"Very early on, I introduced two of the founders, Mark Zuckerberg & Dustin Moskovitz to our executive team and we were all impressed with these young college students who were passionately building a social network for themselves. This was one of the key differences between facebook and Friendster. We had several meetings with Zuck and the team and eventually made an offer to acquire facebook and have them lead our technical team at Friendster."
Interesting you'd think a social network named "shots" is about taking pot shots at others but a negativity ban and Justin Beiber has helped the upstart become the fastest growing social network ever with over 10 million "shotties" sharing selfies. Here like twitter and tweet, naming a company something that has spin off naming potential is a bigger deal for you if your name investment holds such potential. (also a name that could mean take a shot, basketball shots, alcohol shots, camera shots... had to be worth a fortune in another never disclosed deal.)
Explaining all this on Bloomberg West today was Shots Investor and domain name investor, Jim Scheinman, of Maven Ventures.
The man who started Friendster, the first of his three Unicorn exits should now a Thing or two about here to stay or gone tomorrow social networking.
Jim Scheinman T ’88 is a serial entrepreneur, angel investor, and advisor to start-up companies in Silicon Valley. He is a pioneer in social networking and engagement marketing, a relatively new form of marketing and the predominant source of revenue for facebook and other online social networks.
Jim is most prominently known for his role as employee number one (essentially a co-founder) at Bebo, the third largest social network in the world when it was acquired by AOL in early 2008 for $850M. Since his founding of his angel investment business Maven Ventures in 2008, he has had 3 successful exits, two of which were Google acquisitions. Today, several of his investments are leaders in their industry with tens of millions of customers and tens of millions in capital raised, including Tango, Zoom, Pageonce and Banjo.
In this interview, Jim shares some of his experiences at the center of the social networking industry as it was being born. He explains why Friendster was not able to realize its potential and ended up being eclipsed by other social networking sites and some of the key reasons why Bebo was a huge success.
Jim reveals how the seeds for his career as an entrepreneur were planted when he was a child selling merchandise at a local flea market under the supervision of his parents. He takes us through his unconventional journey from baseball card mogul to corporate attorney and later from social networking trailblazer to mobile application innovator.
How big was Friendster when you left the company in March 2005?
We went from zero to 3 million members in less than two years, which was phenomenal growth, and we had fifty employees. Friendster’s viral growth (no paid acquisition) was unprecedented at that time and I learned many key viral growth strategies during the early days of Friendster that have served me well in all my future companies.
You left Friendster to join an unknown husband and wife team which had just started their company two months before. At the time, Friendster was the #1 social networking site and you had Tier I venture capital firms backing the company. So what possessed you to leave?=
I left because I had a feeling that…well I knew that this was a billion dollar industry and this was the future of the way people were going to communicate with one another, especially young adults, and that Friendster was likely not going to be the winner. It was mostly around the technology and team issues that we were having. I knew this because I had lived through it already with NBCi.
When I saw the growth trajectory MySpace was experiencing and the challenges Friendster was having internally with people and technology, I knew that either MySpace or some other young upstart would steal our thunder and be the winner. Friendster’s CEO at the time asked me to head up Corporate Development and bring in a company to acquire to help get Friendster going in the right direction. The first company that I contacted and brought in was Facebook.
Very early on, I introduced two of the founders, Mark Zuckerberg & Dustin Moskovitz to our executive team and we were all impressed with these young college students who were passionately building a social network for themselves. This was one of the key differences between facebook and Friendster. We had several meetings with Zuck and the team and eventually made an offer to acquire facebook and have them lead our technical team at Friendster.
But Zuck and his team had other plans and when that deal did not happen, I decided that I needed to leave Friendster. I knew that there was going to be a billion dollar play in this space but was not confident Friendster was going to be that company.
I met Michael and Xochi Birch through my corporate development work at Friendster. The old Bebo site was growing very quickly, though it wasn’t a social network at the time. It was more of a contact-sharing site, like Plaxo. They had lots of viral growth, but very little user engagement. When I called the Birches, I thought they had a team of thirty people. Michael told me to meet me at his pad. I said, what do you mean? It was just the two of them were working out of the top floor of their apartment, and they had more unique users than Friendster did. It was incredible. They had recently sold the rapidly growing social networking site Ringo to tickle.com and had a taste of success, but not the blockbuster outcome that it could have been. I didn’t think they’d be a great fit at Friendster and I told them to let me know if they wanted to try to build a billion dollar social networking site out of Bebo, because I had tons of ideas on how to do this and knew what to avoid from my experience at Friendster.
Incidentally, I was so impressed with Zuck and his team at facebook that I met up with him for lunch (at 2pm at the Creamery—he had just woken up from a late night of computer programming!), to explore possible opportunities for me at facebook. While it was still early, there were more than 50 people at the company already and the prospects of working college shift hours (2pm-3am) didn’t fit well with my family-friendly working lifestyle. The Birches with their 2 kids at the time were a much better fit from that perspective.
Once again, a possible colossal failed opportunity to be in the first 50 employees at facebook, in hindsight, but staying consistent with my values, was the right call for me. Who knows, it I were too miserable with the work schedule, I might have quit after 6 months before vesting any stock and just left the social networking field completely. Fortunately, things worked out at Bebo.
S called me soon thereafter and we quickly agreed on terms for me to come in and help re-launch Bebo as the next great social network. I was on vacation in Lake Tahoe at the time, which was great, because it’s helpful to make these tough decisions in a care-free environment. If I had been focused on Friendster day to day, I probably would not have done it. At the time, it didn’t seem like a very rational thing to do. I was leaving as an early executive of the largest (by far at the time) social network to help start a new one in an already crowded field. But in this calm environment I could think clearly about the opportunity and decided to take a big swing for the fences.
I really liked the Birches and we were at similar life stages (working and having kids). I figured that no matter what, we are going to have a lot of fun working together for the next four years, and we’ll learn a lot, and we really have a shot at doing something special. And, if Bebo was successful, I was so early, essentially a co-founder, that there would be no doubt that I was an integral part of Bebo’s successes. I knew a lot of people were going to think I was crazy for leaving the #1 social networking company for this no-name business, but that’s what I did.
We spent the first six months re-architecting it as a social networking site and then launched it. It took about another six months to get some traction and once we got some traction, it just took off. A lot of the things I had learned from working at NBCi and Friendster about how to plan for success and what to avoid came in very handy. And the Birches’ viral growth skills and all the lessons that they had learned from their past failed and successful internet ventures came in very handy as well. We were off to the races!His is a GREAT story read more of it HERE!