August 1, 2006 11:46 AM PDT

New lease on life for Friendster?

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Creativity and expression quickly became the standard by which one's identity and connections were established. On MySpace users had complete profile freedom. They could blog and upload graphics, MP3s and videos onto their profiles. They could open accounts for pets, clubs and organizations, even beer.

By the fall of 2005, Friendster was short on capital and looking to be bought.

"We were in debt late in December," Lindstrom said. "It was the classic sort of running-out-of-money situation."

'Too soon to give up'
The company got a shot in the arm in February when venture firm Kleiner Perkins Caufield & Byers invested roughly $3 million, based on what it saw as an untapped potential for profitability.

"There was real revenue and there was a team that was committed. It's a Web site people use, so there were plenty of assets and value there," said Russell Siegelman, a partner at Kleiner Perkins. "They were one of the earliest in the social-networking game, and it was too soon to give up."

With its patent pending, Friendster implemented a two-part fix, with a simultaneous revamping of the site and a restructuring of the company to propel itself back into profit mode. The company cut staff from 50 to 27 employees, bringing onboard a new crew of engineers to address the technical hurdles that had become the company's legacy. At the same time, Lindstrom was promoted to president.

Much-needed changes to the Web site were implemented quickly. Users were provided with a customizable profile page. The ability to add videos with the push of a button, rather than by placing code on the edit page, was unveiled in June.

An automatic friend update, which is a chronological list of activities within a user's network--such as a friend posting a new photo or blog--now appears on the profile page as well.

"Our users are older, busier," Lindstrom said. "They have lives and they don't want to spend that much time looking for things. They want us to deliver it to them."

More patents on the way?
And then there are the patents. Roughly a month after Abrams filed his first patent request, he submitted 11 more.

"The first patent is the broad one; the rest are more technical," Lindstrom said. "I can't really disclose what they are."

He did say that the remainder of Friendster's patent portfolio involves bits and pieces of social networking, including details on methods and technology for uploading material onto a profile page.

Should Friendster choose to use its potential patent leverage, it would be throwing itself into the middle of a burgeoning culture clash.

"The patent world is all about exclusivity and the right to stop somebody from doing something that you have a legal right to control," said Daniel Westam, head patent litigator at Morrison & Foerster. "The Internet is all about openness and freedom, a 'no one can stop me' attitude and so the intersection between patents and the Internet has been very disruptive."

Westam said that patents have become a greater force in conjunction with the multibillion-dollar businesses that seek them.

"The businesses that a patent potentially affects have grown very large, so the potential damage and impact of a patent has also grown," he said. "So if you sue Microsoft now on a software patent, you're suing a $50 billion dollar business. The same is true if you sue Google on an Internet advertising patent--the potential recovery is much greater."

Lindstrom maintains that Friendster's claim as inventor of the social networking phenomenon is "solid" and that whatever lies ahead, the going won't be a cakewalk.

"We still have a lot of work to do," he said.

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