Friendster definitely failed because they couldn't pull off scale. I was CTO of the Tagged social network at the time and the issue loomed large during our 2005 fundraising. Investors had seen $50m go down the drain when Friendster got slow. Despite network effects, users moved over to products that were up and running (mostly MySpace but also hi5, etc.).

I seem to recall that the Friendster team had more than one aborted rewrite before they got it right, and by then it was too late. Scaling social networks required a different bag of tricks than was popular at the time (e.g., database replication was well accepted as a best practice, but sharding worked much better). Talented people could still get it wrong.

Still, social networking illustrates how failing to scale is rare, and should practically never be the concern early on. Almost every social network that gained traction struggled to scale at times, but the vast majority of them overcame their challenges.

We poured sweat and tears and many sleepless nights into scaling the Tagged back-end from 10 machines to over 1,000, over time serving hundreds of millions of users. It was a tremendous amount of work, much more than building the initial product, and I don't think there's much we could have done early on to make later scaling easier.

More on the story: http://highscalability.com/blog/2011/8/8/tagged-architecture...