fochios+strategy+report

 To: Proximity Social-Networking Team From: Athena Fochios Date: January 6, 2010 Subject: Friendster strategy analysis

The following is my Friendster strategy analysis. Friendster dominated the social networking world when it first went live. Soon, other social networking sites began to appear and Friendster began to lose its popularity. Friendster is now counting on appealing to countries where other social networking sites have not yet been adopted. Their success largely depends on Gen Y’s reaction to Friendster. Friendster will have to prove that they are just as good as the other social networking sites in order to stay in business.

Friendster is a privately owned social networking site which was created by two computer programmers, Jonathan Abrams and Cris Emmanuel, in Mountview, California. Friendster was founded in 2002 and went live in 2003. The social networking site attracted more than three million users within the first couple of months. (Wikipedia, 2010) Although it seemed promising at first, the hype about Friendster slowly fizzled as other popular social networking sites were launched. Today, the company focuses its attention on members from Asia who make up approximately ninety percent of Friendster subscribers. (Wikipedia, 2010) Currently, Friendster headquarters are located in Sydney, Australia with Richard Kimber being the chief executive officer. (About Friendster, 2009)
 * Profile **

 Friendster’s revenues come from advertising and online transactions by users. It has also received funding from private investors and the following venture capital firms:

· Kleiner Perkins Caufield & Byers · Benchmark Capital · DAG Ventures · IDG Ventures    When Friendster was first established, it was funded by Kleiner Perkins Caufield & Byers, Benchmark Capital, and private investors totaling $12 million. Later in February 2006, Friendster received $3 million from Kleiner Perkins Caufield & Byers and Benchmark Capital followed by another $10 million in August 2006 from DAG Ventures. In August 2008, Friendster reported that IDG Ventures funded their company with an additional $20 million. (Wikipedia, 2010) In 2003, Friendster made a big mistake. They rejected a $30 million buyout offer from Google. If they had gone through with this deal, the shares would have been worth much more today. (Arrington, 2009)  In recent news, MOL Global has purchased Friendster. The purchasing price for the social networking site was $30 million. This figure is relatively low compared to the quote saying that Friendster was worth between $98 million and $273 million. (Arrington, 2009) If this all is true, then it appears that people are giving social networking sites a much higher value than what they are really worth.


 * Competitive Landscape **
 * Friendster will have to be alert of two critical forces now and in the future. They are the following: **

·  Threat of Substitutes: The biggest competition for Friendster is other social networking sites offering virtually the same services. Websites such as MySpace and Facebook have attracted many of Friendster’s original users. These websites have taken over the social networking obsession in America. ·  Consumer Power: Members of Friendster have no obligations to the social networking website. Consumers can come and go as they please. Friendster has had problems with its members investigating newer social networking sites. Therefore, abandoning Friendster. (Roth, 2009)

Since Friendster is failing in the United Sates, they have decided to focus their attention on other countries and a younger audience. (Google finance, 2009) Avoiding completion with other social networking sites seems to be beneficial for Friendster. Recently on December 10, 2009, Friendster developed a new website for its users attempting to keep up with other social networking sites. (Wikipedia, 2010)
 * Friendster’s Strategy **

Friendster seems to have a chance in other countries where Facebook or MySpace are not available or popular yet. David Roth explains this well by saying, “If you're in the Philippines and doing your social networking on Facebook, you're probably awfully lonesome.” (Roth, 2009) Friendster is vastly popular in other countries among Gen Y users with the possibility to advance to other generations as well.
 * Gen-Y’s Implications **

I believe that Friendster could pull through to being one of the biggest social networking sites in various other countries. Gen Y will keep using Friendster as long as the developers keep their website updated with new, enticing features.

__References:__ // About Friendster //. (2009). Retrieved from http://www.friendster.com/info/index.php <span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"> Arrington, M. (2009, December 15). //Friendster valued at just $26.4 million in sale//. Retrieved from [] <span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"> Friendster. (2010). //<span style="font-family: 'Calibri','sans-serif'; mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Wikipedia //. Retrieved (2010, January 6) from [] // Google finance //. (2009). Retrieved from http://www.google.com/finance?cid=422222 <span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"> <span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">Roth, D. (2009). Ye Olde Social Network. //<span style="font-family: 'Calibri','sans-serif'; mso-ascii-theme-font: minor-latin; mso-bidi-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Slate Magazine //, Retrieved from <span style="color: black; mso-ascii-font-family: Calibri; mso-bidi-font-family: Calibri; mso-hansi-font-family: Calibri;">[]  <span style="font-size: 12pt; line-height: 115%; mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;">