FaceViet filed for bankruptcy, have web 2.0 Vietnam’s bubbles started bursting?

A reader named Mike Nguyen just left a comment on my blog stating that FaceViet has just filed for a bankruptcy. I’ve contacted him to confirm the news but could not receive any feedback.

 

However, a check at FaceViet.com did result that the site was down, without any official announcement! I tried to reach Thanh Le, CEO of FaceViet, to ask about FaceViet bankruptcy rumors through his email address but could not receive any answer yet.

 

If FaceViet’s bankruptcy rumors are for real, this would be a sad, but predictable chapter of Vietnam’s web 2.0 bubble. It would leave a lot of implications for web 2.0 Vietnam and more than 100 Vietnamese web startups still struggling to establish a sustainable business model in Vietnam, especially in the wake of the current financial crunch.

 

Good vision + Poor execution + Poor local insights = ?

 

It is a real calamity, actually. FaceViet was launched around August 2007 as the first truly, “authentic” Facebook clone as web 2.0 business was then at the peak of hype cycle in Vietnam. FaceViet has two weak Facebook clone competitors at the time, which are GuongMat (also overseas-based) and local Tamtay.vn. Giant VC Corp, quite successful at the time with Baamboo (music search), Sannhac (online karaoke)… was also busy preparing their own Facebook clone named Zoomban. VCs were so busy then looking for potential prospects to fill in their dealflows and raising new funds like there were no tomorow.

 

While Xiaonei and StudiVZ have scored it big with their Facebook clones in China and Germany for hundreds of million bucks, life has not been easy for Vietnamese Facebook clones. As I’ve pointed out very early that any Facebook replication for Vietnamese population would have to pay a pricy tag, a runaway success for Vietnamese Facebook clones has never materialized so far.

 

VC Corp. was very smart to stop Zoomban project to re-focus on their core assets, leaving the Facebook clone bandwagon to FaceViet, Guongmat and Tamtay. With no innovation, Guongmat is still experiencing a living death. Meanwhile, FaceViet after a series of changes and evolution has failed to craft an attractive differentiation & positioning strategy. As a result, all their improvements including venturing into online music, video, books etc. only further mystified their value proposition and dilute their focus.

 

FaceViet failed to gain enough traction and reach critical mass not because of their vision. A similar social networking utility like Facebook is still a real unmet need of Vietnamese Internet population. However, just cloning Facebook is never enough to address this need. FaceViet team could not tap into the local insights so that they can provide something of real value to the users besides what Facebook has offered. Their team seems to be so busy to evolve and adapt their model when there were problematic signals. Poor execution and a lack of thorough understanding of local insights cannot compensate for a good vision, adequate funding and a passionate management team. If FaceViet could address these issues in the beginning, I thought FaceViet would be very much different from what they are now, and this is a real pity.

 

Who will follow FaceViet?

FaceViet provides a good lesson for Vietnamese web 2.0 startups, who are facing unprecedented difficulties since the world financial crisis burst out. In the past two years, nearly 100 web 2.0 startups or projects were launched in Vietnam. Some most notable:

  • Blog.com.vn: teen social network, offering video, music, photo sharing etc.
  • Caravat: the second LinkedIn clone in Vietnam, developed by Vietnamworks
  • Chacha.vn: iLike clone, developed by Vega Corporation (owner of Clip.vn)
  • Chuyendong.vn: another teen social network
  • Clip.vn: YouTube clone
  • Cyvee: the first LinkedIn clone in Vietnam
  • Cyworld.vn: the Vietnamese version of South Korea’s Cyworld
  • Gamevui: social casual games
  • Linkhay: Digg clone, developed by VC Corp.
  • Noi.vn: yet another social network
  • PhunuNet: women social network, developed by Vinalive (where the author of this entry works)
  • Sannhac: online karaoke community, developed by VC Corp.
  • Tamtay.vn: a hybrid of Facebook and MySpace
  • TeeVN: Zazzle clone, offering custom t-shirts & mugs
  • Thehetre.vn: yet another teen social network
  • Thodia.vn: Yelp clone
  • Vatgia: online classifieds
  • Vitalk: mobile social network, developed by Visky, the online arm of FPT Corporation
  • Yeuamnhac: music social network
  • Yume.vn: teen social network, inside Timnhanh Portal (a Yahoo clone)
  • Yup.vn: another Yelp clone
  • Zing.vn: teen social network developed by VinaGame
  • Zooz.vn: fast growing teen social network, developed by giant SMS/MVAS & cable TV player VTC     

Blah blah blah….

 

These are only the most notable ones, as there are more than 100 web 2.0 services in Vietnam so far. Most Vietnamese web 2.0 services are struggling to find a relevant business model, notwithstanding revenues and scale. The year 2009 will be crucial for them as many would face a similar situation like FaceViet.

 

New Year, New You

It is not very “Vietnamese” to start a lunar New Year post with a sad story like this. However, I think FaceViet did offer some good implications for us to start a difficult new year ahead. In this difficult economic time the fittest still survive. To my opinion, those are the ones who possess the following attributes:

 

HarryD’s list of the fittest’s attributes

  1. Clear value propositions that address local needs and based on local insights
  2. Clear business model, and thus revenue model & roadmap
  3. Secure enough funding through the end of 2010
  4. Product near or in completion, with users growing organically and sustainably
  5. Dedicated, passionate, experienced, smart, visionary management team, with excellent execution capabilities
  6. Know and well establish core competencies, and can leverage these core competencies into product & business development
  7. Own a cool brand
  8. Develop above-mentioned attributes into a defensible market position, preferrably as the category leader

From these, you can make some prediction what Vietnamese web 2.0 companies would still weather the difficult 2009 ahead. If you do not possess these attributes, it would be worthy to start this 2009 Year of the Ox to develop those attributes. For the Facebook clones, they would suck until these are not addressed and they are still just cloning the “surface” of Facebook the authentic and original.

 

I would much appreciate if you my friends who are regular readers of my blog could share your experience to add into my list of attributes above so that other Vietnamese web startups can learn from you and have a better 2009. Thank you in advance.

 

 

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