Lessons from Friendster

This is a good article in the NY Times about the rise and fall of Friendster—definitely a startup tale to learn from.

One thing that stands out is how the company focus changed from the founder scratching his own itch:
"'Basically, Jonathan wanted to meet girls,' said Mark J. Pincus, a Silicon Valley entrepreneur who provided Mr. Abrams with some of the seed money to finance his project at the end of 2002. 'He told me himself, he started Friendster as a way to surf through his friends' address books for good-looking girls.'"

To one driven by...other concerns:
"'Friendster ended up with three levels of V.P.'s, C.E.O.'s and board members who, although they had great résumés, they were not connected to the social networking concept and didn't really use Friendster,' [Melissa Gilbert] wrote.

Doerr denies this, saying, "We understood the opportunity. The company didn?t seize that opportunity." But the article goes on:
"...the board also lost sight of the task at hand, according to Kent Lindstrom, an early investor in Friendster and one of its first employees. As Friendster became more popular, its overwhelmed Web site became slower. Things would become so bad that a Friendster Web page took as long as 40 seconds to download. Yet, from where Mr. Lindstrom sat, technical difficulties proved too pedestrian for a board of this pedigree....In retrospect, Mr. Lindstrom said, the company needed to devote all of its resources to fixing its technological problems. But such are the appetites of companies fixated on growing into multibillion-dollar behemoths. They seek to run even before they can walk."

A classic example of how money and connections gets trumped by user experience.

BTW, the claim that if Abrams had sold for $30 million in Google stock that he "would easily be worth $1 billion today" is way off. Unless my math's wrong, it assumes an internal Google valuation at the time of under $4 billion. And that's even with the assumption Abrams didn't sell any stock way back when it was only $100, and he owned 100% of the company when it sold. The deal valuation certainly would have been more than that (in fact, rumor has it, it was partially Abrams' balking at the play-money valuation they claimed that helped kill the deal). All that said, it still woulda been a hell of a deal.