In July 2005, Rupert Murdoch’s Newscorp purchased Myspace the largest social media platform in the world at that time for $580M. Myspace had over 16 million active users then. Nothing was close to its size, it had seemingly won the market and could not be caught because the thinking was that for a social network, bigger is better. Once a social network is the largest by far, any new user it seemed would rather join that network where they were most likely to find the most people they know, or the most people with which they’d share similar interests, or the most content they’d like…why would they join something far smaller where they would find far less of everything? So, it seemed Myspace would continue to snowball in size and Newscorp would make a big profit over the next few years from their acquisition.
However, something went very wrong as 6 years later Newscorp sold Myspace for $35M at a massive loss. Myspace had been wiped out by a new wave, what they didn’t see coming was social networks 2.0. In February 2004, Mark Zuckerburg had launched Facebook, and by the time Myspace was acquired by Newscorp, Facebook only had 3 Million users, far less than Myspace but the platform was just better, much better. And the rest is history.
In 2021, AfterPay, the darling of the Buy Now Pay Later (BNPL) industry reported that it had achieved over 16 Million users. It was shortly thereafter acquired by Square (which then changed its name to Block) in the largest acquisition in Australian corporate history, for $29BN. Afterpay has a huge number of merchant suppliers, so any new customer would seemingly rather join Afterpay than something smaller where they would have less options to use that service.
History looks to be repeating itself because Buy Now Pay Later 2.0 looks to be coming from behind to take over. There is a new wave of BNPL companies, that have come up with a model where their service can be used anywhere. Zilch launched with the concept of BNPL that can be used anywhere a Mastercard is accepted, its growth so fast it’s become the fastest Unicorn in in European History, already valued at over $2BN. And out of Australia, the home of AfterPay has come BizPay a BNPL service for business that can be used to pay an invoice for any supplier, not only those signed up to the service. BizPay is reported to be on track for a $400M+ IPO in late 2022. According to Phil Belamant CEO of Zilch, these By Now Pay Later 2.0 companies are “disintermediating” the networks that their predecessors have created.
It looks like Block may be headed for the same disappointing outcome in a few years from their big acquisition, as it looks like something better has come along, and just like Facebook cannot be stopped.
