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- 😯 How Friendster died (The Untold Story)
😯 How Friendster died (The Untold Story)
The rise and fall of the first social network (before Facebook)
Admond Lee
March 24, 2024
Read Time: 5 minutes
Hey Founders,
Welcome to The Runway Ventures, a weekly newsletter where I deep dive into startup mistakes and lessons learned to help you become a better founder.
🎉 By the way, we finally hit 1,000 subscribers last week! I started the newsletter earlier this year and still can’t believe there are more than 1,000 founders (including you!) wanting to learn from startup mistakes.
My vision still remains the same. There are many ways to succeed for founders, but only a few ways to die. The goal is to help founders NOT die. If you stay default alive, you have a chance.
Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → Friendster
⚠️ 2 Mistakes → Poor user experience
🧠 3 Lessons Learned → You don’t have to be the first to win
🔗 The Runway Insights → How Amplitude became a $4 billion company
🤝🏻 The Founders Corner → When should I pivot for my startup?
☠️ 1 Failed Startup: Friendster
🚀 The Rise of Friendster
Friendster, founded by Jonathan Abrams in 2002, was one of the first social networking sites where users could create profiles, upload photos, connect with friends, write comments and send messages to each other.
On top of that, some users also used Friendster for dating, joining new groups (based on their interests) and discovering new events.
Because of its exponential growth, Friendster had raised a total of $48.5 million across 5 rounds of VC funding.
At its peak, Friendster had over 100 million users, mostly in Southeast Asia.
The Problem — People struggled to connect with friends online easily.
The Solution — Friendster allowed users to connect with people easily online by uploading their photos and information and inviting their own friends to join the social networking site.
Well, guess what? The emergence of social media (i.e. Friendster) fulfilled a human desire and need that people didn't know it had.
🥳 It’s like when your friends are joining a party, and you don’t want to be left out, so you join the party and have fun with other friends.
This is exactly what happened to Friendster which contributed to their crazy growth within a short period.
By 2003, Friendster grew from 0 to 3 million registered users in one year.
📉 The Fall of Friendster
However, good times never last. While it seemed like Friendster was poised to become the largest social networking site, this is when things started falling apart.
😯 Here’s what happened to Friendster (the untold story):
2002 — Friendster was launched.
Only a few months after Friendster launched, Myspace emerged.
Myspace was another social networking site with similar functionalities as Friendster, but much cooler with better user experience.
2003 — Friendster hit 3 million registered users.
Google offered to buy it for $30 million in shares (which would be worth over $1 billion today).
Jonathan’s investors told him not to sell to Google, saying that they could help him turn Friendster into a multi-billion company.
So, he turned Google down.
2004 — About 1 year after Friendster started, Facebook launched.
July 2009 — As Friendster continued scaling, it faced many issues:
Performance Issues: Friendster faced performance issues due to technical problems and a redesign.
The site faced a catastrophic decline in traffic as users fled to other social platforms like Facebook.
Poor user experience: Friendster failed to maintain a consistent quality of user experience as the platform scaled.
Instead, it focused on adding new functionality like internet-based phone functions and integrated chats, as well as acquiring lucrative advertising partnerships.
December 2009 — MOL Global, a payments company in Malaysia, acquired 100% of Friendster for USD 39 million.
June 2010 — MOL sold their intellectual property to Facebook, including seven finalised patents and eleven pending patent applications, for USD 40 million.
November 2010 — After the acquisition, MOL Global shifted Friendster’s direction toward social gaming (which was a growing industry in the Asian market).
Friendster focused almost entirely on in-browser games.
MOL also partnered with Facebook to incorporate a payment system where users could buy Friendster coins which could be used for in-game materials.
2015 (unofficial death) — Friendster announced it was taking a break.
The MOL’s bet on social gaming didn’t work out, and Friendster couldn’t sustain itself.
2018 (official death) — Friendster officially shut down.
Despite its downfall, Friendster had a significant impact on the social networking landscape, particularly in Asia given its mainstream success there. It also paved the way for other sites like Facebook and Twitter.
Want to learn more about Friendster’s downfall?
⚠️ 2 Mistakes
Friendster was Facebook before Myspace was Facebook before Facebook was Facebook.
Mistake 1: Poor user experience
One of the biggest reasons why Friendster failed was its poor user experience due to the massive user base and traffic it had.
⏳ For instance, at one point, the site’s servers became so overwhelmed that it took 40 seconds to load a single page on Friendster. To make things worse, instead of fixing the loading speed, the leadership team focused on adding more features to the site.
Because of this, Friendster was clunky and confusing, making it difficult for users to navigate and find the information they were looking for. As a result, more and more users moved to Myspace and Facebook.
Mistake 2: Outcompeted by new competitors
Right after Friendster was launched, competitors started coming out one by one. In fact, Jonathan also recalled a similar statement in an interview with the L.A. Times:
“MySpace wasn’t even amongst the first 50 copycats of Friendster,” he said. “If hundreds of people are copying you, competing with you and your stuff is not working, you’re going to get in trouble.”
And Jonathan was right.
Friendster faced many problems, including performance issues, poor user experience, and lack of features that users wanted. By the time Friendster fixed these problems, it was too late to catch up as Myspace and Facebook had already implemented them.
Eventually, Friendster got outcompeted by Myspace and Facebook. Users migrated to these social networking sites. And Friendster was slowly getting forgotten.
Even though Friendster had its first-mover advantage, it didn’t last long.
🧠 3 Lessons Learned
Lesson 1: User experience is key
This is especially true for B2C companies (i.e. Friendster). If users don’t like to use your product because of the poor user experience, it’s just a matter of time before your product is dead. Sad, but true.
This is also why Myspace kept all the parts of Friendster that worked, and changed the parts that didn’t to improve user experience, like:
Allowing users under the age of 18
Allowing users to use fake names and photographs to create their online personality
Attracting musicians to its site to gain a foothold in the youth market
Improving the site’s performance with scalability
Lesson 2: Always be paranoid
Facebook was launched in 2004 run by four students at Harvard, one of whom was Mark Zuckerberg. Facebook’s initial growth was slower as it was intentionally designed and offered only to universities and high school students.
💃 It was a brilliant move because all students wanted to join the party as they didn’t want to miss out when their friends were having fun. Facebook’s growth was crazy within campuses. By the time it was launched to the public, it was too late for Friendster to catch up.
While Friendster had its first-mover advantage, it didn't last long. It was outcompeted by Myspace and Facebook.
The only constant in business is competition. Be prepared for future disasters. Fix the roof during sunshine, and stay protected during storms.
Always be paranoid.
Lesson 3: You don’t have to be the first to win
🏃🏻♂️ Even though Friendster was one of the first social networking sites and had exponential growth when it first started, it wasn’t enough to win the marathon.
Myspace and Facebook saw the early success of Friendster. Most importantly, they learned from Friendster’s mistakes and built better products. While Friendster was struggling internally, Myspace and Facebook was slowly catching up and eventually took over Friendster.
Today, Facebook is the winner and most of its early competitors died.
🧠 Moral of the story:
First-mover advantage is overrated. You don’t have to be the first to win. Learn from the mistakes made by your predecessors and become 10x better than them.
🔗 The Runway Insights
🤝🏻 The Founders Corner
This is the place where you can ask me any questions about building a startup. Every week, I’ll pick one question to answer.
Just reply to this email with your burning question. Let’s win together 🤝🏻
Founder’s Question:
I’m a first-time founder. How to know when I need to pivot my startup to a new direction? I’m a bit lost and not sure if I should continue working on the same startup idea or pivot.
My Thought:
To be honest, I struggled with this question as well when I first started my startup. As a result, we pivoted too late, costing us lots of money and time and eventually shortening our runway.
However, nowadays when I’m not sure if I should pivot, I always refer back to this sharing by YC on when and how you can pivot. Highly recommend watching this if:
You’re wondering if you should pivot
You are not sure if your new idea is better than your last idea
Pivoting is almost inevitable when you’re building a startup. Using the framework shared by YC, I hope it can help you navigate this phase smoothly!
🤝🏻 Join our founders community on Discord:
Building a startup is one of the toughest things you can do. Why struggle alone when you have our community to help and support you.
This is the founders community I wished I had when I first started.
That's all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope it has helped you in some ways and brought you some peace of mind.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.
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