Friday, June 29, 2007

Friendster? Really?

posted by Andy Leff
File this story under "Great Comebacks of the 21st Century," right after the Boston Red Sox and before Lance Armstrong.

VentureBeat reported that pioneering social network Friendster experienced a 41 percent surge in page views in May -- about 9 billion views total. This gives it a 4th place finish in the social networking race, and a leading position among second-tier sites. (Keep in mind that Friendster has gained its popularity in secondary markets, which are not as valuable as the U.S. market.)

Friendster's resurrection is a good case study for other Web 2.0 businesses just getting started, or trying to overcome market setbacks. Here's the backstory: The company crashed and burned three years ago. It relinquished its market leadership to MySpace and then Facebook came in which didn’t help either. The future looked bleak.

But Friendster refused to admit defeat. Instead, it re-architected its site. The debilitating technology bugs were fixed and improved. And the company went toe-to-toe with rivals by adding classifieds, classmate search, invite prompts, and automatic friend updates.

Friendster also relaxed its views on who could be a member of the site, and stopped deleting accounts for cities, colleges, clubs, and people who just liked adding random people to their contact lists. In effect, they began copying the business model that killed them in the first place.

Now place this transformation within the context of social network community growth. Friendster passed through early buzz, plunged into obscurity, and presently enjoys self-sustaining growth (in member acquisition, not necessarily bottom line growth) in secondary markets to the United States.

Friendster will never regain the spotlight that it once had before being crushed by MySpace, but it can gain some ground in markets where MySpace doesn’t hold a death grip on the market.

It's already capturing valuable share in the Pacific Rim, and can overtake MySpace and Facebook in these markets if their growth continues at a decent clip. That said, I am not optimistic that it can continue at this rate without strong penetration in the U.S.

Will Friendster’s victory over MySpace in secondary markets happen tomorrow? No. Will Friendster ever become a leading social network in the U.S. and not look like a ghost town? Probably not.

After all, it took Friendster three years just to reach this hopeful turning and possibly tipping point, so reaching the No. 1 spot could take another few years, if ever.

Still, market velocity might be Friendster's new best buddy. Web 2.0's offerings and audience are growing exponentially and rapidly. This in turn will accelerate the growth model, and drive social networks along the curve faster than expected.

So what can start-up social networks learn from Friendster? One, business is business, online or off. Survival always demands strategy, flexibility, and adaptation.

Two, Web 2.0 is unpredictable. Friendster came back once, but they could easily slide back. And a new social network might be waiting in the wings, ready to make its own grand entrance and upstage the classic sites.

The takeaway: Just because there's a market leader doesn't mean you can't come along and redefine the space with a better, smarter feature set that reaches more users or a different set of users. Most recent example: the Apple iPhone, which has upset the telecom industry simply by attempting to redefine what a mobile phone is.

So take the existing paradigm, and reinvent it or break it -- even if that paradigm is your own.

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