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,â€ 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.
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.