The battle of the Facebook clones is raging behind China’s Great Firewall, and the war is about to cross international borders as two of the country’s leading social networking sites, Renren.com and Kaixin001.com, plan to IPO in the U.S. in the coming months. Here’s what you need to know:
RenRen launched in December of 2005 as a blatant copy of Facebook, going so far as using the the same color palette and site layout. It even including the phrase “A Mark Zuckerberg Production” on the site’s home page. The company’s model started much like Facebook’s, too, launching first on college campuses where it spread virally from one university to the next before eventually opening up to the public.
Not even a year later, RenRen was acquired by Chinese holding company Oak Pacific Interactive, which scrubbed the site of its “Zuckerberg” reference and got serious about turning the property into an online cash cow. Five years later, RenRen’s the most popular social networking site in the country in terms of unique visitors. It’s particularly popular among tech-savvy college students, who increasingly access the site from their phones.
Kaixin001 may not garner as many eyeballs as RenRen, but it also serves a different niche: the more affluent, white-collar market. That’s exactly the sort of market that advertisers covet, and perhaps it’ll be the saving grace that makes Kaixin001 attractive as a potential investment.
While Kaixin001 started as a Facebook-like social networking site in 2008, the company aggressively moved to enter the social gaming sphere by building in-house “apps” that users could play without downloading special software.
RenRen felt left out. So executives at the company decided to pull a shank and thrust it deeply into Kaixin001′s back by buying the rights to Kaixin.com (NOT kaixin001.com). RenRen twisted the shank by building an online gaming site on Kaixin.com that was remarkably similar to Kaixin001.com. Fast forward a few years, and Kaixin.com’s functionality has been folded into RenRen. In fact, if you type Kaixin.com into your browser now, you’ll automatically get forwarded to RenRen.com.
The branding confusion is far from ethical, but it could be a big factor behind RenRen’s surging success. Not only that, but RenRen was fast to embrace an “open” gaming platform that allows outside developers to build and release games on the site.
Comparing the “global reach” (on Alexa) between RenRen and Kaixin001 seems to indicate that the trend is in RenRen’s favor:
RenRen’s audience has grown over the past year while Kaixin001′s has tapered. And yet, Kaixin001′s stickier. Users who DO end up there tend to stay significantly longer and look at more pages – in part, perhaps, because the site targets white collar workers who have Web access at work. Here’s how pageviews at the two site stack up:
They always say that the trend is your friend in investing, and I think the same is true about social networking sites. Kaixin001 is obviously losing its sheen while RenRen’s growing. Unless the management team at Kaixin001 uses its possible IPO windfall to change tact and offer users something truly innovative, it could suffer the fate of MySpace. And that’s a road no one wants to go down.
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Tags: Kaixin001, RenRen, social networking stocks
