The New York Times’ Gary Rivlin has this cautionary tale for all the Web 2.0 companies out there that are hoping for YouTube-like acquisition dollars. Friendster, which popularized social networking before MySpace was even a gleam in its co-founders’ eyes, was once the hot Silicon Valley start-up embraced by VCs (too closely, as the article suggests) that turned down a $30 million buy-out offer from Google in hopes of growing into the next Yahoo! or YouTube.
But Friendster is now the buzzword for failure.
Roughly once a week, David L. Sze, a venture capitalist at Greylock Partners, hears from entrepreneurs who say they have the next MySpace, the copycat social networking site that has trounced Friendster. “The counter to that is, ‘Tell me why you aren’t going to be the next Friendster,’ ” Mr. Sze said. “It’s become the iconic case of failure.”
In three short years, Friendster has fallen so low that it ranks 14th among all social neworking sites — it pitifully falls below even MyYearbook.com, a site started last year by a high school student. What happened? According to Rivlin, Friendster was laid low by a mixture of arrogance (Friendster co-founder Jonathan Abrams was just a little bit too into himself), greed (holding out for bigger buyout bucks) and a VC-populated board composed of old (50+) white men who didn’t grok social networking.
Those are all factors, of course, but the real demise can be traced back to the failure of Friendster to fix its technical problems (pages sometimes took 40 seconds to load) and its lack of appreciation for rising competition, namely MySpace.
“I was giving people regular updates on MySpace,” said Jim Scheinman, who served as Friendster’s head of business development from October 2003 until leaving in May 2005 to work at a social networking rival, Bebo.com. “But a lot of people refused to take them seriously.”
Many people working at Friendster sneered at MySpace. The holy grail at Friendster — and the cause of most of its technical problems — was its closed system: users at Friendster could view only the profiles of those on a relatively short chain of acquaintances. By contrast, MySpace was open, and therefore much simpler from a technological standpoint; anybody could look at anyone else’s profile.
Friendster’s object lesson is one that would be well worth studying (and is, in fact, the subject of a case study at Harvard Business School) for the the batch of Web 2.0 companies still hoping for their pay-offs. Mark Evans takes a good crack at figuring out who’s next in the big buy-out game. His list of contenders are all worthy candidates, but nothing on the magnitude of YouTube…or Friendster in better days.
Cynthia Brumfield at 11:14 AM|Comments(1)
I think that when they fired TroutGirl for blogging that it showed how arrogant the owners really were. After that the bloggers and social networking adopters turned on the site and it was downhill from there. Friendster's problem was that they never acknowledged that it was really their customers who owned the site not them.
Posted by: davis freeberg at October 15, 2006 12:37 PM
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