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FriendFinder Owes Seattle Engineer Andrew Conru a Ton of Money

Seattle – from www.seattletimes.com – Years before “friend” became a verb, Andrew Conru [a Johnny Thrust lookalike] built an empire of social-networking Web sites where the main preoccupation was a different, shorter “f” word.

The Silicon Valley engineer sold his collection of sex-oriented membership sites to Penthouse Media Group in 2007 for more than $400 million, and quietly relocated to Seattle.

Much of his big payday, however, still hinges on the pending initial public offering of the company, FriendFinder Networks. Conru received notes, not cash, for most of the purchase price, and is still owed hundreds of millions.

If the $220 million IPO [ever happens], Conru will have the option of collecting about $80 million of that debt; he’d retain about 8 percent of the Florida company and a seat on its board, and would still be owed a couple hundred million dollars. Or, he said in an interview recently, he may just hold on to all of his high-interest, nine-figure IOU.

The company he started as a Stanford Ph.D. student runs explicit subscription-based sites such as AdultFriendfinder (slogan: “Meet real sex partners tonight”) and others where “models” perform on camera for paying Web viewers.

Conru sees them as ahead-of-the-curve social networking: “By making the Web sites more a place to hang out than a database of profiles, we were able to average 35 percent year-over-year revenue growth for the 12 years before the sale.”

In a phone interview from India, where he is traveling and looking at potential investments, Conru said he took more than a year “simply to decompress” and enjoy the restaurants and cultural attractions within easy reach of his Belltown condo.

Now he’s exploring business investments and philanthropic ventures.

He said he’ll soon debut compute.org, an organization to catalyze developers to write software that’s “helpful but doesn’t necessarily have to make money,” such as a way for people with impaired vision to participate in online gaming.

Conru said he’s also looking for another Internet opportunity, but the Web is more crowded than it used to be. “It’s more of a challenge now to get the same scale or league that FriendFinder was.”

Meanwhile, he’s advising other entrepreneurs and getting back up to speed on the latest in software. Until recently, “I haven’t touched a line of code for a year.”

The only detailed story on Conru and FriendFinder, published in the now-defunct “New Economy” magazine Business 2.0 about six months before it was acquired, suggested his Web empire would be hard to sell because it was “far too big for any adult company to afford and far too dirty for any mainstream company to stomach.”

That ick factor apparently continues to dog FriendFinder; its IPO is being run by two underwriters with no significant previous U.S. offerings to their credit.

Analyst Nick Einhorn of IPO-watching firm Renaissance Capital says FriendFinder, with yearly revenues of about $350 million, has a fairly solid business that’s being dragged down by debt now totaling some $450 million.

“It’s definitely kind of a mess with the debt, and that’s really why they need to go public,” says Einhorn, whose firm isn’t involved in the deal.

None of that seems to worry Conru, who’s exploring everything from desalination to broadband. “I’m interested in so many different things, it’s hard to pick,” he said. “For the first time in my life, I can choose.”

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