Who screwed the pooch on Friendster?

by Mathew on October 15, 2006 · 7 comments

If I were an advisor to a startup, or a venture capitalist like Paul Kedrosky or Rick Segal or Fred Wilson, I would clip and laminate the story from today’s New York Times about the decline and fall of Friendster, or blow it up and make a wall-hanging for the boardroom, or force every employee to memorize it, or something equally dramatic. As a VC in the story says, Friendster is an “iconic case of failure,” an epic tale of missed opportunity and failed potential, like a Greek tragedy with Silicon Valley engineers and VCs instead of Oediupus and his mom.

In 2003, Friendster was a social-networking star, and growing quickly. Kleiner Perkins and a host of other top VCs were all over it like white on rice. The company turned down a $30-million buyout offer from Google. Why not? It was going to be huge. Then came the stability and performance issues as it grew — ignored, of course. Then the “help” from miscellaneous CEOs, board members and others, most of which focused on competing with Google, Microsoft and Yahoo. And a long, spiralling trip from superstardom to the bottom of the barrel, as MySpace became everything Friendster could have been.

friendster

So who’s to blame? The founder suggests (through a friend) that the VCs screwed everything up. Some of the VCs even appear to agree. The legendary John Doerr of Kleiner Perkins says “We completely failed to execute… everything boiled down to our inability to improve performance.” While the executive team was planning to expand and offer all kinds of new features, the site was so slow as to be almost unuseable, and it continued to pursue a kind of gated-community approach even as MySpace opened itself up to anyone.

This story should be required reading in the Valley, especially now during what may or may not be Bubble 2.0.

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  • http://www.howardlindzon.com howard Lindzon

    There is asucha fine line here that it would make a great business school story

  • Mathew Ingram

    Thanks for the comment, Howard. According to the NYT story, a prof at Harvard Business School is doing just that.

  • ZF

    You have to understand that when John Doerr says “We completely failed to execute… everything boiled down to our inability to improve performance” that’s his way of assigning 100% of the blame to the company’s management.

    To a VC like Doerr the ‘executives’ are the ones who are responsible for ‘executing’. VCs are usually management heroes in their own minds after everything has gone well, but generally seek to distance themselves in this way from shared failures.

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  • Mathew Ingram

    That’s a fair point, ZF — you could read Doerr’s comment that way. And it’s worth wondering why if performance was such an issue, he didn’t do more to help whoever it was “execute” on that particular front.

  • http://www.venturelaw.blogspot.com Suzie DIngwall Williams

    It’s just a new learning cycle for the Valley VCs, much like the one we went through here in Canada 5 years ago. Some of the companies backed by our VCs here lasted as long as a Hollywood marriage, if you’ll recall. Riptide wasn’t around long enought to print business cards. Youtopia? You what? The real messes in the US to watch for are the public venture capital deals and roll-ups being done by larger private euqity funds. You can sense the vultures gathering for those…

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