One of the problems with social media platforms like Facebook and Instagram is that all the photos of lovely holidays and stimulating social lives can stir the occasional feeling of envy and anxiety.
Chinese internet firm Renren also suffered from a severe case of FOMO, or “fear of missing out”. It tried to do a bit of everything but at the expense of seemingly focusing on getting anything right. Last week the company finally called time on its bid for social media dominance by selling its website Renren.com.
The move hardly came as a surprise: its social media unit had been floundering for some time.
Renren was originally regarded as the ‘Facebook of China’. Entrepreneur Chen Yizhou had sought to emulate Mark Zuckerber in 2006, when he purchased the social media platform Xiaonei, which means “inside the school”, and merged it with his own website Renren.
Five years later, Chen launched a hugely successful initial public offering in New York. At its peak, the company was valued at $9.4 billion, behind only Tencent and Baidu among Chinese overseas listed internet companies (Alibaba didn’t go public until three years later).
Now, its market cap is hovering around $100 million. Some of its other founders jumped ship years ago. Wang Xing quit (after selling Xiaonei to Chen) to run Meituan Dianping, which is listed in Hong Kong with a market value of $38 billion.
The current deal will see Renren’s parent company Beijing Qianxiang Wangjing sell Renren.com to Beijing Infinities Interactive Media for $60 million. As part of the deal, Qianxiang will get $20 million in cash and the rest in shares of Beijing Infinities, a $700 million company that owns China’s major IT news site DoNews.
“From Xiaonei to being rebranded as Renren, to now Renren being sold; from the glory to now collapse, it all felt like a dream. It was a website that recorded my college life but now I can’t even remember the password to log in. It definitely is the end of an era,” one former user sighed.
So what happened? As Entertainment Unicorn, an entertainment news portal, put it: “Renren is dead not because of its product. But because it was poorly run.”
Even before 2011, growth was already showing signs of slowing. The platform, which mainly targeted teens and college students, was losing share to Sina Weibo and WeChat. “Renren tried to expand beyond the campus network to reach a larger user base. But it did not have a clear idea of how to do that. So most of their ideas were blatantly ripped off from other social networks,” Entertainment Unicorn points out.
Worried about the vicious competition in social media, Renren changed tack by pushing into mobile games. By the end of 2012, they had replaced display advertising as its biggest revenue generator. Over the next two years, the company also expanded into group-buying, online video streaming and even crowd-funding. The plan was to power ahead in each of these areas by leveraging the company’s main customer base of college students, Chen explained at the time.
But those new businesses failed to bear fruit.
In 2015 Renren sold its daily deal site Nuomi to Baidu. Sohu also acquired Renren’s online video site 56.com. By the end of the year, revenues had receded almost 12% year-on-year to $41 million. Net losses advanced to $220 million.
But Chen kept pushing. In 2016, when live-streaming was the hottest trend in the industry, he took Renren back into the market for live- stream platforms. However, the reception from users was lukewarm. “It feels like Renren never wanted to miss a window of opportunity. But instead of taking advantages of the prevailing wind, it is getting knocked over,” was National Business Daily’s verdict.
Having dumped its social network business, Renren’s parent company says it will focus on two more promising ventures: its second-hand car sales platform China Renrenche, and its mobile app operation (it is an investor in Trucker Path, an American app that gives information about the location of fuel stations and parking areas for truck drivers). Chen is confident that the sale “is the most viable” way to propel his firm “onto its next phase of growth.”
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