Thursday, May 26, 2005
VCs make fickle friends for Friendster CEO #2
After pushing out the founding CEO of Friendster last year, it appears that the VCs behind Friendster didn't like the choice they'd brought in a year ago, Scott Sassa, either.
Huh? What, the West Coast president for NBC, the man behind the development and production of Fear Factor wasn't able to take the Internet's version of a reality show, as one Blogit member calls a social networking site like Blogit (and by that logic, Friendster), and turn it into a profitable franchise?
According to this Wall Street Journal story (subscription required) the justification for the change at Friendster -- which has struggled to stay relevant in the face of competition and make money -- was explained as follows:
Friendster of Mountain View, Calif., said Mr. Kwon, 31 years old, who currently serves as executive vice president of product and technology at IAC/InterActiveCorp's Citysearch.com, will join the closely held company on June 13.
..."Scott was brought on to build a business model that could generate revenue, but at this point the company's emphasis, with Taek coming on, is building the product and technology," said spokeswoman Carleen LeVasseur. She said the focus would be on both improved usability and new features.
The fact is that free sites always have a hard time going from free to paid. A site like Craigslist has been able to make that leap by focusing its charging to a handful of categories in three cities where it gets 50% of its traffic, as I was told by the Craigslist CEO a couple of weeks ago (over drinks at Le Colonial with former Red Hat founder Bob Young -- more on that in another post since Bob is doing some very interesting things with his new startup).
Of course, Craigslist is not VC-backed which means that it doesn't have to deliver huge returns to its venture investors. Would Craigslist have been on its third CEO too by now if VCs were looking over its shoulders...and wondering why they weren't converting their 2B page views per month into significant revenue, beyond the salaries it pays out to its 18 employees? Probably.