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Sunday, October 15, 2006

The Fall of the House of Friendster

Gary Rivlin over at the New York Times has a great article on Friendster's decline and fall. If only founder Jonathan Abrams had taken Google's $30 million dollar offer, he'd be worth $1 billion today. Instead he chose to take venture capital in the hopes of building Friendster into something on the level of a Yahoo!, which similarly declined a buyout offer and of course, became hugely successful.

Friendster's decline and fall can apparently be described by three factors: a revolving cast of CEOs (3 in 12 months), scaling problems (at times the site took 40 seconds to load up), and an out of touch board that wasn't well-versed in the social networking market (and was assuming success instead of working towards it).

One thing stood out: Kleiner Perkins, Benchmark, and other VCs pumped in another $3 million to keep Friendster afloat, citing in part Friendster's brand name recognition and millions of users (most of whom hadn't visited the site for a while). What interests me is that they expected those inactive users to show up again. Most likely, even at Friendster's height, most registered users had already abandoned Friendster. More thoughts later.


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