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SATYAM COMPUTER SERVICES LTD FOUNDER RAMALINGA RAJU

January 8, 2009

RAMALINGA RAJU,
FORMER CHAIRMAN ,MD,
SATYAM COMPUTER SERVICES LTD.
Founded: 1987
Headquarters:Hyderabad, Andhra Pradesh, India
Key people: Ramalinga Raju-now resigned Chairman
Industry: Information Technology
Revenue:As Reported by the Company:▲ 2.1 billion USD
Actual Figures: Unknown
Employees:52,865 (As of September 30, 2008)

EARLY LIFE:
Having made a humble beginning to rise to the dizzy heights of success and become one of the richest Indians, Byrraju Ramalinga Raju is described as the pride of Andhra Pradesh and the pride of Telugus. He was born to a farmer B. Satyanarayana Raju in Garagaparru village in West Godavari district of coastal Andhra Pradesh September 16, 1954. Satyanarayana Raju moved to Hyderabad in the 1960s. Ramalinga Raju's grandfather was an enterprising farmer who ventured out of traditional agriculture into agribusiness and bought a sugar mill. The venture backfired and the family lost a fortune. It then scattered into different parts of Andhra and Satyanarayan Raju, Ramalinga Raju's father, whose name inspired the group's name Satyam, moved to Hyderabad and became one of the first farmers to start commercial grape production around Hyderabad. The family recovered and Ramalinga Raju, the eldest son, was sent to the US in 1975 to get an MBA degree from Ohio University after he completed his B.com from Andhra Loyola College at Vijayawada. Ramalinga Raju had a stint at Harvard too. He had attended the Owner/President course at Harvard. He has two brothers and a sister. Raju is married to Nandini. They have two sons, Teja Raju and Rama Raju, and a daughter, Deepti who is married.
In India, as a commerce student at Vijayawada, he had been a carefree young man, from a well-to-do farming family, with not a worry in the World. To begin, when Ramalinga Raju came back from the US in 1977 armed with ambition and new ideas, he tried to build new business for the family. Ramalinga Raju moved away from the traditional agriculture business and set up a cotton-spinning and weaving mill named Sri Satyam. Thereafter he shifted to the real estate business and started a construction company called Satyam Constructions This earned him his bread and butter. Out of curiosity he had brought a small computer back with him from the US. It was a glorified programmable calculator. He realized that information technology would be big in the future and took the plunge in this new business, about which he had limited knowledge.
Satyam Computer Services Ltd:
Satyam (Sanskrit for 'truth') Computer Services Ltd was founded by B.Ramalinga Raju along with one of his brothers-in-law, DVS Raju in 1987 in Hyderabad. He was so influenced by his father that he named the company after him. It was a humble beginning for Satyam with only 20 employees. Satyam Computer Services Ltd was incorporated in 1989 and it went public in 1992. He learned a great deal during his time at OU and in the United States. During that time he foresaw the upcoming trend of outsourcing and the future prominence of computers. He started an IT company with 20 employees and bagged a multitude of IT projects from US companies. The company went public in 1992.Satyam rapidly developed and became a multinational company with thousands of employees spread over many countries.Ramalinga Raju very soon realized that there could be higher margins if one could convince companies abroad that Indian companies could develop the software in India and upload it to the US companies mainframe computers through a satellite data link. Satyam was one of the first companies to get a dedicated 64kbps data link for such "offshore" development. Satyam was among the first Indian companies to make the unique paradigm shift from onsite-led operations to offshore driven ones. Raju also found Satyam Infoway, now called SIFY, an Associate Company of Satyam and India’s largest Internet service provider and first Indian company to get listed in NASDAQ. With the launch of Satyam Infoway (Sify) Satyam became one of the first to enter Indian internet service market. Through his managerial skills and quality leadership, Ramalinga Raju built Satyam into a multinational company and bagged several key contracts, especially from the US. Satyam began trading on New York Stock Exchange in 2001. With each passing year, Satyam strengthened its position and extended its operations to various locations.
The Transformation:
Satyam also became one of the few companies in the world to attain the top rating -level5- in the capability maturity model (CMM) instituted by Carnegie-Mellon University's software engineering institute. Satyam's foray into corporate data and Internet services too was path breaking. While several e-mail companies were languishing in the pre-Internet days due to unreasonably high license fees and port charges by Dot, Satyam Infoway moved into this space in 1995. It invested heavily in TCP/IP networks when the only internet service provider was the government monopolized VSNL. At that time companies could only be listed in India after three years of profitable business, while Internet play required large funding for infrastructure and acquisitions. Satyam quickly moved to list Satyam Infoway (SIFY) on Nasdaq with great success. On 19 October 1999 it became the first internet company from India to be listed in the global markets. Satyam Infoway reached a milestone with its subscribers base crossing the two lakh mark. SIFY posted a profit of Rs 67 crore for the year ended March 31,2000 against Rs 10 crore in the previous year.
Setting Standards:
While high-flying SIFY has caught people's imagination, the flagship Satyam ComputerServices, a software services company, has grown from a turn over of less than Rs4.7 crore in1993 to Rs679 crore in 2000(146 times) and its net profit 149 times from Rs 90 lakh to Rs134 crore. Satyam today has become folklore in Andhra Pradesh. Satyam now has six development centers in India, seven overseas and marketing offices in 30 countries. To increase technology competency continuously, the company has started a Tech Guru scheme. These are top line tech professionals from the global IT industry, who come to the impressive Satyam Technology center (STC), Hyderabad and conduct courses for about two weeks. Already nearly 30 such professionals have been to the center. A brainchild of Ramalinga Raju, STC is perhaps the most impressive corporate campus in India and would be well placed in the rest of the World. IN THE PICTURE:Satyam Development Center
Choosing the right partner @ speed of thought:
Choosing the right partner in software services the world over, has been the key strength of Ramalinga Raju. The November 1999, the all-cash Rs499 crore India-world deal looked astronomical. It made several people to sit up and take notice. Nasdaq certainly did. It gave an even higher valuation to Satyam's subsidiary - Satyam Infoway (Sify), than before. Consequently, its market cap went up by $800 million.
It has tied up with Computer Associates international to provide online access to advanced E-business applications for small and medium enterprises. The venture will have an initial investment of $3million.It has also entered into an agreement with Texas-based Enterprise Inc. to enable E-market solutions for traditional businesses and dotcom companies worldwide. Focusing on the auto sector, Satyam decided to tie up with TRW under which the latter will outsource to the venture at least $200 million worth of projects, spread over a five- year period. Satyam Infoway Ltd took 25% stake in the popular Cricket website Cricketinfo.com by issuing $37 million worth of American Depository shares (ADS) in an all stock deal. SIFY's buying spree continued. It has signed an agreement to buy-out 100 per cent of IndiaPlaza.com for $8.1 million. It is an all-stock deal. Satyam computers is tying up with CCMB(Centre for Cellular and Molecular Biology) in bio-informatics, a hot new field which combines molecular biology with data mining and warehousing in information technology. True to its reputation for speed, Mr.Raju is in advanced discussions with CCMB for setting up an International training center in bio-informatics, among others.
How he runs the Company:
Raju has always felt that to really succeed one must have a vision and must be ready to take risks. That's the reason Satyam's management style is unique. It does not function as a normal pyramidal hierarchy. Every department or division is formed as a circle where the head operates as a CEO of an enterprise, with all the responsibility of running an independent company, including making profits. Even though the perks in Satyam are lower than the industry standards, What holds the staff together is Raju's unique "power in one" philosophy that promotes togetherness on the mind's plane, including the singing of a corporate anthem together. Its staff attrition rate is a half of the industry's turnover of 15 per cent per annum. Content wise, the crux of the philosophy is Japanese. Raju received the Ernst & Young Entrepreneur of the Year Award for the Services sector. In the manner true to him he explained that he was receiving the award on behalf of all Satyam associates.
The Person:
Raju is a very soft-spoken person and quite accessible. His passion is reading and has anextensive library at home. His reading interests include philosophy, science and management subjects. Raju showed a strong social orientation and has been furthering the cause of social transformation through Byrraju Foundation and EMRIEMRI.

SATYAM TODAY:
Satyam rapidly developed and became a multinational company with thousands of employees spread over many countries. Satyam Computer Services Limited offers consulting and information technology (IT) services worldwide. The company operates in three segments: IT services, Business Process Outsourcing (BPO), and Software Products. The IT Services segment provides a range of services, including software development, packaged software integration, system maintenance, and engineering design services. Its BPO segment provides services covering human resource, finance and accounting, customer contact, and transaction processing. Its Software Products segment engages in the product development and creation of propriety software.

IN THE PICTURE: Ramalinga Raju (left), Founder and Chairman, Satyam Computers, and Ravi Narain, Managing Director and CEO, NSE, at a listing ceremony of company’s shares at NSE in Mumbai .

The company offers services to customers in a range of industries, including insurance, banking and financial services, manufacturing, telecommunications, transportation, and engineering services. The company markets its services primarily to companies in the United States, Europe, the Middle East, and the Asia-Pacific region. The company has a strategic alliance with MindFlow Technologies Inc.
Satyam's network covers 67 countries across six continents. The company employs 52,000 IT professionals across development centers in India, the United States, the United Kingdom, the United Arab Emirates, Canada, Hungary, Singapore, Malaysia, China, Japan, Egypt and Australia. Satyam has strategic technology and marketing alliances with over 50 companies. Apart from Hyderabad, it has development centers in India at Bangalore, Chennai, Pune, Mumbai, Nagpur, Delhi, Kolkata, Bhubaneswar, and Visakhapatnam. Satyam is listed on the New York Stock Exchange and Euronext. Today, Satyam has a global presence.It serves over 654 global companies, 185 of which are Fortune 500 corporations. The company, whose revenues crossed $2 billion in 2007-08, became the first Indian company to list its American Depository Shares (ADS) on Euronext, which is one single cross-border trading platform of NYSE Euronext Group.
AWARDS AND ROLES:
Raju has won several awards and global accolades, which include

  • Ernst & young entrepreneur of the year services award 1999.
  • Andhra Pradesh Academy of Sciences medal 1999.
  • Dataquest IT Man of the Year Award 2000.
  • Asia business leader award 2002.
  • CNBC’s Asian Business Leader – Corporate citizen of the year award in 2002 .
  • Hyderabad Management Association life time achievement award 2006.
  • Honorary doctorate by Jawaharlal Nehru Technological University 2006.
  • E&Y Entrepreneur of the Year 2007.

For his achievements and contribution to society, he has been awarded Doctorate by Anna University Chennai on 14 Dec 2007.
Raju has played a key role in taking the Indian IT flag globally, and is presently on the
Executive Council of National Association of Software and Services Companies (Nasscom), the apex forum of the Indian IT industry( NASSCOM) National Council of CII, Board of Indian Institute of Foreign Trade and on the Consultative body of Ministry of IT, Govt. of India. He is also a member of International Advisory Panel of Malaysia’s Multimedia Super Corridor. He speaks at several forums in India and abroad on behalf of the industry and the country.
FRAUD:
Raju was involved in a controversy involving the company Maytas and margin selling of his shares. It eventually ended in Raju admitting to an accounting fraud to the tune of 7000 crore Rupees or 950 million pounds, and subsequently resigning from the Satyam board. The Indian subsidiary of PricewaterhouseCoopers was the auditor of Satyam.
FRAUDS AND CONTROVERSIES:
Satyam was the 2008 winner of the coveted Golden Peacock Award for Corporate Governance, despite concerns raised by independent board directors and was later stripped off the award. In 2008 the company attempted to acquire two infrastructure companies - Maytas infrastructure and Maytas properties for $1.6 billion. Both companies are owned by Satyam CEO Ramalinga Raju's sons. His sons Teja B. Raju and Rama B. Raju are running Maytas Infrastructure and Maytas Properties. This eventually led to the probing of the deal by the government, a veiled criticism by the vice president of India and Satyam clients re-evaluating their relationship with the company. Satyam investors lost about INR 3,400 crore in the panic selling. The USD $1.6 billion (INR 8,000 crore) acquisition was met with skepticism all around as Satyam's shares fell 55% on the New York Stock exchange as well. Considering that none of the independent board of directors questioned the deals, investors are expecting a complete revamp of the board. In line with this three members of the board of directors resigned on Monday 29th December 2008. The World Bank has banned Satyam from doing business with it for 8 years due to inappropriate payments to the World Bank's staff. The World Bank in its own statement has denied allegations of "data theft/ malicious attacks", but confirmed the bribery and improper invoicing allegations. UK mobile payments company Upaid Systems is suing Satyam for over 1 Billion dollars on charges of fraud, forgery and breach of contract.
MAYTAS CONTROVERSY:
India's fourth largest IT bellwether Satyam Computers Services late Tuesday drew a barrage of criticism after it announced a decision to spend $1.6 billion (Rs.79.2 billion) to buy real estate and infrastructure firms run by the sons of its founder-chairman B. Ramalinga Raju. In a hurriedly convened conference call, investors and analysts questioned the move by the Hyderabad-based software exporters to pay such a huge sum to acquire companies linked to Raju and raised concerns about corporate governance at Satyam and its credibility in the eyes of global clients and shareholders. Wall Street made its displeasure known by pummeling the Satyam stock, which lost over 50 percent of its value on the New York Stock Exchange (NYSE) to $5.71 at 10.40 p.m. (IST). Ramalinga Raju, however, justified the decision, saying it was part of a 'good diversification strategy' and that it was only 'incidental' the target companies were controlled by members of his family. The listed firm informed the stock exchanges that it would spend $1.3 billion (Rs.64.35 billion) to buy a 100 percent stake in real estate firm Maytas Properties and $300 million (Rs.14.85 billion) for a 51 percent stake in Maytas Infra. Hyderabad-based Maytas Properties is run by Rama Raju, the younger son of the Satyam founder, and Maytas Infra by Teja Raju, the elder son.
Ramalinga Raju told analysts the privately held Maytas Properties was owned by a 'combination of some members of the immediate family and other related investors' while the promoters owned a 36 percent stake in the infrastructure firm.Satyam proposes to acquire a 31 percent stake in the listed Maytas Infra from the promoters at Rs.475 per share and make an open offer for a 20 percent stake at Rs.525 per share. Ramalinga Raju said he expected the process to be completed in about three months. The infrastructure company's stock lost 2.26 percent to close at Rs.486 on the Bombay Stock Exchange (BSE), while the Satyam stock gained about 0.5 percent to Rs.226.50 in Tuesday trading. Satyam's announcement was made after trading had ended.
When analysts and fund managers wanted to know why Satyam's robust balance-sheet was being saddled with acquisitions that would dilute margins, Ramalinga Raju argued that the infrastructure sector in India was poised for high growth in the years to come and that there would 'not be much of dilution, especially at the earnings-per-share level.' 'The business model of IT services has become riskier and depends on the export market and currency fluctuations. Rather than buying just another IT asset, we decided to de-risk and diversify,' he maintained. Satyam posted sales of Rs.81.37 billion and net profit of Rs.17.16 billion during the last fiscal to March 2008. At the end of September, the IT firm had cash and bank balances totalling Rs.53.13 billion. Representatives of institutional investors on the conference call were highly critical of the fact that Satyam had taken a decision which would change the face of the company without consulting the shareholders and warned of their strong opposition to the planned deals.
Ramalinga Raju said Satyam had to make a 'judgment call' and came to the conclusion that buying businesses unrelated to software but related to him personally was the best course. Representatives of investors such as Templeton and Motilal Oswal complained that Satyam had no business buying real estate or infrastructure companies and that their investment in Satyam was because it was engaged in providing software services. There was a 'fair amount of analysis and evaluation' before the deal was announced but there was 'no dialogue' with companies other than those which Satyam decided to buy, Ramalinga Raju added. Rama Raju, the vice-chairman of Maytas Properties, would have no role to play in Satyam while a decision was yet to be taken about what part Teja Raju would play in the affairs of the software company. The Satyam founder predicted that the share of the software and BPO business to the company's revenue would fall to 50 percent over four-five years, with the rest coming from the acquired entities. Maytas Infra posted a net profit of Rs.969 million on sales of Rs.18.74 billion during the 12 months to March 2008. Asked if the decision was reversible, Raju declined to give a direct reply, only observing that 'there are other parties involved'. He also argued that the credibility of Satyam would not suffer in the eyes of its clients. ' If we do the right things and make the right moves, there is no way the acquisition will dilute our ability to service our existing clients.'
ACCOUNTING SCANDAL OF 2009:
On the 7th January 2009, the company Chairman Ramalinga Raju resigned after notifying its board members and the SEBI that he had falsified accounts. Raju affirmed in a letter to the board that neither he nor the managing director had benefited financially from the reporting of inflated revenues. He confessed that none of the board members had any knowledge of the situation in which the company was placed. He noted that Satyam’s balance sheet as on the 30th of September, 2008, carried inflated figures for cash and bank balances of Rs 5,040 crore(as against Rs 5,361 reflected in the books). Furthermore, it carried an accrued interest of Rs 376 crore which was non-existent. An understated liability of Rs 1,230 crore on account of funds was arranged by himself. An overstated debtors' position of Rs 490 crore (as against Rs, 2,651 crore in the books).

He stated that: What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore in the September quarter of 2008 and official reserves of Rs 8,392 crore). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.” Raju had appointed a task force in the last few days before revealing the news to address the situation .Satyam’s official website notes that
"We are obviously shocked by the contents of the letter. The senior leaders of Satyam stand united in their commitment to customers, associates, suppliers and all shareholders. We have gathered together at Hyderabad to strategize the way forward in light of this startling revelation” said Mr. Ram Mynampati, Interim CEO (pending ratification by the Board) and Member of the Board, who has been mandated by the Board to steer the company through this crisis.”

AFTERMATH:
Analysts in India have termed the Satyam scandal as India's own Enron scandal. Immediately following the news, Merrill Lynch (Now with Bank of America) terminated its engagement with the company as Credit Suisse suspended its coverage of Satyam. It was also reported that Satyam’s auditing firm PricewaterCoopers will be scrutinized for complicity in this scandal.
RAJU’S RESIGNATION:
The New York Stock Exchange has halted trading in Satyam stock as of January 7, 2009.India's National Stock Exchange has announced that it will remove Satyam from its S&P CNX Nifty 50-SHARE index from january 12. Ramalinga Raju resigned as the company chairman after confessing to a Rs.40 billion ($823 million) fraud that was going on for years.
Satyam was the brand image of Andhra Pradesh, Hyderabad was identified with this company, and its founder-chairman B. Ramalinga Raju was a hero to youngsters. But overnight, arguably the biggest fraud in India's corporate history has reduced the chairman and his company to a big zero. The man who spent three decades in IT services and built Satyam into India's fourth largest IT services firm, was described as a visionary, a global business leader and a thinker. Now, the angry shareholders want him to be put behind bars. The man who was once described as pride of Telugus, is today the target of their wrath.

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FULL STORY >>

CHRIS & TOM MYSPACE CREATORS

December 8, 2008

               

"Social Network" is so 2005. MySpace Cofounders Chris DeWolfe (left) and Tom Anderson(right) are calling their site a "social portal". With Facebook surging, cofounders Chris DeWolfe and Tom Anderson have gone back to their roots -- music, pop culture, and a proven cash-flow ad model -- to spur a next phase of growth. 
Chief operations officer Amit Kapur came aboard MySpace three years ago as the "first business-development guy."






  


 
                                                                   chief operations officer Amit Kapur


Technology Chief Aber Whitcomb

Chris Dewolfe, the lanky, shaggily hip CEO of Myspace, is holding his last meeting of the day from a prone position, a collection of long limbs stacked on a tiny red love seat. The early evening powwow, taking place in the cramped office of his senior communications director,  Along with cofounder and MySpace president Tom Anderson, he has lived through a lot of long days lately -- about four-and-a-half years' worth since the site first launched. In fact, a slight defensiveness hangs in the air here about the site's age. Not that it is too old, but rather that it is younger than most Web watchers seem to remember. Everyone I talk to at MySpace HQ in Los Angeles, from DeWolfe and Anderson on down, mentions the four-and-a-half-year figure, as if to remind me that their biz is only a month older than their chief social-networking competition, the upstart some 350 miles to the north, Facebook.
It's understandable that the MySpace folks would feel a little slighted by all the attention Facebook has been getting. It was MySpace, after all, that grabbed headlines in 2005 when Rupert Murdoch's News Corp. acquired it for $580 million. It was MySpace that proved social networking could be a mass medium, attracting 10 million users, then 20 million, then 50 million -- prompting Murdoch to crow about its "meteoric rise" -- back when Facebook was still a college-focused niche player. Yet over the past year and a half, Facebook has quickly gained traction and fans, its fresh-faced CEO piling up TV appearances and magazine covers. Suddenly, Facebook's worldwide user base surpassed MySpace's in size. Then on June 30, MySpace's financial reputation was dinged when Fox Interactive Media (FIM), the News Corp. division that houses the site (along with Photobucket, Fox Sports Interactive, and other properties), closed out its fiscal year without hitting its revenue target.
 DeWolfe, Anderson, and four other senior staffers -- including chief technology officer Aber Whitcomb, hired by DeWolfe "nine years and four companies ago" (he built the original MySpace site in 30 days) and 27-year-old chief operating officer Amit Kapur -- spun out a vision of unwavering ambition and optimism. Hey, did we mention that we're profitable? And that we have 115 million monthly visitors worldwide? That we're outpacing Gmail and Hotmail in messages sent? And giving YouTube a run for its money in video downloads?
At the offices -- which will be traded in next June for a new 300,000-square-foot FIM facility in Playa del Rey, which the company claims is the biggest real-estate transaction in L.A. in 25 years -- the crew opened up about the pros and cons of working for Murdoch. They also laid out a dizzying array of new initiatives, from an imminent site redesign to major marketing alliances with big-name brands. They practically strutted about an unprecedented new foray into the music business, set to be rolled out in early fall, and revealed that MySpace is no longer a social network at all, but -- wait for it -- a "social portal": a global, content-rich hub with a social component. The MySpacers weren't shy about touting the advantages they feel they have over Silicon Valley stars such as Google and Apple. They weren't shy about much of anything, actually (except their own ages, which DeWolfe and Anderson wouldn't confess). In their view, they have come farther, faster than almost anyone these days gives them credit for. In many ways, they are right.
Several hours before DeWolfe's collapse on the love seat,  and Anderson in a sunny corner conference room. Anderson arrives late and inhales a steaming tin of cheesy Mexican goodness before beginning to speak; DeWolfe picks at a salad, then abandons it to better connect and chat. He is an easy talker, radiating an "I've been everywhere, man" vibe in the best sense -- cool, calm, with a low center of gravity. It seems odd, sitting with them, that Anderson is the more famous of the two. He is everyone's first "friend" upon joining MySpace and has become the de facto face of customer service, routinely alerting users to changes and problems through his MySpace blog. He's also a formidable pollster: When he asks members for feedback, he has been known to get some 20,000 responses -- in under 10 minutes. Anderson has 237,991,950 friends on MySpace as of my visit; DeWolfe has barely 200. "I keep a lower profile," DeWolfe says simply.
The two men talk about their roles in the company. "I'm the one who's more of a jerk," says Anderson, pushing aside the wreckage of his meal. "I seem quiet. But when I get upset, I talk too loudly. I'm sort of an alarmist." He laughs, while a slow grin creeps across DeWolfe's face. "Chris is able to calm everybody that I upset in my outbursts."
It quickly becomes clear why DeWolfe is the CEO, the one who works with advertisers and sponsors, cutting the deals that bring in the money. "I have a very negative attitude toward business and businessmen," Anderson says, a little too loudly. "I wouldn't really fit in a corporate structure if Chris weren't there to shield me from it."
Both founders are full of pride for the business they have built -- and are still building. They see the recent revenue-growth shortfall as merely a distraction from the real news: the absolute performance MySpace delivers. "There are only three or four companies in the world that have our type of reach," says DeWolfe. FIM may havemisseditswhopping,Murdoch->mandated $1 billion revenue target in June, but the unspoken defense is that MySpace alone contributed the vast majority of the $900 million that did come in. That's three times even the most optimistic estimates of Facebook's performance (although as a private company, Facebook does not release financials).
MySpace seems too adolescent -- too ADD -- to be such a money machine. But when you peel back the beeping, blinking veneer of its user interface, the site's underlying business model is surprisingly muscular. MySpace was conceived in the overripe petri dish of the Los Angeles entertainment and music scene, where creativity is prized and voyeurism of all kinds is considered a perfectly normal way to have fun. If the highly earnest Facebook emphasizes the efficient sharing of personal information and labors mightily to make sure that people are who they say they are on the site, MySpace has always had a looser vibe, setting users free to be a more stylized -- even fictionalized -- version of themselves. And if Google craves an organized world to help you find what you seek more effectively, MySpace wants you to stumble around and discover things you didn't know you were looking for. In fact, MySpace's business depends on that kind of serendipity and the commercial juices that swirl around it.
Overall, the two founders insist, life is good in the house of News Corp. "I don't think you can name one company that was acquired where the founders were still there after three years," says DeWolfe. Anderson agrees: "We've never felt cornered or pushed into something we didn't want to do." But clearly having Murdoch, along with News Corp. COO Peter Chernin, at your elbow can be a complicated experience. "When we told Rupert we had launched in the U.K. and were planning on three more international markets," DeWolfe recalls, "Rupert said, 'Why not make it 13?' " DeWolfe asked for more staff and had a toehold in 13 countries about 60 days later. (MySpace now operates in 29 countries.)
Murdoch and Chernin both approve every MySpace budget and weigh in often -- sometimes to jarring effect. At the All Things D conference last year, Chernin publicly admired Facebook. "I find it a bit more utilitarian than MySpace," he said, adding that MySpace has always been a "chaotic environment where anything goes." Then interviewer Kara Swisher recalled News Corp.'s controversial April 2007 banishment from MySpace of popular photo-and-video application Photobucket, which had been embedding advertising in its own product. Chernin replied, "We would not allow anyone else to create an advertising platform on our backs," a common practice on Facebook. Widget developers in the audience -- who had been waiting to do just that at MySpace -- were not amused. (FIM later bought Photobucket for a rumored $250 million and opened up its platform this past February.)
Murdoch, for his part, has a habit of popping in at MySpace -- by phone or in person -- largely unannounced. Jeff Berman, a long-ago D.C. public defender whose unlikely career led him to become MySpace's president of sales and marketing, points to the couch in his office and tells me, "Last time Rupert was here, he sat right down, put his feet up on the coffee table, and just asked me what I was doing." Berman answered. "Then he asked me why I was doing that instead of all the other things I could be doing." On another visit, Murdoch wandered over to a junior developer, pulled up a chair, and got an impromptu lesson in coding. "He was so inspired that Rupert took such an interest," says the kid's boss, senior vice president of technology Jim Benedetto, "that he basically didn't leave the office for four days." Inspiration and fear. Such a fine line.
Whatever role Murdoch may play in motivating them, Anderson and DeWolfe know that if they're going to hit their revenue numbers going forward, they need to better exploit MySpace's strengths over the competition. In June, for example, Anderson and DeWolfe created an aggressive new "takeover" feature on their home page, which gets some 45 million views a day -- a shiny bit of advertainment offering marketers a "more creative palette" with which to burn their messages into users' skulls. "You can own the page, whether you're McDonald's, Taco Bell, or Sony with Hancock [the recent Will Smith vehicle]," says Berman. "Our users look at you as content, while you're slapping them in the face with this incredible brand message."
DeWolfe and his team have brokered a series of increasingly sophisticated marketing deals over the past several months that tap the site's music connections and point to the kind of leverage it can bring to bear. When McDonald's wanted to revive its classic "two all-beef patties" jingle, for instance,MySpacequicklywrangledup-and->coming talents in a range of genres to create their own versions, then opened up a contest for user-generated versions, including videos. For State Farm, which was looking to connect with younger customers, MySpace hooked the insurer up with a summer concert series called Projekt Revolution starring Linkin Park and other bands. The campaign runs many levels deep: from a branded presence at the concerts; to a sponsorship of the Projekt Revolution concert site, complete with live-concert footage (and no State Farm logos in sight); to a lightweight gaming site; to a strictly business State Farm site that can connect a Linkin Parker with an insurance agent.
These new marketing efforts are part of the push toward reframing MySpace as a social portal. "Some 90% of online-advertising spending goes to big portals," DeWolfe says. "A much smaller chunk of money goes to more experimental buys or social media." That narrower definition is apparently not how MySpace wants to be seen anymore. "Now that we have such massive traffic on a daily basis, we're competing against Yahoo and MSN and to a smaller degree AOL," DeWolfe says. "And we're now in almost every single advertising proposal."
Anderson and DeWolfe say that while Google may dominate the search market, it isn't close to MySpace in terms of detailed information about what users do and consume -- the holy grail of targeted marketing. MySpace's social-advertising initiative, called HyperTargeting, launched about nine months ago, and is its version of the "we know who you are and what ads you'll like" voodoo. "Click-throughs on these ads are up 300%," DeWolfe says. (The bad news: A newly social iGoogle debuts this summer, complete with personal news feed and gadgets that operate on OpenSocial.)
MySpace has other portal-like tools, too: At about 60,000 uploads a day, it is becoming a popular alternative to YouTube. (MySpace had some 55 million unique video viewers in May 2008, according to comScore Video Metrix, versus 82 million for YouTube.) Aside from user-generated videos, MySpaceTV has a huge universe of professional-grade content, from Fox shows such as The Simpsons; to mini-episodes of '80s sitcoms; to National Geographic programs; to an election site called MySpace Impact, which offers broadcast coverage from MSNBC and NBC. Early on, MySpace developed its own distributed "content-delivery network" for some of its video, "which really reduced our long-term costs," says CTO Whitcomb. That, no doubt, is something Murdoch appreciates.
But DeWolfe and Anderson consider the music business to be their ripest opportunity. About nine months ago, with 10 senior staffers in tow, they held a daylong off-site in L.A. to map out their future. They came away with a heady list of priorities: a significant site redesign, the long-awaited developer's program, and a beefed-up mobile business (an iPhone application debuted in July).
Music, though, quickly bubbled to the top of their to-do list. "When we first started MySpace, we were a site that a lot of bands, tastemakers, and influencers immediately gravitated to," DeWolfe recalls. For musicians trying to make a deal with a major label, or just fill up a venue, it became a perfect way to self-promote and digitally mingle with fans. (We can thank MySpace for accelerating the careers of Lily Allen, Sean Kingston, the Arctic Monkeys, and Dane Cook, among others.) But that area of strength had been allowed to atrophy. As DeWolfe says, "We hadn't innovated much around the music portion of MySpace in about three years."
After the off-site, DeWolfe put in a call to famed record producer Jimmy Iovine of Interscope to bat around ideas. Back in 2005, MySpace had partnered with Iovine to launch its own label, MySpace Records, which was set up to identify and recruit unsigned acts using the site. Iovine's unexpected but inspired suggestion: Call Doug Morris. "If you want to get into the business, you have to get Doug," says Iovine. The CEO of music label Universal, Morris was a most unlikely ally at the time -- his company had a nasty copyright-infringement lawsuit pending against MySpace. But Morris also had another thorn in his side: Steve Jobs. Just a few months earlier, Morris had convinced two other major music labels, Warner and Sony, to try an end run around iTunes by launching their own subscription service. That effort had foundered, in part because of serious rumblings of antitrust concerns. As an outsider, DeWolfe had an opportunity to broker an agreement without triggering legal problems. The day after talking to Iovine, he got on a plane and flew to New York to meet Morris.
Morris listened. And over the ensuing months, DeWolfe and his team managed to bring Warner and Sony back into the mix, in a joint venture called MySpace Music. (Along the way, MySpace settled the Universal suit, coughing up a rumored $100 million.) On the face of things, the venture -- which was slated to launch in September but at press time had yet to name a CEO -- will offer the major labels their best hope for a significant competitor to Apple's iTunes store. DeWolfe is quick to say that isn't the point. "We didn't set out to annoy Steve Jobs or compete with him," he insists. "This was not conceived as an iTunes killer." Anderson points out that iTunes itself isn't much of a moneymaker, anyway: Apple is really a hardware company, not a media company, he says, even if iTunes does control about three-quarters of the digital download market. And Jobs has burned a lot of bridges with the labels, especially over his reluctance to embrace variable pricing -- charging more for newer or more popular music. MySpace may not want to kill iTunes -- it says its music site will actually boost iPod sales -- but the labels wouldn't cry if it happened.
Although technically a separate company, MySpace Music is very much DeWolfe's baby, and its CEO will report to a board that reports to him and Anderson. The new site promises to let people listen to and share streaming songs from a full catalog of music for free, as MySpacers do now with video -- but also create playlists and buy ringtones, merchandise, and concert tickets. And of course, buy music. The majority of MySpace Music's tracks will be offered without digital-rights management, which will allow them to play on an unlimited number of devices, including the iPod. And expect variable pricing. The idea is to create an environment where people will buy more music rather than steal it.
Bits and pieces of MySpace's music model can be found in other places -- such as iMeem, Pandora, iLike, Last.fm, Live Nation, and, yes, even Facebook. But once you factor in MySpace's distinctive mix of entertainment content and social-networking power, the proposition gets more interesting. As Michael Nash, EVP of digital strategy and business development for Warner Music, puts it, "Unlocking the social value in the context of an online community is one of our most important priorities." Nash, who is on the board of the new venture, worked with MySpace in its pre-Murdoch days, developing promotions with acts including REM. "About 20% to 30% of total traffic on MySpace is music traffic," he says. "We saw that lightning in a bottle, the social interaction around music and fans."
For Nash, the MySpace deal may be just the thing to save the music industry from destruction, at least for a while. "The traditional music model has really already sort of expired," he admits. "We were seeing tremendous value in our content, but not a lot of revenue being developed." The dream: As users begin to organize music they like into streaming playlists that can be shared with friends (and that other users can vote up, Digg-style, or subscribe to), the computer becomes a community-generated radio. Supported by advertising. And with the already existing MySpace swirl around celebrities and events, the industry envisions hordes of fans flocking to concerts, which are much easier to profit from. "We needed a completely different business model to unlock that value," Nash says. He admires DeWolfe and the MySpace team for uniting competitors into a venture benefiting all. Rupert's bags of cash didn't hurt, either: "That News Corp., a major media company with deep industry knowledge, has been there to monetize all of this really deepened our commitment."
As for the potential competitors, such as iMeem, who have built their businesses partly on the social networks -- and have helped establish them as music destinations -- Nash is coy. "You can assume that we're in discussions with all the significant players in the space, including Facebook, YouTube, iMeem." But, he says, "it's a competitive world. There's going to be some overlap, but you're not going to see a lot more joint ventures."
MySpace has always had its share of controversy -- from disputes over ownership and valuation in the wake of the News Corp. deal to digs from tech purists about the, um, aesthetic variability that comes with letting people decorate their profiles with blinking, shiny things. Continuing problems range from the annoying (spam and service complaints) to the very serious (privacy and child-safety concerns).
For all the bravado and new ideas, MySpace still has significant challenges. Foremost among them is the relentlessly evolving Facebook, whose most recent comScore numbers show it widening the gap on MySpace to nearly 10 million worldwide visitors in May -- 124 million for Facebook versus MySpace's 115 million. And Google has no intention of ceding the social-portal space to the networks without a fight. Expect Steve Jobs to be an irritant, too. True, digital downloads accounted for only 10% of music sold last year, according to In-Stat, but while it may have its shortcomings, iTunes is deeply entrenched in the culture and will be hard to dislodge. ITunes has sold more than 4 billion songs since it was born (just a few months before MySpace) and today accounts for approximately 70% of digital music sold worldwide. Apple even dipped a toe in the social music market in 2007 with MyiTunes, a widget that lets customers share reviews and music on their Web sites or blogs.
And if it's obligatory to sniff a bit at Facebook for focusing on technology first and monetizing second, the opposite problem exists at MySpace: DeWolfe and Anderson have some real work to do on their site's architecture. "It's a big priority for us," says senior VP of product strategy Steve Pearman, a good-natured techie who walked me through the redesign plans as I worked my way through a huge tub of Twizzlers on his desk. He concedes the site has become a chore to navigate and laments an interface that was simpler once upon a time, before links and products barnacled on as the site rushed to grow. "How the hell did it end up looking like this?" he asks in all seriousness. "This is a terrible design!" Site improvements have already begun to appear, like a tabbed navigation bar to help shape the chaos. (Sort of like Facebook's tabbed redesign.)
 "We are a company that needs to move fast," says Anderson. Products need to be tweaked, sponsors need to be pushed to promote themselves in new, sometimes uncomfortable ways. Referring to himself, Anderson says there's an indispensable role for the gadfly: "It always helps to have someone who can say, No, we can do it faster this way, or We have to break the rules, even our own rules, to get things done." Break any rules lately, Tom? "There was something yesterday, actually." Anderson laughs, then shakes his head, "I better not go into any details." DeWolfe nods at his friend, flashes a half-smile, then slowly spins his chair to look out the window. "Some things are better left to the imagination," he says.

FULL STORY >>

WHATEVERLIFE.COM CREATOR

ASHLEY QUALLS





No rich relatives? No professional mentors? No problem. Ashley Qualls, 17, has built a million-dollar web site. She's LOL all the way to the bank.
From her basement office, Ashley Qualls has made Whateverlife.com a destination for millions of teenage girls.
This summer, Ashley's pals--from left, Shayna Bone, Bre Newby, and Jen Carey--will also be her employees.
Late last year, Ian Moray stumbled across a cotton-candy-pink Web site called Whateverlife.com. As manager of media development at the online marketing company ValueClick Media, he was searching for under-the-radar destinations for notoriously fickle teenagers. Beyond MySpace and Facebook, countless sites come and go in the teen universe, like soon forgotten pop songs. But Whateverlife stood out. It was more authentic somehow. It featured a steady supply of designs for MySpace pages and attracted a few hundred-thousand girls a day. "Clever design, a growing base--that's a no-brainer for us," Moray says.
He approached Ashley Qualls, Whateverlife's founder, about incorporating ads from ValueClick's 450 or so clients and sharing the revenue. At first, she declined. Then a few weeks later she changed her mind. He was in Los Angeles and she was in Detroit, so they arranged everything by phone and email. They still have yet to meet in person.
When did Moray, who's 40, learn that his new business partner was 17 years old?
Pause.
"When our director of marketing told me why Fast Company was calling," says Moray, now ValueClick's director of media development. "I assumed she was a seasoned Internet professional. She knows so much about what her site does, more than people three times her age."
It's like that famous New Yorker cartoon. A dog typing away at a computer tells his canine buddy, "On the Internet, nobody knows you're a dog."
At 17 going on 37 (at least), Ashley is very much an Internet professional. In the less than two years since Whateverlife took off, she has dropped out of high school, bought a house, helped launch artists such as Lily Allen, and rejected offers to buy her young company. Although Ashley was flattered to be offered $1.5 million and a car of her choice--as long as the price tag wasn't more than $100,000--she responded, in effect, Whatever. :) "I don't even have my license yet," she says.
Ashley is evidence of the meritocracy on the Internet that allows even companies run by neophyte entrepreneurs to compete, regardless of funding, location, size, or experience--and she's a reminder that ingenuity is ageless. She has taken in more than $1 million, thanks to a now-familiar Web-friendly business model. Her MySpace page layouts are available for the bargain price of...nothing. They're free for the taking. Her only significant source of revenue so far is advertising.
According to Google Analytics, Whateverlife attracts more than 7 million individuals and 60 million page views a month. That's a larger audience than the circulations of Seventeen, Teen Vogue, and CosmoGirl! magazines combined. Although Web-site rankings vary with the methodology, Quantcast, a popular source among advertisers, ranked Whateverlife.com a staggering No. 349 in mid-July out of more than 20 million sites. Among the sites in its rearview mirror: Britannica.com, AmericanIdol.com, FDA .gov, and CBS.com.
And one more, which Ashley can't quite believe herself: "I'm ahead of Oprah!" (Oprah.com: No. 469.) Sure, Ashley is a long way from having Oprah's clout, but she is establishing a platform of her own. "I have this audience of so many people, I can say anything I want to," she says. "I can say, "Check out this movie or this artist.' It's, like, a rush. I never thought I'd be an influencer." (Attention pollsters: 1,500 girls have added the Join Team Hillary '08 desktop button to their MySpace pages since Ashley offered it in March.)
She has come along with the right idea at the right time. Eager to customize their MySpace profiles, girls cut and paste the HTML code for Whateverlife layouts featuring hearts, flowers, celebrities, and so on onto their personal page and--presto--a new look. Think of it as MySpace clothes; some kids change their layouts nearly as frequently. "It's all about giving girls what they want," Ashley says.
These days, she and her young company are experiencing growing pains. She's learning how to be the boss--of her mother, her friends, developers-for-hire in India. And Whateverlife, one of the first sites offering MySpace layouts specifically for girls, needs to mature as well. "MySpace layouts" was among the top 30 search terms on Google in June. Ashley knows that she needs new content--not just more layouts, but more features, to distinguish Whateverlife from the thousands of sites in the expanding MySpace ecosystem. Earlier this year, she created an online magazine. Cell-phone wallpaper, a new source of revenue at 99 cents to $1.99 a download, is in the works.
Running a growing company without an MBA, not to mention a high-school diploma, is hard enough, but Ashley confronts another extraordinary complication. Business associates may forget that she is 17, but Detroit's Wayne County Probate Court has not. She's a minor with considerable assets--"business affairs that may be jeopardized," the law reads--that need protection in light of the rift her sudden success has caused in an already fractious family. In January, a probate judge ruled that neither Ashley nor her parents could adequately manage her finances. Until she turns 18, next June, a court-appointed conservator is controlling Whateverlife's assets; Ashley must request funds for any expense outside the agreed-upon monthly budget.
The arrangement, she says, affects her ability to react in a volatile industry. "It's not like I'm selling lemonade," she says. Besides, it's her company. If she wants to contract developers or employ her mother, Ashley says, why shouldn't she be able to do it without the conservator's approval?
So the teenager has hired a lawyer. She wants to emancipate herself and be declared an adult. Now. At 17. Why not just sit tight until June? The girl trying to grow up fast can't wait that long.
Ashley is different from the recent crop of high-profile teen entrepreneurs. True, her eighth-grade class did vote her "most likely to succeed," but it's safe to say they were predicting 20 or 30 years out, not three years removed from middle school. She created her company almost by accident and without the resources that typically give young novices a leg up. Catherine Cook, 17, started myYearbook.com by teaming up with her older brother, a Harvard grad and Internet entrepreneur. Ben Casnocha, the 19-year-old founder of software company Comcate and author of the new memoir My Start-Up Life, is the son of a San Francisco lawyer and has tapped Silicon Valley brains and bank accounts.
But Ashley had no connections. No business professionals in the family. No rich aunt or uncle. In the working-class community of downriver Detroit, south of downtown and the sprawling Ford plant in Dearborn, Michigan, she bounced back and forth between her divorced parents, neither of whom attended college. Her father is a machinist, her mother, until recently, a retail data collector for ACNielsen. "My mom still doesn't understand how I do it," Ashley says. To be fair, she did go to her mother for the initial investment: $8 to register the domain name. Ashley still hasn't spent a dime on advertising.
It all started as a hobby. She began dabbling in Web-site design eight years ago, when she was 9, hogging the family's Gateway computer in the kitchen all day. When she wasn't playing games, she was teaching herself the basics of Web design. To which her mother, Linda LaBrecque, responded, "Get off that computer. Now!" For Ashley's 12th birthday, her mother splurged on an above-ground swimming pool--"just so she'd go outside," LaBrecque says.
Whateverlife just sort of happened, another accidental Web business. Originally, Ashley created the site in late 2004 when she was 14 as a way to show off her design work. "I was the dorky girl who was into HTML," she says. It attracted zero interest beyond her circle of friends until she figured out how to customize MySpace pages. So many classmates asked her to design theirs that she began posting layouts on her site daily, several at first, then dozens.
By 2005, her traffic had exploded; she needed her own dedicated server. Ashley, who had bartered site designs for free Web hosting, couldn't afford the monthly rental, not on her babysitting income. Her Web host suggested Google AdSense, a service that supplies ads to a site and shares the revenue. The greater the traffic, the more money she'd earn.
"She would look up how much she had made," says Jen Carey, 17, one of her closest friends. "It was $50. She thought that was the coolest."
I'm doing what everyone says they want to do, "live like there's no tomorrow." --Ashley in her blog, "The Daily Life of a Simple Kind of Gal," July 1, 2006; 2:43 a.m.
The first check, her first paycheck of any kind, was even cooler: $2,790.
"It was more than I made in a month," her mother says.
"It made me want to do even more designs," Ashley says. But first, she went on a shopping spree at a nearby mall with Bre Newby, her best friend since third grade. Ashley walked out with eight pairs of jeans from J.C. Penney and an armful of other clothes. Without a credit card or a bank account, the 15-year-old paid $600 in cash--the most she'd ever spent.
"Before, I would ask my mom, "Can I have $10?' and she'd say, "No, you have to wait a few weeks,'" Ashley recalls.
She hasn't asked since. In January 2006, a few months after that first payday and six months before her 16th birthday, she withdrew from school. Instead of taking AP English, French, and algebra II, instead of being a straight-A sophomore at Lincoln Park High School, Ashley stayed home to nurture her budding business and take classes through an online high school. "Everybody was shocked," she says. "They asked, "Are you sure you know what you're doing?' But I had this crazy opportunity to do something different."
That "something different" was Whateverlife. The name came to Ashley in a moment of frustration. After losing a video game to Bre, she dropped the controller and blurted out, "Whatever, life." She liked it instantly. She thought it would be a great name for a Web site, for "whatever life you lead."
Now her life is centered around working in the basement of the two-story, four-bedroom house that she bought last September for $250,000. It's located in a fenced-off subdivision in the community of Southgate, a couple of blocks removed from Dix Highway, a thoroughfare dotted with body shops and convenience stores. She lives with her mother; her 8-year-old sister, Shelby; three cats; two turtles; a rottweiler; a hamster; and a fish.
Ashley's home office is the physical embodiment of her Web site. The business brings in as much as $70,000 a month, but there's not a whiff of corporate convention. It's fun, whimsical, and unabashedly pink. Pink walls. Pink rug. Pink chairs, pillows, and lamp. Even the blue, green, and silver stick-on robots dancing on the wall have tiny pink hearts. It's a teenager's version of the workplace, which earned raves when she posted pictures on MySpace:
"SOO FLIPPING CUTE!"
"OMG I want that office."
"Geez. That's just incredible. I'm what ...almost ten years your senior and I am inspired by you."
The space reflects Ashley's personality, like everything else about her business. Therein lies one of the main reasons for Whateverlife's success, says Robb Lippitt, whom Ashley considers the only good thing to come out of her legal issues. When her lawyer realized she was running her company alone, he arranged a meeting with Lippitt, the former COO of ePrize, an online promotions outfit that is one of Detroit's fastest-growing companies. Having helped build ePrize to $30 million in annual revenue and 325 employees, he now helps other local entrepreneurs scale the mountain. In April, he became her $200-an-hour consultant and first business mentor.
Since Ashley, his youngest client ever, had never taken a class in accounting or read a business book, she needed a crash course on the basics, such as maintaining two accounts, business and personal. "She was running her business like a piggy bank," says Lippitt, 38.
But he found her to be a quick study and, in many ways, a natural entrepreneur. "She lacks experience, but I was blown away by her instincts," he says. How she makes her layouts compatible with social-networking sites other than MySpace, so her company isn't tied to one site. How she decided to offer her designs as cell-phone wallpaper, creating a new service and revenue stream based on existing inventory. Ashley, he realized, has a vision for Whateverlife that goes beyond a MySpace tools site. It could be a multifaceted community for girls.
Convinced that her fans need help building Web sites, she hired developers in India to create an easy-to-use application and wrote one-teen-to-another tutorials. After the site builder launched in May, though, she told Lippitt she was disappointed by delays and early bugs. Hiccups were common, he assured her; he expected modest results, maybe a few hundred users. But 28,000 signed up in the first week. "There are CEOs across the country who would be dancing in their offices if they got that reaction," he says.
Ashley is the demographic she's serving, which gives her a powerful advantage over far more experienced adults trying to channel their inner teen or glean clues from focus groups. Her site looks and sounds like something made by a teenager, not something manufactured to look that way.
The risk, of course, is that she could lose touch with her audience as she outgrows it. But Lippitt says she already grasps the importance of understanding her customers, not simply assuming they share her taste. She conducts polls about their favorite stores, celebrities, and American Idol contestants. She solicits feedback on new features. And she's thinking of the next step: "I may have to hire people younger than me."
Some days I miss school. I miss the laughter, the lunch lines, the jackass of the class, the evil ass teacher, sometimes I even miss the drama. --August 4, 2006; 1:30 a.m.
On a Wednesday in early June, the gang's all here after school. Well, everyone except Bre. Shayna Bone, 17, and Jen--outfitted in matching Whateverlife T-shirts, featuring row after row of multicolored hearts--sit at a table reviewing their W-4 forms. It's official: The staff is doubling for the summer.
Mike Troutt, 16, who's stretched across a white L-shaped couch, won't be joining them. A past contributor to the Whateverlife magazine, he's working as an apprentice at a local tattoo shop for the summer. He's contemplating where he'll get his first tattoo, he announces. Tomorrow's the big day.
As usual, Ashley is working away at her computer, a new desktop with a touch-screen monitor, one of three computers in her basement. Often, she's up at 7 or working into the wee hours on a "designfest" with Bre, fueled with music and Monster energy drinks.
In just 15 minutes, she creates a layout. Blue and pink streaks on a black background with blocks of pink rap lyrics. Her fingers race across the keyboard as she tries different fonts, sizes, compositions, switching out HTML coding as she talks. "Don't worry," she tells a wary Shayna, "I'll teach you."
Ashley the CEO, who has no fewer than 14 hearts on her business card, is both utterly familiar and a complete mystery to her friends. In some ways, she's the same old "Ash"--or "AshBo," a nickname they coined because she didn't have her own room at one point (Ashley + hobo = AshBo). She still plays The Sims, still giggles when Jen laughs like Eddie Murphy, and is still up for silliness, like standing by the road holding a sign that says, HONK IF YOU BELIEVE IN THE LOCH NESS MONSTER, or taking breaks on the swing set down the street.
"One minute, she's joking around with us," says a friend, "and then it's, 'Oh, guys, hold on. I gotta take this call.'"
AshBo looks even younger than 17. She has straight brown hair with light streaks down to the middle of her back. She has a French pedicure, like Jen and her mother. Her clothes are nothing fancy. "I don't need $2,000 shirts," Ashley says. "I'm fine with Target." Or a University of Michigan sweatshirt over a summer dress.
In other ways, she's an alien among normal teens. She can go on about hiring freelance developers, studying site-traffic trends, calculating ad rates, maintaining low overhead (her main operating expense is seven servers). "Sometimes when I talk about the site, my friends just stare at me," she says. She carries a BlackBerry and a Coach bag (a recent birthday present to herself). Her friends tease her about her last ring tone, which consisted of The Donald, someone they couldn't care less about, barking, "This is Donald Trump telling you to have an ego!"
Whateverlife has definitely brought out a bolder side. "One minute, she's joking around with us, and then, "Oh, guys, hold on, I gotta take this call,'" says Mike. "She turns it on like a light switch." She's no longer the shy 15-year-old who would ask her mother or father to make a difficult phone call. Who didn't know how to respond to advertisers' cold calls. Who didn't know how to negotiate. Now, it's "Is that the best you can do for me?"
"Something clicked," says her mother, who can be direct herself. "She's not letting people walk over her."
At one point, Ashley takes a call upstairs in the kitchen, where a fax machine sits on the countertop. The company that's building the application for her cell-phone wallpaper is on the line. The developer walks her through the latest mock-up, answering Ashley's questions. She's one of those teens who has mastered the art of talking to adults as a peer, of making eye contact rather than looking down or away at a moment's blush.
Her mother, whom Ashley hired recently to keep the books, listens in, hand on hip, a cigarette cocked. Afterward, she asks, "What was he talking about?"
Ashley translates. She'll ask her mother for advice, but she doesn't necessarily take it. "I'm stubborn, like her," she says. Ashley has more leverage than the typical teen. She's the breadwinner. And yet for all her newfound independence, she still needs to be driven everywhere. She hasn't taken driver's ed because she wants to take the class with a friend, not alone.
Occasionally, she feels the tug of her old life, traditions like Lincoln Park's Spirit Week, when she'd paint her cheeks orange and blue, the school colors. More than once, she has returned, just for the day, hanging out in her French teacher's classroom. Ashley wonders if she'll be allowed to participate in graduation. By then, she may have already earned an associate's degree in design, at Henry Ford Community College.
She's determined to bring her friends along for this strange and wonderful ride. They rode in the limo to her over-the-top sweet-16 party at the local Masonic Temple, where guests wore pink Whateverlife rubber bracelets and the door prize was an Xbox. She took Bre on a family vacation to Hawaii, Ashley's first flight. And when the friends go out--tonight it's to Chili's--she picks up the tab.
"This teenage girl ... got more views for our video than Youtube."
This summer, she's the boss. One of Ashley's friends had pitched in making layouts last year, but things got a tad awkward when Ashley thought her friend's productivity was dipping. Now she insists they've made up--BFF. But after the misunderstanding, she wrote up employee guidelines. She wanted to spell out her expectations. Lippitt is impressed. She's learning from her mistakes, a challenge for any new entrepreneur.
"I told them I need a minimum of 25 layouts a week to get paid," Ashley says. "It's just business."
Do I keep my site? Do I sell and be set for life? God, it's all so overwhelming. --August 4, 2006; 1:30 a.m.
Last year, Steve Greenberg, the former president of Columbia Records and now the head of indie label S-Curve Records, witnessed the power of Whateverlife. Greenberg discovered Joss Stone, produced the Hanson brothers, and helped make Baha Men's "Who Let the Dogs Out" an unofficial sports anthem. Last year, he decided to promote Jonas Brothers, an unknown pop trio, online instead of on radio. He turned to Nabbr, a company that had developed a viral widget, a small desktop application that plays videos and can be easily shared with other sites. It's like "a music poster on a bedroom wall," says Mike More, Nabbr's CEO.
The widget made its Internet debut on Whateverlife. While surfing MySpace for leads, More had noticed how many Jonas Brothers fans used Whateverlife layouts. In less than two months, 60,000 fans transferred the Jonas Brothers' three-part video from Whateverlife to their MySpace pages, in effect becoming 60,000 new distribution points. "This teenage girl in the Midwest got more views for our video than YouTube," says Greenberg, 46. "It wasn't even close." The viral campaign encouraged fans to vote for the band on MTV's Total Request Live, and the group's song "Mandy" hit No. 4, unheard of without radio play.
"I created this from nothing, and I want to see how far I can take it."
Since then, Whateverlife has become one of the primary vehicles for Nabbr's viral campaigns for artists and movies, breaking acts such as the Red Jumpsuit Apparatus and 30 Seconds to Mars, as well as Lily Allen. More's staff sends Ashley signed CDs and photos to pass on to Whateverlife fans, and artists record personal shout-outs to her and Whateverlife that play on her site. She's light years ahead of traditional media such as Teen Vogue, More says. "If I were Condé Nast, I'd figure out a way to buy her," he says. "I would."
As previous suitors can attest, that wouldn't be easy. In March 2006, an associate of MySpace cofounder Brad Greenspan approached Ashley with a bid valued at more than $1.5 million. She passed. Three months later, Greenspan's people came back with a second offer: $700,000, a car, and her own Internet show with a marketing budget of $2 million.
Sorry, fellas. "I created this from nothing, and I want to see how far I can take it," Ashley says. "If I wanted to do an Internet show, I could do it on my own. I have the audience."
Until now, she has maintained a remarkably low profile in the offline world. Her scheduled appearance on the "Totally Wired Teen Superstars" panel at Mashup, a teen-marketing conference in July, was to be her first public-speaking appearance--and her first business trip. An even bigger gig is possible: her own reality-TV show. Rick Sadlowski, a TV production executive in Detroit who worked with Eminem when he was still Marshall Mathers, is eager to pitch the idea to MTV. Ashley is mulling it over.
In February 2006, following a falling-out with her mother, Ashley moved in with her father and older brother. With her business booming, she says, she began supporting them--groceries, bills, rent, renovations. At first, she didn't mind. One of the benefits of Whateverlife was the ability to take care of her family in a way she'd never imagined, certainly not when she was a child overhearing arguments about unpaid bills. Ashley says she bought her brother a used car and paid her grandmother's taxes. The insurance through Whateverlife covered her mother's back surgery. But in August, Ashley moved back in with her mother. She hasn't spoken to her father since. Or to her brother, who later filed (then withdrew) a petition to become her conservator. "I used to trust easily," Ashley says. "I've learned to be careful."
When her brother took his name off a joint bank account with her, Lincoln Park Community Credit Union petitioned the probate court to assign a conservator. After several months, the judge tapped attorney Alan May. He has 40 years' worth of experience with conservatorships, but Ashley's situation makes the case unique in his career. Although May's role is protecting Ashley's interests, it hasn't always felt that way to her, not when she hasn't had complete control over the money she made. But she says, "I don't want this to come across like a war."
Until recently, though, the tension was undeniable. Ashley was unhappy having to get May's approval for expenses such as her mother's nearly $500-a-week pay. May declined to discuss the case, but in papers filed last spring with the court, he characterized LaBrecque as uncooperative and evasive.
"They're making me out to be the bad guy," Ashley's mother says. LaBrecque, 42, had little growing up herself. Her father worked on the assembly line at General Motors until he died of a heart attack at 42, leaving his wife to raise six kids on Social Security. "It was rough but we survived," she says. "I feel so lucky my daughter doesn't have to live the life I lived."
In mid-July, seven months after being assigned a conservator, Ashley finally sat down with everybody for the first time: her mother, her lawyer, her consultant, her guardian ad litem, and her conservator. She says that she feels much better about the situation.
But that doesn't change the fact that she wants to be on her own. The typical conservatorship case involves a minor with an inheritance or an elderly person who has lost his faculties. "It's unusual to be emancipated to run your own business," says Darren Findling, Ashley's lawyer. "But she's the perfect candidate--an Internet superstar who happens to be a minor."
For now, she's trying to block all this out and concentrate on her business.
On Thursday, while her friends are slaving through exams, Ashley meets with Lippitt for two hours. They couldn't appear more different. He's a low-key, analytical sort with a law degree. Lives on the other side of town, in the tony Bloomfield Hills suburb. Drives a black Lexus, a rarity on her block. As an entrepreneur, though, she relates to him better than anyone else right now.
"I know, I'm always jumping on 10,000 things," Ashley says and then pitches her latest brainstorm, her own social- networking application for girls.
"Hmm," he says. "How do you think the reaction of MySpace would be?"
A teenage CEO, Lippitt is learning, is even more easily distracted and more fearless than an adult entrepreneur. "Failure is an abstract concept to her, and I want it to stay that way," he says. When he was a teenager, his father lost his body shop and had to start over, attending law school in his forties.
Lippitt urges Ashley to prioritize and think about profits as well as design. As clever as her site-building tool is, it doesn't allow a way to run ads on the pages it creates. "You're leaving revenue on the table," he tells her.
At times, Lippitt has to remind himself that she's only 17. "Even if she could go a lot faster, I don't know if that's the best thing for her," he says. "She's already in the adult world doing adult things. I'm reluctant to drive her away from living an important and fun time in her life."
But he's not shy about pushing her when she needs it. Today, he tells her it's time to consider approaching companies to advertise. So far, she has relied largely on Google AdSense, which supplies ads in exchange for what she says is a 40% cut. The direct model is not only potentially more lucrative but also allows her to target brands more suited to teens than, say, Microsoft Office 2007. "I'm not sure that's a good fit," he says of the software ad placed by ValueClick.
Ashley is excited about the idea. And a little nervous. She'll need a sales presentation, a company logo, and ad rates. Eventually, she may want to hire a sales rep, a job she'd never heard of until Lippitt described it. More important, she'll need to sell herself to name-brand companies. "If she can combine "I'm 17' with a little more about her business, I think she's unstoppable," Lippitt says.
This could be the next growth spurt for Ashley and Whateverlife. It's scary, sure, but she's getting used to the demands and challenges of "this crazy opportunity." She's learning, stretching, getting that much-needed seasoning.
She and Lippitt brainstorm about which brands would resonate with girls like her. This is the fun part. No petitions. No regrets. No family feud. Just a 17-year-old and her big dreams in a pink, pink, pink world full of promise. And if they don't come true? Well, there's always college.

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