Friendster, one of the oldest social networks, is actively looking for a buyer and has hired investment bank Morgan Stanley to find a party interested in acquiring the company or at least some of its assets.
According to documents obtained exclusively by TechCrunch, it looks like Morgan Stanley is shopping Friendster around in Asia, which makes sense considering almost its entire user base is located in the Asian-Pacific region. In the main document (embedded below), it says that 75 percent of its registered accounts are in Asia. The docs come from a credible source, are time-stamped ‘July 2009′ and carry a number of interesting nuggets about the influence Friendster still has in the social networking sphere, even if mostly in Asia.
In the summary fact sheet being sent to multiple potentially interested buyers, Friendster claims over 100 million registered users globally and touts its stronghold in the Asian-Pacific region as well as a bright future ahead since a number of its key markets (Singapore, Indonesia, Malaysia, Philippines, aka SIMP) are expected to experience robust Internet user growth over the next few years. The fact sheet also says Friendster attracts over 100,000 new users and 500 million page views on a daily basis, making it a top 20 global website based on user traffic. According to the documents, the company currently has an employee headcount of 105 employees spread out across its global network of offices (Australia, the United States, Philippines and Singapore).
The fact sheet that we obtained shows that Friendster/Morgan Stanley are gunning for a buyer who wants to gain quick access to the Asian social networking scene, emphasizing it would be hard for newcomers to establish themselves given the relationships with local vendors and partners that are needed for such a venture to become a success. Additionally, it touts Friendster’s portfolio of patents in the space (5 granted and 10 pending) and its experienced management team.
More interesting nuggets of information: Friendster is looking to expand its current revenue streams to include—besides online advertising—virtual goods, gaming, surveys, dating, music and classifieds.
One thing we couldn’t gather from the documents, which are embedded below, is the price Friendster is hoping to get. The company is backed by more $45 million in capital venture firms like Battery Ventures, Benchmark Capital, DAG Ventures and Kleiner Perkins Caufield & Byers, along with some early angel investors such as LinkedIn founder Reid Hoffman and Spinner/Grouper founder Josh Felcher.
Our latest model valuing social networks puts Friendster at only $210 million, based on Facebook’s recent valuation of $10 billion. Mostly that is because of the lower spending power of consumers in Southeast Asia, making advertisers value them less differently. That $10 billion Facebook valuation, though, was for preferred shares. If you look at the $6.5B valuation of the most recent sale of common stock, Friendster would be worth only $137M in comparison. Back in 2002, the company turned down a $30 million buyout offer from a pre-IPO Google. (In an interesting twist, Friendster’s current CEO, Richard Kimber, used to head up sales for Google in South East Asia).
We also took a look at the comScore numbers for Friendster in May, 2009 compared to the same period last year, and worldwide unique visitors dropped 45 percent to 21 million (suggesting there is a big difference between active and registered users).
With stats like these, no wonder the company and its investors are looking for a way to cash out.
Also amusing was that a quick search on Twitter turned up mostly messages from US-based users that were deleting their Friendster accounts.
And here are (screenshots of) the documents:
PJ Connect – Potential Purchaser CA –
Intriguing… i wonder who will come out of the blue and put a bid in for Friendster. We know therre are some super rich asians hiding out there, one of them must come forward and buy Friendster since it is asia based. I didn’t think Friendster attracted that many users daily. In addition i wonder whether the buyer will negotiate the price down because we are approaching the harsh times of the economic crisis. Will this affect the price? Perhaps.. almost certainly!
yup, if it does sell the buyer’s going to get an “interesting” price shall we say.
I think that the price will be negotiated as Friendster does not have a good business model and social media and blogs must be monetized today, wether with virtual goods like PlaySpan http://sn.im/o2dyu that was discussed here a few days ago, or paid blog comments like commentino http://snipr.com/o1thu . unless you do it, you will be negotiated for a low price.
AOL will probably buy it for $5 billion, then pawn it off for $5.
Quite a few Asian Telco’s & ‘old’ media companies will be very interested in the business. What other comparable assets are there in this space ?
Mobile SNS is the growth area for Friendster. This is a killer app…
When Facebook releases a new feature, it hits the New York Times. When Friendster goes down for four days without explanation, it doesn’t even hit the Philippine Daily Inquirer.
Go figure.
I have never much used friendster… is it savable?
100 million + registered users think so…
did anyone red anything about revenues and margins?
I’d say at this point the site can be had for a (relative) song right now based on those stats.
Issue with the stats is that Comscore doesn’t report on Indonesia or Philipinnes which are the two strong holds for Friendster…either way you dice it there are not too many sites with that many people on it…be interesting to see how this plays out
Commscore doesnt measure internet cafe’s. This is the major access point in Asia – so you need to ignore Commscore in Asia !
I Like to know about!
Thans
They aren’t the only ones.
so desperate to find buyers via interwebz/media by leaking the information?
oh noes.
Check out the google trends for websites view of facebook vs friendster in the latter’s key markets. FB is rolling over them in Indonesia and starting to in the stronghold of the Phillipines. Game over.
You’re right, D. Last I heard, Facebook has a quarter of a million Filipino users.
FB is growing by at age 40+…be interesting to see what the kids do once Mom and Dad take over the site…not a bad thing for FB as its a more valuable consumer in certain regards but I think it will blow back on them for the younger demos…
I use 4 SNS sites – there will never be just one global player. Our social circles are more complex than that. Teenagers dont share everything with their parents – so why be on their parents SNS – FB? Amazing how simplistic people are in assuming one site wins everything…. just not how people work
They may have a shot of becoming profitable considering the fact that Asian market is not shy when it comes to spending money in virtual goods or expressing feelings through a third party including some piece of technology. That’s a cultural thing. US and European don’t want to pay for anything…Facebook may be the biggest social network around here, but friendster with its 75% Asian accounts have a better shot at making revenues since its core users are already ready for it.
I think you’re thinking of Japan, China and/or Korea. SIMP is does not have that culture of spending you are talking about.
The owners know it’s game for them in Asia as well now with Facebook closing in fast on them,give 12 months and they will wish they took the $30 million years ago
“7,069,308, 7,117,254, 7,188,153, 7,451,161 & 7,478,078″?
The above are a big joke. Let this be a big lesson to all the rest of the 1.0 or 2.0 web outfits. Worthless to the core and questionable to say the least.
Lesson learnt? It’s all just the fad.. and the same goes to Facebook / Twitter. Question looming is how long would each fad be able to sustain for before a lucrative exit?
why VC doesn’t always work out for the entrepreneur: Friendster was going to sell to Google pre-IPO for $30 million but both John Doerr and Michael Moritz said no.
So how valuable is having a “blue chip” venture firm behind your venture?
I’ll pass.
p.s. if you do the math that $30 million would be worth 50 times that amount
total BS.
bebo and ning and hi5 are valued higher than friendster? give me a break.
Friendster is currently #3 after facebook and myspace and their userbase is growing. You need to check facts better.
If you rely on comscore for outside-US traffic stats, no wonder you make assumptions.
Well traffic isn’t everything, you have to have a strong presence where there’s a good combination of strong e-commerce players + lots of money flowing into digital advertising + users who spend money online and actively engage with both the products you put out and the ads you run.
If this combination were the only sauce needed to monetize, Cyworld would not struggling so much to reborn in South Korea, even w/ the huge market share.
What?! They’re still around?!
I would buy it for a dollar!
I dump them for facebook about 2 years ago. Check on them yesterday, still the same old friendster.
Trust me, more and more Malaysians are switching to fb.
matt
Same goes for Hong Kong, Singapore, Indonesia and the Philipinnes. Friendster is rapidly losing these users to facebook.
Agree with Matthew, Malaysians are switching to Facebook, you can feel the numbers (your friends, colleagues, your mom) suddenly jump starting early last year.
I wouldnt be on the same SNS as my Mom anyway ! what is the point of that – I wouldnt share my party pics with her ! I am sticking to Friendster..
Malaysians that read Techcrunch – is that a representative sample ?
It’s about time they exit, Facebook’s taking over
AFAIK, according to Alexa, Facebook has already been #1 in Indonesia (now have , while Friendster is down to #10. The ship is sinking.
Sorry a typo here
AFAIK, according to Alexa, Facebook has already been #1 in Indonesia, while Friendster is down to #10. The ship is sinking.
I have an account with FS for 5 years now and I’m happy with it.. But the news that it’s being shopped for a potential buyer is somehow sad.
Thanks for the add!
One thing I don’t like about friendster is the spams.
I have noticed a massive improvement ! heard they deployed Cloudmark and it really has hit the spammers..
Facebook is sucking members from Friendster. Even a commercial here in the Philippines is endorsing Facebook. Many kids now are switching to Facebook including my daughter. Those game apps is surely attracting those kids.
Globe and Smart are both co-marketing Friendster in Philippines ! I access the site from my phone every day – and the access fee is very cheap. I dont need to visit the I-Cafe any more !
There has been a lot of chatter about Friendster good and bad, fact is Friendster *was* a successful SNS–but a poorly run one–something the VC’s should have seen eons ago. It has come to no surprise that they are up for sale, strangely IDG decided to place more bet last year and a new *in*experienced management team. Before we go on to its potential, which there is, lets start with some clarification/debunking of data supplied to us by TechCrunch and MS.
The Truth:
Valuation: $200 MM valuation is a mockery to those who are still earning bread in Financial services. Fact is, Friendster earned just around $10MM in revenues in 2008. Their ambitious expectation of $20MM for 2009 is falling extremely shy–doubtful they will reach 2008 levels. Added
Possible Value: $10MM revenues * multiplier factor of 8 (standard multiplier for high growth, high user base, high potential biz) = $80 MM ideal
Realistic Value = $80 / 1.5 (horrible global financial condition) = $53 / 2 (terrible management, limited market potential -SEA, slipping market share) = $26.7 MM
So I wouldnt pay more than $25MM for Friendster
Horrific Management:
Location: Doesnt anyone find strange the CEO and top brass sitting in Sydney of all places and the closet market is 8 hours flight? Or that team is spread around various countries? This a team effort not a one man ex-Google show.
Light weight & Heavy Pay: If you notice in the IM the emphasis is on experienced management–experienced with what? The new head of sales guy has literally 2 years of actual sales experience, certainly MTV is not known for its online media. Then we have the young CFO, who sits in Sydney with little actual experience for such a delicate task of extracting value from this titanic. Forget about the importance of contacts in the FS world to leverage best value for F’ster. No wonder, he chose MS from HK rather than SIMP for transaction…same strategic reason why we attacked Iraq to find Bin Laden!
Data Credibility: its interesting in the IM how eBay is conveniently added to a comparison chart whilst, Yahoo, MSN, large/powerful local online media are excluded…hmm…
SHOCKING FACT: Most of the Sr Management do NOT daily use Friendster themselves, some of em for weeks on end, while their presence is noticed on FB pretty regularly..hmm…
Potential: Not all is lost for Friendster. Indeed, it takes something really special to make it far and attracting users. So is there a potential in acquiring F’ster–my answer is kinda YES. Here’s what I would change to making it a viable potential:
Value: I wouldnt pay a dime more than $25-30. Yes users are there, but remember its NOT APAC, its only SOUTH EAST ASIA we are really talking about. Traditional media can build something more local (ie more attractive for local consumption) anything paid beyond the bespoke price.
Strategy: Part of the management issue has been the lack of real youth understanding (ie going beyond survey’s and hiring folks from traditional media), which has led to some really poor strategy. FB had taken over the SNS crown long back in 2007 all over the world. Neither, Yahoo, MSN nor Friendster can ever en roach without new acquisition. F’ster needs to think out of the box and totally reposition themselves.
Fire entire Management: New team with fresh ideas and energy levels are required. It takes Friendster years to close partnership deals, partly because of inertia and partly wrong people for the wrong job. GET YOUNG KNOWN SUPERSTARS FROM SEA who could certainly change the way this is run. Friendster needs Mark Z/Biz Stone equivalent for SEA. Dont underestimate the power of fresh blood powering young consumers.
I love all the local bands on Friendster – it has way more of the artists I follow that any other SNS in Malaysia
I doubt that you even use the site based on your ’strategy’
Have you ever visited MTV Asia site or Channel V site with a pretty good fan club with upload capabilities? And one more thing: they do not have all the chinese major content which drives 80% of listenership!
Digital_Rokstar is a fool.
What is the source of the disparaging comments posted here ? – sounds like an under-performing ex insider that was fired…
Everything in this post smacks of sour grapes and is an intentional smear on the company. It is not factually correct. Note – not one positive comment was made – hardly a balanced view.
People like Digital_RockStar should get a job and start making a positive impact on the world!
Dont you find it odd, Gotham, in less than a year after a complete new management and raising money they are out again with a bowl in their hands?
I dont have to substantiate the info provided, its all been out there. If you dont like what you read, move on!
Fact is Friendster is under critical condition in Emergency, not many options left to a revival.
And one more thing: I would never work on a titanic!
I will guarantee you 100% that Digital_Rokstar is a bitter former employee that jumped ship, and could probably tell you who it is in three guesses.
And now Friendster’s homepage throwing out all sorts of bizarre errors.
Wonder when they’ll notice.
Friendster has lots of errors on its front page.I mean,I don’t have a account there but I saw some people talking about it.And,I also already knew that,hmmm,when will they notice?