NYTimes has a comprehensive article (req. free registration :() on the rise and fall of Friendster, and what may have gone wrong. The author Gary Rivlin was able to get first-hand points of view from many of the early players in online social networking, including Mark Pincus and Reid Hoffman, who are dealing with different versions of the Friendster story at their own companies, while companies like MySpace, Bebo and Facebook are counting nine zeros in their valuation discussions.
It’s interesting to see how you can have all the right ingredients and still fail (or fall behind competition). The article supports my belief that creating a business is as much art as it is science.