Tim Koogle's Connection at Friendster

Former Yahoo! (YHOO

) Chief Executive Tim Koogle, who left the Internet giant during a steep swoon in 2001, is back in a corner office. BusinessWeek has learned that Koogle quietly took over as interim CEO of Friendster, an online community that connects some 7 million people, in late March. Although rumors have swirled on the Internet that Koogle, 52, may be poised to take the helm at Friendster, a company spokeswoman says he's only a stand-in and that Friendster is still searching for its permanent CEO. Koogle, who's also on its board, declines to discuss the rumor.

Friendster, hatched in 2002, is a leading player among so-called social-networking sites, which have garnered significant attention from big Internet players and investors alike (see BW Online, 2/20/04, "The Perils and Promise of Online Schmoozing"). Friendster is a free service that maps out networks of acquaintances, letting people seek out dates or friends. The idea: People will be more comfortable seeking out others based on a mutual connection. "It's a concept with a lot of promise," says Peter Thiel, former PayPal CEO and an early investor in Friendster.

CLOUDY MODEL. The site appears to have an early edge over its rivals. Its service dwarfs competitors such as LinkedIn and Google's Orkut, which connect several hundred thousand people apiece. Friendster, based in Sunnyvale, Calif., recently raised $13 million in funds, and its backers include John Doerr of Kleiner Perkins Caufield & Byers and Benchmark Capital's Bob Kagle.

Still, the business opportunities in social networking appear cloudy, at best. If sites charge visitors to create a profile, it would curtail the number of people joining the network, squelching the potency of these services. Although Friendster has been exploring ways around this, such as including ads on its site, it still lacks a firm business plan.

That challenge is right up Koogle's alley. He joined Yahoo in 1995, when it boasted just a handful of employees and no business plan. By 2000, he had helped build the portal to over $1 billion in revenues. Whether from his perch on Friendster's board or as CEO, Koogle is betting he'll match that success. By Ben Elgin in San Mateo, Calif.