Friendster gets new (rich) friends
Friendster, the online social networking site that sees itself as challenging the existing matchmaking sites such as Match.com, announced new investors and key advisors today (former Yahoo CEO Tim Koogle, former Paypal CEO Peter Thiel et al) with much bravado about building a new Internet company the size of eBay. We'll have to see! While their free members have grown to 1.8M since launching in March, their business model, if there is one, seems pretty suspect so far. According to this Wall Street Journal story (subscription required):
"The plan for Friendster is to build the next big Internet company or brand -- like Google or Amazon or eBay -- and so what we're doing is assembling a team of the most experienced investors and advisers who can help us with it," said founder Jonathan Abrams. Last week, Friendster announced that Sean Parker, co-founder of Napster, joined the site's advisory board.
...Friendster is currently a free site, and Mr. Abrams said Friendster has been experimenting with selling advertising, although advertising isn't intended to be the site's primary stream of revenue. Mr. Abrams wouldn't disclose revenue or profit/loss figures. Within a year, he said, the site plans to start charging for some kind of subscription content.
The Wall Street Journal story put it aptly when it noted the skeptical response from analysts:
Despite the site's popularity, many are skeptical about start-up companies making lofty claims, especially in this post-Bubble era.
"That's a tall order, to make another Google or Amazon," said Safa Rashtchy, an analyst with U.S. Piper Bancorp Jaffray Inc. There is room for another big Internet company, he said, but "for a new brand to make a big impact as Amazon or Google has, it has to be a totally revolutionary service."