How soon we forget

According to this San Jose Mercury News article, Friendster spurns Google, Friendster rejected a $30 million offer to be acquired by Google. Why? Because Benchmark and Kleiner (two big-wig venture capital firms in Silicon Valley) were willing to give them a $53 million valuation during their most recent investment round. The article also points out that, "Just two months ago, Friendster was valued at $12.5 million."

Hello? Did we totally forget what happened just two or three years ago?! Sure, Friendster is cool, but eyeballs and traffic do not a (huge) business model make. Remember? We already learned this! Obviously this is another deal with a valuation based on potential and not actual revenue (or did Friendster's revenue increase from ~$4 million to ~$17 million in the past two months?), and sure, there is potential there. But I hardly think there's $53 million worth. Earth to VCs: cut it out, before you force another crop of companies to grow too big, too fast, all to recoup an investment you shouldn't have done in the first place. [via Cameron]

Related: BusinessWeek opines with A Dud in Cupid's Online Quiver?

And also: Sippey does some math on the whole thing.