Executive Summary:
Friends Reunited was a social media network that focused on helping users to get in touch with old friends and family members.
Friends Reunited failed because it couldn’t keep up with the competition, due to an inappropriate business model, as well as missing crucial features.
What Is Friends Reunited?
Friends Reunited was a social media network that focused on helping users to get in touch with old friends and family members.
The website worked just like any other social network, enabling users to set up dedicated profiles of themselves and enrich them with photos, contact information, and more.
At its core, Friends Reunited was focused on helping users to find other people. As such, users were able to search for others based on their name as well as the place they first connected.
It, furthermore, enhanced discoverability by adding various categories such as college, neighbors, workplaces, teams or clubs, armed forces, and more.
Friends Reunited also had a dedicated message board in which users could discuss different topics such as sports or politics.
In its first few years, Friends Reunited charged a yearly membership fee to allow users to contact others (while browsing and searching the platform remained free for everyone).
Later on, Friends Reunited removed the subscription requirements and instead simply displayed banner ads across the website. Additionally, the site also sold CDs and books which were influenced by its users.
Apart from its core website, Friends Reunited also had sister sites aimed at dating (Friends Reunited Dating) and learning about one’s ancestry (Genes Reunited).
While the majority of Friends Reunited’s users came from the United Kingdom, it also managed to create umbrella sites in markets such as Australia, Spain, or South Africa, amongst others.
Friends Reunited was shut down in January 2016 after close to 16 years of being in business. How it came to be, who was behind it, and what ultimately led to its demise will be covered in the next few sections.
What Happened To Friends Reunited?
Friends Reunited, formerly headquartered in London, was launched in July 2000 by husband-and-wife duo Julie and Steve Pankhurst as well as their friend Jason Porter.
Sadly, the reason for Friends Reunited’s existence is grounded in a tragic event that Julie and Steve Pankhurst had to go through years prior.
The couple initially met when they were both employed as software engineers for GEC Avionics in Borehamwood, Hertfordshire.
A few years later, though, tragedy struck. Julie Pankhurst unfortunately had a miscarriage. Luckily, better times would soon be on the horizon.
In 1998, the couple married and soon were able to welcome their first baby (a second one followed two years later). There was one problem though: the couple didn’t want to call tropes of people to let them know about the birth of their first child.
Years earlier, in 1995, a site called classmates.com had been launched by Randy Conrads. It eventually managed to take the United States, where it was primarily operating, by storm.
Julie figured that the United Kingdom would certainly be interested in a similar platform. Interestingly enough, Steve was actually against the idea but nevertheless proceeded in helping her.
The couple, furthermore, recruited their friend Jason Porter and scrambled together a first working prototype within two weeks.
In May 2000, they unveiled friendsreunited.co.uk to the British public. Given that the founders did not raise any outside funding, it took some time for the site to pick up steam. By the end of 2000, it only had around 3,000 registered members.
Their fortunes would soon change for the better when Steve Wright mentioned the site on his show on Radio 2. Aided by word-of-mouth as well as the fact that Friends Reunited was the first of its kind in Great Britain, it soon began to take off.
By July 2001, the site had managed to amass close to 550,000 monthly visitors. Around the same time, the founders decided to move away from putting ads on the site (which, after the dot-com bubble burst in 2000, paid out significantly less) and moved towards the membership model.
The burst in usage numbers as well as the willingness of users to pay allowed the three founders to quit their jobs and focus on Friends Reunited on a full-time basis. The Financial Times, in October, even named Steve Pankhurst one of the top 10 creative thinkers in the United Kingdom.
However, the founders would soon experience the downsides of running an exponentially growing social media business. In November, the platform was forced to temporarily suspend its message board after students had posted defamatory comments about their former teachers.
Despite those issues, Friends Reunited continued to double its monthly traffic numbers. By the end of 2001, over two million people were visiting the site every month. Its success even led to the emergence of copycat sites, most notably Convicts Reunited, which focused on reuniting former prison inmates.
In some cases, Friends Reunited even helped to reignite a lost spark, leading to the marriage of people that hadn’t seen each other in years or even decades.
The platform’s growth eventually led the founders to expand the model into other countries. In May 2002, they announced that Friends Reunited would launch local versions in Europe, namely France, Germany, Holland, Italy, and Spain, as well as South Africa. At that point, the site had more than six million registered members.
Furthermore, in October, Friends Reunited also expanded into selling physical products. The first one was a CD containing tracks voted for by users of the site. Unfortunately, as time progressed, the founders were becoming increasingly stressed running the business (all while managing their young family).
As a result, in January 2003, Steve Pankhurst publicly disclosed that his plan was to sell the site, which had almost nine million members, to someone who would be able to implement more professional structures and thus take it to the next level.
That sentiment changed in March 2003, though. Friends Reunited announced that it had hired former Financial Times chief Michael Murphy to lead the company while the founders would take a backseat. Not long after, Murphy recruited fellow former FT executive Tim Ward to help him expand the business.
One way with which the newly established leadership team managed to grow the site was through acquisitions. In June 2004, Friends Reunited purchased its Australian counterpart Schoolfriends.com for about £1 million.
The acquisition provided Friends Reunited with another one million users in Australia and New Zealand. Furthermore, it also purchased the rights to its ‘Genes Reunited’ feature, which it later turned into a separate website.
Two months later, it acquired another company. Friends Reunited bought The National Archives 1901 Census for about $6 million to boost memberships of its ancestry website Genes Reunited. That same year, in 2005, Friends Reunited had generated $16 million in annual revenue.
As Friends Reunited continued to grow, its negative effects would similarly be covered. More and more news outlets began pointing out that the site became one of the major reasons for the increasing number of marital break-ups.
The desire for a sale was reignited when, in July 2005, News Corp. announced that it would be acquiring competitor Myspace for a whopping $580 million. After a lengthy bidding war, Friends Reunited finally found a suitable buyer.
In December 2005, ITV, Britain’s largest commercial TV broadcaster, announced that it would acquire the platform for £175 million (equal to about $304 million). The initial payment was £120 million while another £55 million would be bound to performance targets (which were eventually fulfilled).
All of the three original founders decided to depart from the business after the sale went through. And since both Julie and Steve Pankhurst as well as Jason Porter made £30 million from the sale, they certainly had some cash to fill their now empty schedules.
At the time of the acquisition, Friends Reunited boasted 15 million registered members. Soon after the acquisition, ITV contemplated turning stories from the social network into a TV show (on ITV Play, the broadcaster’s previously launched games channel).
To fend off the growing competition, namely Friendster, Myspace, Bebo, and Facebook, ITV launched a £7 million advertising campaign in January 2007. By that point, some of the above-mentioned platforms had already surpassed Friends Reunited in terms of traffic.
ITV also used the site to promote services of its own. In May 2007, it launched a new dating show called Streetmate, which was promoted by a dating-focused site that the Friends Reunited team had previously created.
To reignite growth (Friends Reunited grew a mere 1.2 percent between 2006 and the summer of 2007), Friends Reunited completely altered its business model.
In April 2008, the company removed its subscription fees and instead moved towards monetizing via banner ads. Competing social networks had all overtaken Friends Reunited due to simply being free.
A month after the relaunch, ITV announced a complete restructuring of the company. CEO Murphy stepped back and became a non-executive director on the board. Marketing chief Tim Ward moved to ITV Consumer while financial director Rob Mogford committed to stepping aside by the year’s end. Andy Baker, the group director of digital recruitment at Trinity Mirror, took over as managing director.
While the shift towards advertising increased traffic, it also put the company, which was previously profitable, in the red. It certainly didn’t help that the great financial recession led to a severe decline in online advertising spending.
In January 2009, during an earnings release, ITV also announced that it had significantly slashed the valuation of Friends Reunited (right after it transferred the £55 million earn-out). To make matters worse, ITV reported a whopping £2.7 billion overall loss in 2008, which forced it to lay off around 1,500 employees.
The added financial pressure made ITV revaluate its whole internet strategy – with the eventual realization that a sale was the only way out. After months of negotiations, during which many rumors kept swirling around, it finally managed to sell Friends Reunited.
In August 2009, ITV sold Friends Reunited for a mere £25 million to Dundee-based publisher DC Thomson vis-à-vis its company Brightsolid Limited. Brightsolid, at the time, owned findmypast.com and was therefore primarily interested in acquiring the Genes Reunited site and not Friends Reunited.
Interestingly, the confirmation of the sale to a little longer than expected after it was referred to the Competition Commission by the Office of Fair Trading. In February 2010, six months after the purchase announcement, the Competition Commission finally approved the sale.
The owners made a few changes to Friends Reunited, such as adding a Follow button or being able to add other users as friends and family. Two years later (March 2012), as a last hurrah, Brightsolid completely revamped the platform and even advertised it on TV.
For example, the platform improved its privacy protection, which Facebook at the time (and certainly going forward) caught a lot of heat for. The site itself was relaunched as a “digital scrapbook” where users can collect their own pictures along with copyrighted photos (made possible by multiple deals with image libraries). Those images could then be shared with friends and family.
And just like that, the platform was done. On January 18th, 2016, co-founder Steve Pankhurst, who had previously returned to the business to try and salvage it, announced in a blog post that Friends Reunited would be shut down a month later. He wrote:
“It is clear that the site is no longer really used for the purpose it was built for … therefore, it is with a heavy heart, that we have decided to close the service down.”
He, furthermore, added that only a few people a day would log into the platform. Moreover, many of the contact details that users had provided were simply outdated. As a result, the business failed to cover the cost of running it, prompting Pankhurst and DC Thomson to shut it down.
Why Did Friends Reunited Fail?
Friends Reunited failed because it couldn’t keep up with the competition, due to an inappropriate business model, as well as missing crucial features such as a follow button.
For the longest time, Friends Reunited was charging users a subscription fee to be able to send messages. Users would have to pay £7.50 for a six-month membership.
Because of that fee, as well as the site’s theme (reuniting with long-gone friends), Friends Reunited was primarily attracting an older demographic.
Younger people were either not willing to pay the fee or simply used the platform for malicious purposes (such as roasting their former teachers).
As a result, Friends Reunited severely diminished its total addressable market, which other social media networks were glad to swoop up.
Take, for instance, Facebook, which began as a way for college students to connect. However, it quickly expanded into other demographics until it became a platform that everyone would want to be a part of.
Moreover, those competitors were also much more skilled at churning out new and helpful features. For example, Friends Reunited only added a follow option in March 2012, almost 12 years after being founded.
ITV was particularly criticized for the way it handled the acquisition. The media conglomerate simply didn’t know what to do with Friends Reunited and, apart from a few TV ads, didn’t commit many resources to the platform nor managed to release a sufficient number of new features.
The user experience, even after the removal of the paywall in April 2008, was still lackluster. Users would complain about being bombarded with ads and needing to scroll for seconds (which are decades in internet speech) to find the content they sought.
Eventually, competing platforms such as Facebook began to overtake Friends Reunited and never looked back again as network effects started to kick in.
