Friendster raises $3.1 million; Good man Siegelman stepped in

We’ve just confirmed with social networking company Friendster some of news floating around in recent days, and want to clear up some misunderstandings in those reports.

Friendster’s original investors Kleiner Perkins and Benchmark have reset the company’s value, and invested $3.1 million (in what is called a recapitalization). The news, reported today in VentureWire, confirms what we’d heard and partially reported in February.

Russ Siegelman

Friendster will release some more online features and a revised home page, perhaps next week, the company’s officials confirm. None of them are surprising: Friendster will give users a way to know when their friends have added new photos, written new blog postings or changed their profile, as VentureWire reports. The company will also make its site searchable by Google and other search engines, at least for those members that choose to make their profiles public. The site already has a web-based chat service.

Friendster has also moved to the more hip, youth-friendly San Francisco, from boring old Mountain View.

A quick note about some blog gossip that Kleiner Perkins partner Siegelman was fired from Kleiner in part because of his role at managing Kleiner’s investment in Friendster: That’s plain wrong, according to several insiders we’ve talked with. Kleiner’s John Doerr made the decision to invest in Friendster and sat on Friendster’s board in that crucial phase when key decisions were made. Siegelman was only an observer at first. He became a board member late last year, long after Friendster’s problems were known. And since Siegelman has been on the board, Friendster’s traffic has steadied, and even risen.

In fact, Siegelman’s fate at Kleiner is the exact opposite of the blog gossip. You can make a good argument that Siegelman didn’t do that well at Kleiner over the past decade, scoring no great deals during the height of the Internet boom, and that he was on his way out for a number of reasons long before the Friendster deal. But regarding his role Friendster, insiders say only good things. Friendster’s poor performance “way predates Russ,” an insider told us. “Russ was an incredibly helpful guy in the mix. He was drafted on the board by KP after John didn’t want to deal with it anymore. It was John’s deal…Russ was skeptical of it to begin with. For his name to be dragged through the mud is totally unfair.”