Its chief executive, Richard Kimber, was Google's managing director of South-East Asia until the middle of last year. He said his key reason for leaving Google was the challenge of working at a growth company and finding a way to make money from the millions of social networking users, a problem also faced by the largest sites, Facebook and MySpace.

Although Friendster is by far the largest social networking site in Asia, fewer than 6 per cent of its users are in the US and there are only 1 million Australian registered users. Kimber said that, despite the dominance of MySpace and Facebook and the high barriers for users to switch to a new social network, it was "still very early days in the space and by no means has the race been won". Friendster was founded in 2002, two years before Facebook and a year ahead of MySpace, originally as a dating website before evolving into a broader social network.

"[Friendster] has more personalisation of your profile page than say a Facebook," Kimber said. "Facebook is quite utilitarian whereas Friendster is more focused on community and also family - there's a lot of Friendster users that have extended family and family's a very core concept in Asia and very much epitomises the social structure of how Asians connect and relate to each other.

"A lot of these Asian countries do not have social security or the dole so families support each other and Friendster is a key way that families in Asia contact each other." Friendster, which declined a $US30 million buyout offer from Google in 2003, is a private company so does not make its earnings public and Kimber would not say whether the site was profitable. Facebook, despite its 150 million active users, only generated an estimated $US300 million in revenue last year, while MySpace, which has diversified into more of an entertainment site, was expected to book close to $US1 billion.

MySpace, part of the News Corp empire, has loaded the site up with ads while Facebook has taken a more cautious approach out of fear it might annoy users. Facebook users in particular have been reluctant to accept new forms of highly lucrative, targeted advertising based on personal information provided to the site as this is seen as an invasion of privacy.

Another problem with trying to earn money from social networks is that brands can advertise on the site for free by creating applications, starting up their own pages and running competitions. For instance, Burger King recently offered a free Whopper to people who deleted 10 friends in what it dubbed a "Whopper sacrifice" promotion, but Facebook did not earn a cent. Kimber says the social networking sites that remain in the long term will be the ones that can develop the most lucrative business models. For now, Kimber can rest easy as Friendster recently raised $US20 million and is backed by blue-chip venture capitalists including Kleiner Perkins Caufield & Byers, which was one of the original investors in Google. But the investors will eventually be agitating for a return on their cash injections and Kimber said it was not good enough to focus solely on display advertising.

"The North Asian social networks have used other methods to monetise such as virtual goods and gaming and these are more likely to be the areas that we'll focus on rather than just purely advertising," he said. Kimber said he would "love to conquer Australia one day" but for now the focus was on Asia due to its significant growth prospects.

"The US is largely saturated, Europe is becoming saturated," he said. "The next billion users on the internet are going to come from Asia, they're not going to come from Europe or America."