The Lessons from Wirecard and Myspace

The Lessons from Wirecard and Myspace

I still believe that Myspace did not collapse because of the rise of Facebook. My call remains that Myspace did not execute on what it wanted to do, and because of that, it froze on its mission. That is typical: most startups do not die because of competition, they die because they are unable to execute on the mission they have been established to pursue. 

Specifically for Myspace, it was stagnant on its product innovation, especially on integrating with 3rd party entities, which Facebook later did, and set a new basis of competition. Yet, even with that, it could have found a niche in a segment with its music nativity if not that it was failing across the board. We later knew what happened!

Yes, a few years later, we realized that Myspace was not backing up when it reported that it had lost years-long data of its users! That type of company was not destined to have impacts in markets. Yes, it was not Facebook that killed it, it would have folded even without Facebook with that culture! You were making $800 million per year but could not find money to do backup!

“As a result of a server migration project, any photos, videos, and audio files you uploaded more than three years ago may no longer be available on or from Myspace. We apologize for the inconvenience.” Myspace.

That takes me to Wirecard, an insolvent German fintech which announced in 2020 that €1.9 billion in cash was missing. According to Financial Times, some employees saw some of their colleagues moving cash in plastic bags over a period of years. What do you expect? Simply, collapse. Yes, when staff saw employees go to the vault, load cash in plastic bags, and take home, and no one reported it, the mission was done, competition or no competition!

Wirecard employees hauled millions of euros of cash out of the group’s Munich headquarters in plastic bags over a period of years, according to former employees, suggesting that the payments company was looted even more brazenly than previously known.

The once high-flying fintech, which at its peak was worth €24bn, went bust last summer in one of Germany’s biggest accounting frauds. It collapsed after discovering that €1.9bn of corporate cash did not exist and that parts of its business in Asia were a sham.

Former employees have told Munich police investigating the fraud that staff repeatedly removed large amounts of cash from Wirecard’s head office, people with direct knowledge of the matter told the Financial Times.

 

MySpace Backup Problem Explains Why Competition Is NOT Your Startup Main Enemy

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0 thoughts on “The Lessons from Wirecard and Myspace

  1. “Staff saw employees moving cash in plastic bags.” Which groups are called staff and which ones are referred to as employees? Becoming confusing.

    If Wirecard kept so much raw cash in its vaults, what made it a fintech then? And this happened in Germany? Employees loaded cash in plastic bags and went home. Sounded like sci-fi movie. And some people wondered how snake swallowed some millions in Nigeria few years ago? Wirecard’s case is even dumber, a bit superfluous.

    MySpace forgot people’s data, Wirecard forgot where it kept people’s money.

    Which sector holds the largest concentration of dumb people? Initially you might think it’s either Entertainment, the make-believe universe, or Sports; but with the level of funny stories coming out from Tech sector, I think the title should belong to Tech. This is one industry where guys play kalu kalu with billions of dollars on weekly basis, and when you enquire on what happened to the money, you are told incredible stories.

    The sectors where too much money flows seem to be where you have the dumbest guys, just look at these four sectors: Entertainment, Sports, Tech, Financials (the Wall Street guys and co).

    World of wonders!

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