RenRen Investor David Chao On The Third Internet Wave
Source: blogs.forbes.com
May. 4 2011 - 2:12 pm
By TOMIO GERON
David Chao, co-founder and general partner at venture firm DCM, is at the New York Stock Exchange for the IPO this morning of RenRen, where he is a board member. He called me to give his quick take on the IPO. (DCM invested in 2006.)
Investors are recognizing social networking as the next major wave of Internet companies, he says. (He also notes that one no longer rings the NYSE bell, one pushes a button that makes a bell sound. Who knew?)
“I do think that investors around the world are definitely recognizing the fact that social networking is the third major wave of the Internet,” Chao said. “First you had portals, like Yahoo and Sina, then Google and Baidu, and now the third wave is replacing emails and becoming the portals for the next generation with companies like Facebook and Renren.”
Facebook isn’t yet public, despite its sky-high valuation on secondary markets. But Renren is as of today and investors are buying. The stock is trading at $19.91, up 42.2% or $5.91 at 1:42pm EST.
Renren is now the fifth-largest Chinese Internet company by market cap. It’s also the largest real-identity social networking service by number of users globally. And the first to go public, Chao says.
Besides online advertising, Renren , formerly known as Oak Pacific Interactive, also generates cash from its online games and has a Groupon-like local deals business, Nuomi, which is popular in China’s big cities. Though calling it a local deals business in a mega-city like Beijing, for example, is a little bit of a misnomer, Chao says.
While many in the U.S. may not have heard of Renren, the company has been a quick or early mover in a number of areas, Chao points out. Renren actually launched the first “farm” game, Happy Farmer, which spawned many others notably Zynga’s Farmville. Renren launched its local deals business last year, while Facebook just launched its own this month. |
