This came as news to me when Friendster.com was acquired by a company in Malaysia. Friendster.com used to be the leading online social networking site and was often copied by the one Maga social networking site – MySpace.com (see book I finished on Stealing My Space).
I know that Friendster.com is a big hit in countries like Singapore, Indonesia, Malaysia, the Phillipines and maintains a strong foot hold in Asia, but the growth of the company within the last few years were very disappointing. According to an article in Wired.com (Issue 12.04 | April 2004), they valued Friendster at $53 million. After five years, Friendster was only able to double its value in comparison to companies like MySpace or the current social networking website titan, Facebook which is able to command a higher value and have seen a huge surge in growth.
A couple of days ago, Frindster was sold for a price tag of $110 million to a Malaysia company – MOL Global. MOL Global is an affiliate of online payment solutions provider MOL AccessPortal Bhd, which has Berjaya Corp Bhd chairman and chief executive officer (CEO) Tan Sri Vincent Tan as the principal shareholder.
An industry blog, TechCrunch, had in July valued Friendster at US$210mil, a fraction of Facebook’s estimated US$10bil valuation. According to Compete.com, Friendster is currently generating 1.1 million unique hits in Nov 2009 while Facebook is generating 128.3 million unique hits for the same period.
I doubt that Friendster will come close to what Facebook is doing but I am sure that MOL sees a value in Frienster to cough up $110 million, and if TechCrunch is accurate in their estimate, then Friendster was sold at 50 cents on the dollar.
In the book, Stealing MySpace by Julia Angwin (published in 2009), it brought up lots of interesting facts especially in the earlier years. Here are some things that you might not know about that small company that started in Los Angeles, CA.
- Domain name (MySpace.com). The original domain name was bought and utilized as a free online file storage and at its peak, it saw 7.5 million registered users utilizing their service. They competed with XDrive which offered 100MB of free space, while MySpace offered 300MB. They folded and that domain was bought by DeWolfe of ResponseBase for $5000.
- Spam and trash. ResponseBase who developed MySpace did everything from spam, small trashy remote control cars which had a high return rate, useless eBooks which had lots of complaints. ResponseBase was also involved with spyware and unauthorized pop-up installation. ResponseBase was part of eUniverse which was later rebranded as Intermix.
- Rip Off concept. MySpace were no innovators. They copied Friendster, one after another application. They even copied some applications out there which resulted in them being sued and they settled out of court, to renaming some of their applications. i.e. hot-or-not. MySpace was developed to go after Friendster’s market, as they saw Google offering Friendster $30 million in Summer 2003.
- Ownership. MySpace was a side project for ResponseBase and ResponseBase was owned by Intermix. Intermix was bought my News Corp, not MySpace. News Corp was interested in acquiring MySpace but bought Intermix to get to it.
- Price. Intermix was bought for $580 million by News Corp. Unknown to the general public, some of the people who came up with MySpace pocketed $75 million over two years following the sale. DeWolfe and Anderson got $30 million for two year per person, which other shared $15 million over two year.
- Contender. Other than News Corp, Viacom was actively looking to buy Intermix due to the success of MySpace.
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