There’s many success stories lately of Web2.0 companies making successful exits. MySpace and Youtube come immediately to mind at the forefront of these cool, sexy startups that rode on the wave of “youth-phoria” and their new-found social lives on the web. The founders of Youtube and MySpace may have become the new “rock stars” of the Internet Age, but for every rock star, there’s hundreds of has-beens..
Friendster was touted as the coolest shit we had ever seen. A website that allowed internet users to create web profiles, connect with their old and new friends. The social networking industry was born and heralded as the Next Big Thing in the hype-fueled days of 2002. The mags were going gaga over it, from the notable Time, Forbes to chick reads like Cosmopolitan and Entertainment Weekly. Even Playboy was into them. Its founder, Jonathan Abrams, was THE STAR, showing up at events, with “strikingly beautiful women on each arm”, as NYT reports here.
And Friendster had powerful investors that read like the Hall of Fame of Silicon Valley. John Doerr, Ram Shriram, Peter Thiel (co-founder of PayPal) , Tom Koogle (chief executive of Yahoo through the second half of the 1990’s). It was an All-Star Team. No one could touch them. Google tried buying them in 2003 for $30M but was rebuffed. Friendster thought it could be much bigger, maybe something bigger than what Google is today. They wanted to do everything:
We had a new clothing line come out last week. We’re talking about a reality TV show. I thought it’d be a cool Web site, but the whole cultural thing has been amazing. — Jonathan Abrams speaking on MArch 16, 2004 at the SXSW conference.
Besides, those behind Friendster were so convinced that they were destined to be the next big thing that they instead fixated on the actions of their presumed peers — at least that is Mr. Siegelman’s recollection. “I remember going to these board meetings and feeling disgusted,” he said. “Half of every board meeting was taken up by a discussion of what Google’s going to do, or Yahoo.”…
…The performance problems would come up, but the board devoted most of its time to talking about potential competitors and new features, such as the possibility of adding Internet phone services, or so-called voice over Internet protocol, or VoIP, to the site. Source: New York Times
But today, we know what happened, Friendster is literally the jaded cheerleader who never got laid after attending all the frat parties and courted by all the football jocks. It lies listlessly in 14th position in a ranking of all social networking websites, hundreds of time smaller in membership size behind MySpace. Its website still sucks, where MySpace has bands, TV celebrities and cool people hanging out, a $900M advertising deal with Google, Friendster has to make do with lame shit like this on its front page:
Do you want to be a fan of Cornetto ice cream?
So why did Friendster fail? I strongly think it is due to the absolute loss of control of the founders over the company’s direction and strategy. The “too many cooks in the kitchen” analogy came straight to mind. Secondly, the “experienced” investors dun get social networking. They focused too much on the money and not enough on the idea. Social netowrking is a real fuzzy concept that requires a lot of chemistry between the founders and its users. THink Facebook’s Mark Zuckerberg who was not even 21 when he started it, MySpace’s young music-loving founders, Youtube’s Chad, Jawed and Steve who digged videos. Can you imagine the 50-something board members understanding this?
The number of mistakes made at Friendster are many:
- Founder Jonathan Abrams was replaced as CEO in April 2o04.
- Board members who had great resumes but did not understand the product. The legendary John Doerr was deemed to have “little feel for the product”, and taken off the board by his fellow KPCB partner Siegelman.
- A rotating-door CEO policy
The board replaced Mr. Abrams with one of its own, Mr. Koogle, the former chief executive of Yahoo. But Mr. Koogle served only three months, a temporary caretaker who showed up at the office only sporadically, former Friendster employees said. The board next chose a television industry executive, Scott M. Sassa, to replace Mr. Koogle. That selection might have made sense if the company had been in position to start cutting big advertising deals. But it was not, given that its Web site was not up to speed. Mr. Sassa left after less than a year, which was nearly twice the tenure of his successor, Taek Kwan, who left at the end of 2005, six months after he started.
I truly believe Friendster is a good lesson for social networking entrepreneurs trying to create the next MySpace. Its way too easy to think any kid can code a website in his room and ask 100 friends to spread the word and them to spread to another 2 virally by themselves and hope for it to scale the Hitwise/ Alexa ranking s subsequently. Yes, myYearbook.com, founded by a 16-year old student, is ranked higher than Friendster currently.
But if you think you can be MySpace, what makes you think you won’t become Friendster instead?
If you like this, this article here.