventures before MySpace rocked their world. His advice to students: “It was definitely the entrepreneurial classes that allowed you to be flexible and understand key metrics that drive growth in emerging companies,” he stresses. While the courses that teach advanced accounting principles, like FASB and IRS tax codes, are an integral part of the major and the accountant as a whole, they are a lesser job function for Berman and other entrepreneurial accountants. A cutting-edge CPA like Berman is a part of a new generation of accountants. He’s a fan of mainstream rocker Dave Matthews. And he’s fond of golf. But he also plays the racing game Burnout 3: Takedown and listens to masked metal-hardcore hooligans Hollywood Undead. As for his financial background and his desire for growing new companies, he says there’s nothing that’s helped him more in his business life than being passionate about his work: “It’s in my blood.”