Starmedia

Infobox_Company
company_name = StarMedia
company_
company_type = Latin Internet
location = Issy-les-Moulineaux, France
foundation = 1996
key_people = Fernando Espuelas, Founder
Jack Chen, co-Founder
industry = Internet
homepage = [http://www.starmedia.com/ www.StarMedia.com]

StarMedia is a leading [ [http://www.hispanicprwire.com/news.php?l=in&id=11298 Hispanic PR Wire - starMedia Launches New Entertainment News Channel ] ] Latin Internet brand, founded in August 1996 by Fernando Espuelas and Jack Chen as the first pan-regional Internet portal [* [http://www.businessweek.com/1997/52/b3559159.htm BusinessWeek] Welcoming Spanish Speakers to the Web: Fast-growing StarMedia is racing to fill the niche first, December 1997] for Spanish and Portuguese speaking audiences. During the dot.com boom of the 1990s, StarMedia became an iconic company when it raised the first dollar of venture capital for a Latin Internet company, and then did the first IPO in the sector, while becoming one of the top 10 biggest sites on the Internet, measured by audience, and the only one not in English.

Under Espuelas' leadership, StarMedia launched a massive marketing effort to attract the very first Internet users, advertisers and e-commerce companies across the Latin world. Called the "Espuelas Effect" by leading Brazilian news weekly "Exame", StarMedia was the catalyst for the Internet industry throughout Latin America. While Espuelas was CEO, Starmedia was the leading Latin portal [Fortune Magazine article, Going Global With StarMedia Chief Fernando Espuelas, April 2000] , serving over 25 million Spanish and Portuguese speakers every month across the Latin world.

In total, StarMedia raised over $500 million in a series of private and public offerings, reaching a market capitalization of over $3.8 billion dollars at its peak. According to the Harvard Business School Case [StarMedia: Launching a Latin American Revolution, http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=800166] [http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=800166 "StarMedia: Launching a Latin American Revolution"] , by 1999 StarMedia was the Latin American market leader. StarMedia is now owned by France Telecom subsidiary Orange, serving "more than 24 million" Hispanic Internet users per month, according to company statements starMedia Launches New Comprehensive Finance Channel, CNN.com] in 2008.

StarMedia.com is a free-to-web global service connecting Spanish-speakers through the Internet as well as providing consumers relevant and extensive information and services. StarMedia has local operations in Colombia, Mexico, Peru, Spain and throughout the United States (Los Angeles, Miami and New York)

Founding, Capitalization and Growth

Fernando Espuelas and his childhood friend, Jack Chen, founded StarMedia in 1996 with $100,000 in personal savings, credit cards and loans from friends and family.

A year later, after being turned down by over 50 venture capitalists across the U.S., the pair were successful in raising $3.5 million from Susan Segal, general partner of Chase Capital Partners and its technology affiliate Flatiron Partners. Soon after, StarMedia raised additional venture capital from WarburgPincus, the New York City Investment Fund and David Rockefeller. In 1998, StarMedia made history when it raised an additional $80 million dollars in the largest private placement for an Internet company up to that time. David Rockefeller, wealthy Latin American families, Intel, the Hearst Corporation, Intel, NBC and GE Capital were the principal investors in that round.

StarMedia went on to raise over $500 million dollars in a combination of public and private offerings. Well before the twin stock market and Latin American collapses of 2000-2001, which severely impacted StarMedia's business and share price, major StarMedia investors had realized significant profits on their StarMedia investments. Investors such as WarburgPincus, Intel, GE Capital, Hearst and many other institutions and individuals sold their StarMedia shares at or near the peak of the market. Espuelas writes in his book "Life in Action": “Because I believed in our company and our mission, I had never sold a single StarMedia share or stock option. I personally lost close to $500 million.” [Life in Action ]

According to the Harvard Business School case [http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=800166 "StarMedia: Launching a Latin American Revolution "] , written by professors Thomas Eisenmann and John K. Rust, "by the fall of 1999, StarMedia had sprinted to a sizable lead in the race to acquire Latin American Internet users. Its pan-regional, horizontal portal was the first to target Spanish- and Portuguese-language speakers on the Internet, registering 1.2 billion page views in the third quarter of 1999. Thirty-three-year-old StarMedia co-founder Fernando Espuelas was the toast of "Silicon Alley" and a recognized hero throughout Latin America. A picture of him on the cover of Internet World magazine--ripping his shirt open to show the StarMedia logo, like Superman, summed up the spirit of the company."

StarMedia implemented Espuelas' "relentless innovation" strategy. StarMedia launched web-based email, chat and streaming video in Spanish and Portuguese before its U.S.-focused competitors such as Yahoo, Excite, Lycos or AOL did in English. In 1996, Espuelas launched the first ever television campaign across Latin America promoting the Internet and the StarMedia brand, helping to spark the subsequent explosion of Internet use in the region. Along with CBS News, it launched the Web's first video news channel in 1997. Other innovations included the first instant messaging system in Latin America; in partnership with HP the first out-of-the-box e-commerce platform for small businesses; and with IBM, the first free ISP in the region. As part of Espuelas' push, StarMedia acquired 12 other media and technology companies in the U.S., Latin America and Spain. At its peak, StarMedia had over 1,200 employees in 18 offices across 12 countries.

First Public Offering of a Latin Internet Company

StarMedia went public on Nasdaq under stock symbol STRM, on May 25, 1999 in an IPO of 7 million shares priced at $15 per share, reaching a market capitalization of $1.2+ billion on its first day of trading. It was the first Latin Internet company to go public, creating what Brazil's leading business magazine "Exame" called the "Espuelas Effect", eventually reaching a market capitalization of more than $3.8 billion dollars. According to the "New York Times" in an article from May 31, 1999, Espuelas, who had immigrated with his mother from Uruguay with $100 dollars, was worth over $160 million [New York Times, Stocks Drive a Rush to Riches In Manhattan's Silicon Alley, http://query.nytimes.com/gst/fullpage.html?res=9B04E3DE1230F932A05756C0A96F958260&sec=&spon=&pagewanted=all ] at the end of the first day of trading; at its peak, Espuelas' holdings in StarMedia were valued at over $500 million dollars. He never sold any shares or stock options, as Espuelas wrote in "Life in Action".

StarMedia became the best known, most highly traded Latin Internet Stock on Nasdaq during the late 1990s dot-com boom. Other stocks in the sector included Terra Networks and AOL Latin America.

Technology market blow-up, Latin American regional bust and sale

During the .com bust of the early 2000s, which coincided with the worst Latin American economic collapse in a generation, StarMedia lost almost all of its market value, and was the subject of class-action shareholder litigation. After an independent investigation initiated by a special committee of Board of Directors found no wrongdoing by management, the Board's Audit Commitee and StarMedia's outside accountants, the class-action suit was settled by the Board and its insurance company. As part of the settlement, a full release was given by the shareholders to the former management, the company's outside accountants, Ernst & Young, and the Board's Audit Committee. The lawsuit was subsequently dismissed by the Federal judge. [ ( [http://www.gilardi.com/pdf/smnnot.pdf Class Action notice of settlement] in re Starmedia Network, Inc. securities litigation, July 29 2002)]

In August 2001, Espuelas resigned as CEO after conflicts over strategy with the Board of Directors. Susan Segal was named head of the company. Segal decided to abandon StarMedia's core business to focus on the mobile solutions subsidiary, StarMedia Mobile. The StarMedia network of websites, related intellectual property and over 25 million unique users per month audience were sold to the Spanish ISP eresMas Interactive for US$8 million in cash on July 3 2002. The following week eresMas, now claiming to be the leader of the Spanish-language Internet industry because of its acquisition of StarMedia, was acquired by France Telecom subsidiary Wanadoo SA (now called Orange after a rebranding in 2006) for $250 million dollars. According to Orange, StarMedia is the leading Spanish-language portal in the world.

In 2002, StarMedia Mobile was renamed CycleLogic and shareholders approved a one-for-1,000 reverse stock split. Shortly thereafter, CycleLogic deregistered its shares from NASDAQ. Segal ran the company until it filed for bankruptcy in 2003.

On March 2004 the assets of CycleLogic were acquired out of bankruptcy by an international group of investors, becoming a part of the IMS group of companies, Intelligent Mobile Solutions Inc.

External References

* [http://www.starmedia.com www.starmedia.com]
* [http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=800166 Harvard Business School Cases] "StarMedia: Launching a Latin American Revolution"
* [http://www.exonline.com.mx/diario/noticia/dinero/hacker/%C2%A1starmedia_vive!/306572 El Excelsior] ¡StarMedia vive!, August, 2008
* [http://money.cnn.com/news/newsfeeds/articles/prnewswire/200807011357PR_NEWS_USPR_____CLTU086.htm CNN] starMedia Launches New Comprehensive Finance Channel, July 2008
* [http://www.hispanicmpr.com/2008/05/08/starmedia-launches-new-entertainment-portal-for-spanish-speakers/ Hispanic MPRM] StarMedia launches new entertainment portal for Spanish speakers, May 2008
* [http://www.earthtimes.org/articles/show/starmedia-launches-new-entertainment-news-channel,362195.shtml The Earth Times] starMedia Launches New Entertainment News Channel, May 2008
* [http://www.semana.com/wf_InfoArticulo.aspx?IdArt=110046 Semana] Los portales vuelven a la carga: Terra y Starmedia, sobrevivientes de la burbuja punto com, tienen fe en la nueva Internet, March 2008
* [http://www.espuelas.com/ espuelas.com] Fernando Espuelas' Official Site
* [http://wnews.uol.com.br/site/colunas/materia.php?id_secao=4&id_conteudo=30 WNews] Subversivos da Internet latino-americana, August, 2006
* [http://imasters.uol.com.br/entrevista/3095/entrevista_exclusiva_bob_wolheim/ iMasters] Entrevista exclusiva: Bob Wolheim, March, 2005
* [http://www.thestandard.com/article/0,1902,28022,00.html The Industry Standard] Fernando Espuelas July, 2001
* [http://www.economiabr.net/2001/08/01/starmedia.html Exame] Reinventando a Starmedia, July 2001
* [http://search.barnesandnoble.com/Internet-Business-Models/Thomas-R-R-Eisenmann/e/9780072508345/?itm=27 Internet Business Models: Text and Cases] Internet Business Models: Text and Cases with Teledesic Case CD-ROM, June 2001
* [http://www.baquia.com/noticias.php?id=8993 Baquia] El esquivo internauta hispano de EE UU, May, 2001
* [http://www.guardonline.com/?q=node/8825 Associated Press] Latin American Deals with Internet, Obstacles, April, 2001
* [http://www.pc-news.com/detalle.asp?sid=&id=5&Ida=221 PC-News.com] Fernando Espuelas habla sobre la brecha tecnológica en el mundo, March 2001
* [http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BD2BD3376-60D9-409A-8646-58405488E9B2%7D MarketWatch] StarMedia sees itself as Latin leader, December 2000
* [http://www.timewarner.com/corp/newsroom/pr/0,20812,668032,00.html CNN] Twenty Latin American Leaders of the Internet Named by CNN, November 2000
* [http://mensual.prensa.com/mensual/contenido/2000/10/26/hoyenlared.htm La Prensa] Starmedia pregona su segundo lugar en Brasil, October, 2000
* [http://www.elcolombiano.com.co/proyectos/grandes_entrevistas/febrero/febrero_25/fernando_espuelas.htm El Colombiano] Fernando Espuelas, creador de un imperio para la comunidad virtual February 2000
* [http://news.bbc.co.uk/2/hi/americas/1027228.stm BBC News] Annan wants 'information for all', November 2000
* [http://www.timewarner.com/corp/newsroom/pr/0,20812,668032,00.html CNN] Twenty Latin American Leaders of the Internet Named by CNN, November 2000
* [http://www.computerworld.com.au/index.php/id;1589100435 Computerworld] Free Net Access Rocking LatAm ISP Market, November 2000
* [http://www.baquia.com/com/20000904/art00005.html Baquia] Starmedia, el territorio hispano-luso le pertenece, September, 2000
* [http://query.nytimes.com/gst/fullpage.html?res=9502E5DF1631F930A1575BC0A9669C8B63 The New York Times] INTERNATIONAL BUSINESS: When Funds Abroad Fill a Void at Home; Financing Latin America's Start-Ups, August 2000
* [http://www.hispanicbusiness.com/news/newsbyid.asp?idx=1057&cat1=news Hispanic Business Magazine] Wrestling for Web Dominance, August 2000
* [http://www.city-journal.org/html/10_3_the_triumph.html CityJournal] The Triumph of Silicon Alley, August 2000
* [http://www.allbusiness.com/marketing-advertising/4448259-1.html AllBusiness] Crowd, August, 2000
* [http://www.fastcompany.com/magazine/36/minm.html Fast Company] What We Have Here Is No Failure to Communicate, June 2000
* [http://www.bumeran.com.ve/articulos_aplicantes/7/11320/trabajareninternetescomocorrerenformula1.html Bumeran] Trabajar en Internet es como correr en Fórmula 1, May 2000
* [http://query.nytimes.com/gst/fullpage.html?res=9E02E5DD1F3DF93AA15756C0A9669C8B63 The New York Times] StarMedia Faces New Challenges in Latin America, May 2000
* [http://www.idg.es/iworld/impart.asp?id=107009 IDG] Los dos gigantes latinos cruzan el charco, May, 2000
* [http://theindustrystandard.com/article/0,1902,14907,00.html The Industry Standard] Santana Will Jam With StarMedia, May 2000
* [http://www.sfgate.com/cgi-bin/article.cgi?file=/examiner/archive/2000/05/09/STYLE9392.dtl&type=music The San Francisco Chronicle] Santana reaching out on Net via Hispanic StarMedia, Webcasts of upcoming concerts, online chats planned, May 2000
* [http://www.lanacion.com.ar/Archivo/Nota.asp?nota_id=180701 La Nacion] Presente y futuro en la ruta de StarMedia, May 2000
* [http://www.computerworld.com.au/index.php/id;710563586 Computerworld] StarMedia Tops Analyst Expectations in Q1, May, 2000
* [http://www.forbes.com/newmedia/asap/2000/0403/084_6.html Forbes] Ramp Champs, May 2000
* [http://www.computerworld.com.au/index.php/id;373201782;fp;;fpid;;pf;1 Computerworld Magazine] StarMedia to Wire Public Schools in LatAm to Net, May 2000
* [http://www.accessmylibrary.com/coms2/summary_0286-2510147_ITM Latin CEO Magazine] Architect of the Internet: The Internet in Latin America is now flush with capital-and promise. But who will carve out the winning niches and define the look and feel of the new medium?, January 2000
* [http://www.businessweek.com/1999/99_43/b3652019.htm BusinessWeek] La Vida Loca of a Latin Web Star (international edition cover story), October 1999
* [http://info.abril.com.br/edicoes/158/arquivos/3144_1.shl Info Magazine] A internet não é mais a mesma, May 1999
* [http://www.hispanicbusiness.com/news/2000/5/4/hispanic_ecommerce_market_expands.htm Hispanic Business Magazine] Hispanic E-commerce Market Expands, May 2000
* [http://www.hsm.com.br/hsmmanagement/edicoes/numero_19/encanto_virtual.php Revista HSM] Com o encanto do virtual: Todos pensavam que a StarMedia remava contra a corrente, mas ela descobriu um tesouro escondido na América Latina, April 2000
* [http://www.computerworld.com.au/index.php/id;1191261862;fp;;fpid;;pf;1 Computerworld Magazine] Espuelas: StarMedia Leads LatAm Portal Market April, 2000
* [http://money.cnn.com/magazines/fortune/fortune_archive/2000/04/03/277174/index.htm Fortune Magazine] Going Global With StarMedia Chief Fernando Espuelas, April 2000
* [http://www.marketwatch.com/news/story/starmedia-reports-531-jump-revenue/story.aspx?guid=%7BF632258C-B69F-4B1C-BDB7-FF3BE74D4412%7D MarketWatch] StarMedia reports 531% jump in revenue, April 2000
* [http://nymag.com/nymetro/news/people/features/2883/ New York Magazine] Profile: 35 Under 35, April 2000
* [http://www.internetnews.com/ent-news/article.php/317731 Internetnews] StarMedia, L'Oreal Launch Portal for Spanish-Speaking Women, March, 2000
* [http://www.atnewyork.com/news/article.php/321511 atnewyork.com] 'Questions for ... Fernando Espuelas', March 15 2000
* [http://www.terra.com.br/istoe/1586/economia/1586mudanca.htm Istoe] Mudança de hábito: O empresário Fernando Espuelas radicaliza e deixa de cobrar acesso de todos os clientes da StarMedia, February, 2000
* [http://money.cnn.com/magazines/fortune/fortune_archive/2000/02/07/272807/index.htm Fortune Magazine] Chase's Venture Capital Elite They're not rock stars; they're more like a hot studio band. Chase Capital Partners keeps the hits coming, January 2000
* [http://query.nytimes.com/gst/fullpage.html?res=9A07E2DC1E39F932A35752C0A9669C8B63 The New York Times] VISIONS: CITIES - Manifestoes To Give City A New Edge; Cooper Union for Technology, January 2000
* [http://www.highbeam.com/doc/1G1-58736200.html Newsweek] Latin America's Internet Star: Fernando Espuelas, January 2000
* [http://findarticles.com/p/articles/mi_m0BEK/is_9_7/ai_55548152 Latin Trade Magazine] Rocket Man - Internet Entrepreneur Fernando Espuelas, StarMedia, December 1999
* [http://veja.abril.com.br/especiais/Digital3/capa03.html Veja] No olho do furacão, December 1999
* [http://query.nytimes.com/gst/fullpage.html?res=9C0DEEDB143CF932A15752C1A96F958260 The New York Times] C.E.O ROUND TABLE; Online Pioneers: The Buzz Never Stops, November 1999
* [http://www.newsweek.com/id/89743 Newsweek] A Regional Race Into Cyberspace - So What If Many Latins Still Await Their First Phone? Big Money Is Mobilizing To Bring The Continent Online In A Hurry, November, 1999
* [http://www.businessweek.com/1999/99_43/b3652015.htm BusinessWeek] Battle for the Net: The rush is on to cash in on Latin America's fast-growing market, October 1999
* [http://www.noticias.com/articulo/21-11-1999/redaccion/grandes-sitios-latinos-seguiran-pasos-terra-y-starmedia-l4.html Noticias] Los grandes sitios latinos seguirán los pasos de Terra y Starmedia, November, 1999
* [http://www.infoworld.com/articles/en/xml/99/10/11/991011enlatinwireless.html InfoWorld] StarMedia: Latin American provider to offer wireless services to Spanish-speaking users, October 1999
* [http://nymag.com/nymetro/news/nyawards/1710/ New York Magazine] The 1999 New York Awards: Fernando Espuelas, 1999
* [http://www.smartmoney.com/breaking-news/index.cfm?story=19990901040321 SmartMoney] Starmedia Launches Brazilian Internet-Access Service, September 1999
* [http://query.nytimes.com/gst/fullpage.html?res=9F0DE1DB1E38F937A1575BC0A96F958260 The New York Times] On-Line Network Expands, August 1999
* [http://query.nytimes.com/gst/fullpage.html?res=990DE6DD153CF93AA35754C0A96F958260&st=cse&sq=%22fernando+espuelas%22&scp=6 The New York Times] Treasury Chief Urges Inner-City Investment, July 1999
* [http://www.tvmasmagazine.com/revista/julio/26.htm TVmas Magazine] Premios internacionales de CNN y Time, July 1999
* [http://www.espectador.com/text/empresas/emp12013.htm El Espectador] “StarMedia abre en Montevideo su sede para América Latina”, January 1999.
* [http://www.sfgate.com/cgi-bin/article.cgi?file=/examiner/archive/1998/10/13/BUSINESS12045.dtl San Francisco Chronicle] Viva Internet StarMedia Inc. lands $80 million to fund Latin American Web community, October 1998
* [http://query.nytimes.com/gst/fullpage.html?res=950CE3D8103DF93BA25755C0A96E958260&sec=&spon=&pagewanted=3 The New York Times] The Web Reflects a Wider World, June 1998
* [http://query.nytimes.com/gst/fullpage.html?res=9B04E3DE1230F932A05756C0A96F958260&sec=&spon=&pagewanted=all The New York Times] Stocks Drive a Rush to Riches In Manhattan's Silicon Alley, May, 1999
* [http://veja.abril.com.br/270199/p_094.html Veja] A batalha pelos portais, January 1999
* [http://www.espectador.com/text/empresas/emp12013.htm El Espectador] “StarMedia abre en Montevideo su sede para América Latina”, January, 1999.
* [http://www2.uol.com.br/JC/_1999/0601/if0601o.htm Jornal do Commercio] Bate-papo em português na página da Starmedia, January, 1999.
* [http://www.lanacion.com.ar/Archivo/Nota.asp?nota_id=187882 La Nacion] Portales, la movida que se abre paso en la Web latina, January, 1999
* [http://www.cnn.com/TECH/computing/9812/23/latinit.idg/ Computerworld] Latin America booming with IT skills, infrastructure problems, December 1998
* [http://www.pcworld.com.ve/n21/articulos/starmedia.html PCWorld] StarMedia: sabor latino en la Internet, December 1998
* [http://www.wired.com/techbiz/media/news/1998/11/16124 Wired Magazine] StarMedia Wants US Hispanics, November, 1998
* [http://www.sfgate.com/cgi-bin/article.cgi?file=/examiner/archive/1998/10/13/BUSINESS12045.dtl San Francisco Chronicle] Viva Internet StarMedia Inc. lands $80 million to fund Latin American Web community, October 1998
* [http://www.wired.com/wired/archive/6.09/newmedia.html?pg=3 Wired Magazine] Yo Quiero StarMedia September 1998
* [http://www.brookings.edu/articles/2001/10metropolitanpolicy_wylde.aspx The Brookings Institution] The New York City Investment Fund: An Emerging Model For Corporate Engagement in Urban Development
* [http://www.businessweek.com/1997/52/b3559159.htm BusinessWeek] Welcoming Spanish Speakers to the Web: Fast-growing StarMedia is racing to fill the niche first, December 1997
* [http://query.nytimes.com/gst/fullpage.html?res=9805E1DA1139F932A25752C1A961958260&partner=rssnyt&emc=rss The New York Times] Media Company Arrives, November 1997
* [http://www.wired.com/techbiz/media/news/1997/09/6563 Wired Magazine] New York Dream Job: Director of Community, September 1997

References