StarMedia

» see starmedia.com as it lived, on the wayback machine

~ the obit ~

starmedia was a us-side bet on the latin american web, in spanish and portuguese, from a manhattan headquarters. the founders were fernando espuelas, a uruguayan-american adman, and jack chen, a venture banker. in august 1996 i was twelve, in ankara, on no internet at all. the closest a starmedia property would come to my orbit was latinchat, but that was the latin diaspora's chat room, not the turkish dial-up scene.

the company spun up as part of the late-nineties bet that the web would split along language lines and that portals would carry the same scale advantages in spanish and portuguese they were already carrying in english. the model was a yahoo for latin america: a directory, a webmail product, news syndication, the usual portal stack ported to a different alphabet.

on 25 may 1999 the company listed on nasdaq as STRM at fifteen dollars a share. the stock ran the typical dot-com arc, the market cap peaked above $3.8 billion before the correction. by 2000 the wheels were coming off. the q3 1999 page-view count was 1.2 billion and the monthly active number was over 25 million, but the ad revenue per page never approached the english-language internet's run rate.

~ the rap sheet ~

~ the rise ~

starmedia's pitch was that one company could serve mexico, argentina, brazil and the us-hispanic market from a single stack, with one ad sales team and a shared infrastructure bill. that was a real efficiency on paper. the problem in practice was that spanish and portuguese were not the same language and that brazil was not in the same advertising market as argentina or mexico.

flatiron partners and chase capital led the early rounds. latinchat was its breakout consumer product. by 2000 latinchat had real scale, the kind of thing you would notice in a us-trade-press article about the latin american web. it was also unmonetizable at the rates the rest of the company was burning.

~ the cracks ~

starmedia missed its q1 2000 revenue numbers and the stock collapsed inside a week. through 2000 and 2001 it ran through layoffs and an accounting restatement that erased a couple of quarters of prior revenue, with a sec inquiry trailing. the original founders were pushed out by mid-2001. the latin-portal premise was no longer worth what the market had paid for it.

in july 2002 the spanish isp eresmas, owned by retevision, paid around $8 million for starmedia's web properties. roughly two orders of magnitude below where the company had floated three years earlier. a week later eresmas itself was sold to france telecom's wanadoo for over 255 million euros. starmedia became a directory page inside a french telco's spanish-language portal.

~ what got buried with it ~

what disappeared was the first serious pan-regional latin-internet company, the one that had been positioned as the yahoo of spanish. in those days. terra networks survived, mostly because it was a telefonica subsidiary with a real distribution channel. starmedia did not have that. it had a chat room and a webmail product.

fernando espuelas later moved into broadcasting and political commentary. jack chen moved into venture investing. the starmedia properties limp on as a low-traffic directory under orange's spanish ad business, the kind of corporate tombstone that gets renewed once a decade without anyone noticing. either way, the pan-latin portal dream was settled by the eresmas sale.

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