Kudos to Gary Rivlin at the New York Times for his great piece yesterday on Friendster. If you didn't see it, the original article is here, and the follow-on coverage from Michael Arrington is here.
It is a great tale of how Jonathan Abrams (pictured left) started the site as a way to get a few dates, turned down a $30M buyout offer from Google (which would be worth around $1B in GOOG stock today), and opted to raise VC money from John Doerr of Kleiner Perkins and Bob Kagle of Benchmark -- trying to create the next big thing. However, the bigger buyout offer never came, Jonathan Abrams is gone, and Friendster did a recap in the Spring with DAG Ventures.
There are several lessons to be learned from the Friendster fiasco. They seem to connect well with recent research I've published on the Breakout Performance blog on the drivers of VC-Backed firms' sales growth, as well as comments we've made here on the topic of "Why Smart Executives Fail" and the 'Seven Habits of Spectacularly Unsuccessful Executives.'
Here's the abridged version of lessons learned from Friendster:
- Never forget basic blocking and tackling. In our research, we called this "basic attention to detail" -- something Jeff Bussgang has discussed. If the Friendster site doesn't load, who cares what Yahoo and Google might do next according to the SWOT analysis?
- Even with bluest of "blue-chip" VCs, success can never be taken for granted. None of us has the Midas-touch -- even John Doerr and Bob Kagle. Managers and directors alike need keep a spirit of "proactive paranoia" alive in all discussions. Succes is taken and kept; it's never handed over easily.
- Even if you're the smartest CEO in the world, arrogance can be a company-killer. It's not intellect which gets companies into trouble; it's arrogance. Listen to a comment to Arrington's post on Techcrunch in response to his covering this article: "I remember shortly after Friendster launched, and Jonathan Abrams was responding to comments — I made a few suggestions about how it might be a good idea to integrate blogs and rss feeds. My suggestion was laughed off by Abrams as being ‘too geeky’ for their audience — and his arrogance was clearly apparent. I stopped using Friendster from then on."