CNET — Nov 14 — Friendster has hired a banker (Montgomery & Co., a boutique investment banking firm in Santa Monica) to find a buyer, CNET News.com has learned. Company executives have been talking to several Internet media companies about an acquisition, according to those sources. According to one source, it was looking for a sale price in the ballpark of $200 million. Now its price has been lowered to the range of $50 million to $100 million. From September 2003 to March 2004–during the height of Friendster’s popularity–it drew more than 1 million unique visitors per month, according to Nielsen. Since then, Friendster’s traffic has fallen to roughly half that. The site has roughly 21 million members. FULL ARTICLE @ CNET
Mark Brooks: Hopefully, if Friendster sells, it will sell for $100 million or more. $50 million seems awfully low given that it was valued at over $30 million for it’s first VC round. It’s still a very considerable internet property and holds a lot of promise.
Which is the main intangible asset of that site?
Its database?, its traffic?
Perhaps they will be lucky if they get paid USD10 million!
(USD0.50 /fifty cents/ per each member of the database)
Kindest Regards,
Fernando Ardenghi
Buenos Aires.
Argentina.
ardenghifer@gmail.com
Regarding the prospects for a big valuation being assigned to Friendster….I’m not as pessimistic as Fernand, yet not quite as optimistic as you, Mark.
Forgetting for a moment the other (and some would say more relevant) metrics for determining a FMV for the property…and focusing just on the USER EXPERIENCE that Friendster provides…that user experience is…well..pretty weak.
They’ve just never quite been able to “nail down” that “hard to describe but easy to know it when you feel it” smooth flow as you navigate from page to page, module to module, activity to activity, etc. Even as they have recently added several new features and modules, it’s simply not “fun” or even “easy” to use their site.
Others can spend time calculating future revenue potential (as a basis for valuation) by running numbers based on page views, average time spent on a page, etc. Without a WONDERFUL user experience, however, the projected future revenues will never materialize….as users will continue to abandon the site.
Buyer beware? Well…that may be a bit melodramatic. Perhaps it should be something along the lines of “Buyer be AWARE” (of the trend in the quality of the user experience).
CHEERS!
David