Friendster Wins Patent After emerging from debt, Friendster wins a patent on social networking. July 6, 2006 Friendster said Thursday that it has received a patent that covers online social networks, one the company had applied for long before its decline and recent recapitalization. The U.S. patent, which was awarded June 27, is extremely general, and would seem to cover the activities of many other sites, especially those like LinkedIn that allow people to connect within a certain number of degrees of separation. Naming Friendster founder Jonathan Abrams, who has left the company, as inventor, the patent refers to a “system, method, and apparatus for connecting users in an online computer system based on their relationships within social networks.” “It’s way too early to say” whether the company would pursue licenses and litigation from its competitors, Friendster President Kent Lindstrom told RedHerring.com. “We’ll do what we can to protect our intellectual property.” Though the Friendster patent could be challenged in either the patent system or the courts, opponents would face an uphill battle. “Once the patent is issued there is a presumption of validity that follows with it,” said attorney Bill Heinze of Thomas, Kayden, Horstemeyer & Risley. Hoping for a Turnaround San Francisco-based Friendster has had a troubled past, falling from grace after being a social networking pioneer. Though it still counts 9 million to 10 million users, many of them in Asia, the company had lost momentum to younger networks such as MySpace. Despite its pedigree—with over $15 million from investors including Kleiner Perkins Caufield & Byers, Benchmark Capital, Battery Ventures—Friendster couldn’t hold onto its early social networking lead. Through the end of 2004 and 2005, the site suffered from slow load times, driving many users away. It has also been criticized for lacking the openness and cultural tie-ins of MySpace. Mr. Lindstrom said of the problems, “I wish I could explain why—I have no idea why it happened. For a number of reasons we had trouble scaling for almost a whole year.” In October, the company put itself up for sale after seeing MySpace be bought by NewsCorp for over $500 million. By January, it had not found a buyer and was about to run out of capital. In February investor Kleiner Perkins recapitalized the company, pulling it out of debt and giving it the resources to build a new team. 1 From www.redherring.com/Article.aspx?a=17498&hed=Friendster+Wins+Patent 25 August 2006 Friendster has never been profitable, but it is now on that track, Mr. Lindstrom said. The company makes money from ad sales in the United States and SMS in Asia, where users can subscribe to pay for phone alerts when their friends update their profiles. Mr. Lindstrom said that advertisers haven’t been thrown off by the company’s rough times. “The demise of Friendster is a bigger Silicon Valley story than it is for the ad agencies in Minneapolis.” Targeting Its Audience The company, which has just under 30 employees, recently moved from Mountain View, California, to San Francisco. It had as many as 57 employees in the past, said Mr. Lindstrom, but scaled down after completion of an operations center in Santa Clara, California. After the recapitalization, the company replaced most of its engineering team and got to work speeding up the site. Mr. Lindstrom said the company has improved page-loading times from 40 seconds, or even complete failure, to about two seconds. Friendster is now planning to re-address the U.S. market, where it currently has 1 million to 2 million users. In the last month, the company took a page from MySpace and opened up Friendster to web crawlers, making users’ profiles searchable and accessible without being logged onto the site. The company thinks it has a niche in users who are older than the teenagers and college users who frequent MySpace and Facebook, respectively. The redesigned site emphasizes what a user’s friends are doing, rather than surfing across profiles. Patent History The new Friendster patent covers the basic steps involved in joining a social network: entering a personal description and relationships to other users, mapping relationships and degrees of separation, and connecting to others through these friends. Mr. Lindstrom said that Kleiner Perkins had encouraged Friendster to file patents when it funded the company in 2003. Another eleven patents are in the pipeline. The approved patent came as a surprise. “Frankly we’d almost forgotten about it,” Mr. Lindstrom said. Six Degrees of Separation, another failed social networking startup, had obtained a patent on social networking technology in 2001. It was bought at auction in 2003 by the founders of LinkedIn and Tribe.net. The Six Degrees patent is cited as a reference in Friendster’s patent, indicating the U.S. Patent & Trademark examiner did not find that the two patents overlap. The Friendster patent’s main claim applies to networks that limit relationships to a certain number of degrees of separation—for example, you cannot connect to someone who doesn’t know someone who knows someone you know. 2 From www.redherring.com/Article.aspx?a=17498&hed=Friendster+Wins+Patent 25 August 2006 That is very likely to apply to networks like LinkedIn that function with such limits, said Mr. Heinze. However, the patent might also have broader application, to networks without such limits. “Since [the patent says] you can define that maximum number of degrees as any number, that’s a pretty tough claim,” said Mr. Heinze. LinkedIn and social networks Bebo, Tribe.net, and Tagged were not immediately available for comment. Contact the writer: [email protected]. 3 From www.redherring.com/Article.aspx?a=17498&hed=Friendster+Wins+Patent 25 August 2006 .