@seth

Answering the Facebook Platform Bears- #1: “Facebook apps are not real media”

Concomitant with the debate about Facebook’s valuation ($5… $10… $15…$100b…?) is a somewhat more restrained discussion about the value of applications being built on Facebook’s platform and the value of the users that interact with these apps. Despite the fact that more than 40 million people use Facebook– 50% of them daily– there remains skepticism about the long term value of these users to advertisers.

Historically, Social Networks have generated tons of page views but have had a hard time monetizing these impressions. “Professional” content properties focused on deep verticals, such as C|Net and BabyCenter.com, regularly attract $20+ CPM ad rates, whereas “amateur” social media sites like Digg, MySpace and others are lucky to generate CPMs above a few dollars with any consistency.

Three primary critiques have emerged in recent months that call into question the viability of social media being produced on top of open social platforms, exemplified by Facebook:

1. Facebook apps are not real media

A few weeks ago Kara Swisher dismissed Facebook apps as a “children’s hour:”

And if that is all there is, can Facebook really build a viable and long-lasting business on what is essentially a bunch of games that will ultimately become wearying for users? Doesn’t it need more robust apps that actually are useful and relevant and make Facebook the service that Zuckerberg has often told me was a “utility”?

Kara suggests that real social media apps would be robust, useful, and relevant; not the inane, ephemera of super poking, graffiti walls and food fights. Despite the apparent lack of utility of Facebook apps, they are exceedingly popular. Take Slide’s suite of apps (led by TopFriends), or Rockyou’s, or Grafiti, or the hundreds of apps across our Social Media network- together all of these apps are generating hundreds of millions of page views each day. And none of them existed six months ago. It is curious to think whose media is being displaced by all of this new attention: Are people turning fewer pages on MySpace? Spending less time reading blogs in their feedreaders? There is little doubt, in 2007, that MySpace (Fox) and Blogs are legitimate forms of media. Which begs the question: is media defined based on something innate in terms of its form, or is it instead defined based on its usage?

There are interesting parallels to Facebook apps t0 be found in the recent history of blogs. In 2003 and 2004, blogs were dismissed by traditional Internet media as being nothing more than narcissistic ruminations about the vagaries of everyday life. After all, who really cared about what Fred Wilson listened to at his Amagansett beach house? Flash forward a couple of years and blogs have become big business. Although my blog and your blog together might only generate a few dollars a month via AdSense, “professional” blogs such as Huffington Post and Engadget are generating millions of dollars of revenue and taking reader-share from NYTimes, MSNBC, and others. John Battelle and his team in Sausalito are building a viable media franchise representing premium blogs such as BoingBoing to advertisers looking to participate in “conversational media.”

Just like the post is the expression of the blogger (and the article is the expression of the journalist), so the app is the expression of the developer. Unlike blogs and traditional Internet media sites, however, apps do not provide content. Instead, they provide a structured, social environment where content can be created. The media, in this case, only comes to life through the social interaction of two people. Facebook’s open social platform is a printing press not a book. The app is the book in the social media universe. Just as with books, apps focus on certain themes and relate to specific audiences. The author of the app- ie the social media developer- publishes code that facilitates a certain kind of collaboration among a target group in her social graph.

The first products of this new kind of printing press may well end up looking trite and ephemeral, with the benefit of some longer historical perspective. But so were most of the first books, and Internet sites, and blogs. But there is no doubt as to the viability of even these early experiments as legitimate media properties.

Coming next: #2: “Facebook apps are all head, no tail.”

Comments 4 Comments
Categories Attention

Social Ads

11 Oct

At the end of July, roughly two months following the opening of Facebook’s social media platform, I wrote that “Closed is the New Open.” I anticipated that Facebook would enable tremendous innovation by virtue of how few options it provided for expression as opposed to how many. In the roughly two months since, developers have harvested the Facebook social graph to create a veritable rain forest of myriad applications.

The original sin of social media may be remembered by future generations as the moment when poke and wall exposed themselves at the Facebook Platform F8 event in SF on May 24, 2007. Against the backdrop of an open social graph API, these core functions suddently enabled 3rd parties to create entirely new forms of social interaction: “Who do you want to XXX now?,” “Wanna send a XXX to your friend?,” “Who is XXXer?,” “What do you want to draw on your friend’s XXX?”

Platforms

A platform’s success is based on its generosity: how many sustainable applications have been built on said platform?

For an embodiment of a successful platform, cf Dave Morin, the authentic leader of Facebook’s technical platform. When you sit down with him, you are struck by his commitment to openness and providing all applications with a level playing field. He combines the intellect of an economist with the empathy of a sociologist. Any fear a developer may be wrestling with in terms of whether to base their business on Facebook, melts melts away in Morin’s disarming presence. You think to yourself, “Geez, sounds like these guys at Facebook are genuine- the platform is open.”

Applications take what the platform gives.

Applications

The success of an application is based on its ability to consume, to take, information from a platform and interpret it specifically for a user’s benefit. In media futures speak, the Facebook platform exposes an API which creative developers use to infuse their apps with a certain alchemical magic, otherwise known as engagement.

Perhaps the best personification of a successful application is Max Levchin, the intense, “nothing will stand between our engineers and N consumers” CEO of Slide. Slide is the biggest application suite on the Facebook platform. Max wastes little time at conferences educating others, as he seems to prefer notating on a whiteboard about optimizing viral growth paths. If Morin is like Jeff Sachs the world economist– working hard to reassure countries that he will promote free trade– then Levchin is like Dmitri Balyasny, the hedge fund trader who stays under the radar while managing vast money flows.

Advertising takes what the applications give.

Advertising

- D(["mb","\u003cbr /\>More than ten years ago in 1996 we saw the emergence of first generation ad servers and networks: focalink, netgravity, clickover, accipitor, flycast, and of course doubleclick. Call this advertising 1.0. These were basic tools for web sites to serve ads and for advertisers to purchase banner inventory. The media was "dumb" insofar as there little in the way of targetting, although the consumer experience was so new that response rates to banners were still extremely high.\u003cbr /\>\u003cbr /\>Starting in 2000, Overture and Google\\\\\\\\\\\\\\\\\\\\\\\\\\\'s adwords represented the next step forward by moving from a pure impression basis to a cpc basis. Ads could now be targetted based on the implicit "lookingforness" of the keyword.\u003cbr /\>Sent via BlackBerry by AT&T\u003c/div\>",0] ); D(["ce"]); //–>While apps take from the platform, they give to advertising. The 10-year procession of online advertising models from when banners first appeared in 1995 to today’s behavioral targeting, can be seen simply as an emerging ability for web sites to share more about what they know about their users with the advertisers that want to reach those same users. This is the apogee of what I shall describe as personal advertising, which is all forms of advertising that try to market to you based on who you are, what you have done, and what your commercial intentions may be. All advertising today, more or less, falls under this umbrella.

Recently, I have been working on a different kind of advertising, social advertising. This is when the ads you see aren’t simply influnced by your behavior, but in fact are driven by the behavior of those in your “friend group.” This was never possible before a social network such as Facebook enabled new kinds of applications that could carry social graph information up into the advertising layer of the online media stack. These kinds of ads take the value of rich data about social influence (which is extracted from the applications) and pays this value back to the underlying platform, which benefits in the form of increased CPM. I will have much more to show and tell about social advertising next week at the Web 2.0 conference. One thing that should be self evident is that the only forms of advertising that work inside of social media are social advertisements.

The most desperate attempts that personal advertising continues to make in order to capture my attention not withstanding:

* For a powerpoint-icized description of Social Advertising, see the brief presentation I gave at Dave McClure’s excellent Graphing Social conference this week

Comments Leave a Comment
Categories API, Facebook, Social Media

Closed is the New Open

31 Jul

If there ever were a post where the title said it all, this is the one.

For weeks, months, I have been working with my team at SocialMedia building applications inside of a clean well-lit, hermetically sealed social network called Facebook.

Here is what we now know about this platform:

It’s has an “open” API that exposes its “closed” social graph.
It shields each of its 30 million users behind a cloak of absolute privacy, where every social connection is required to opt-in.
It maintains total control over the syntax and organization of every single one of its pages.
It is starting to dominate the time spent online by its users, stealing click-share from every other web site and service.
It holds captive the rich behavioral data of its audience.

Fred almost threw me out of his office a few weeks when I suggested that “closed was the new open.”

I had challenged him on his logic for investing in Twitter by asking “what is the role of Twitter when Facebook has commodified the status update?” and he replied that the entire USV portfolio was built on the premise of openness. As a co-founder of AttentionTrust and co-organizer of the Open Data conference, I am, of course, a strong advocate for users needing to own copies of their own data and for them to be able to easily move it around and see how it is being used by others.

That being said, I sense that users (including the 57,000 blogosphere alpha dogs) are increasingly tired of copying and pasting javascript code into their blogs and manually organizing their online identities. The beauty/horror of Facebook is how incredibly easy it is to add applications with a single click. Once again, convenience seems to be trumping data conservation.

Just as AOL consolidated its position in the early 90′s by offering a far more convenient, user-friendly interface to the online world (despite the reality that it was a proprietary walled garden written in rainman), so now is Facebook doing the same by offering a better interface to your online world.

The openness that Facebook enables is really simply the opportunity to build closed ecosystems on top of its social graph. This is the story, for example, of Slide’s Top Friends network, which in less than two months has established a proprietary social graph on top of Facebook’s own proprietary social graph.

web 3.0 = facebook 2.0?

17 Jul

Google died on May 24, 2007.

Not Google the company, nor the stock, but the idea of Google as this unstoppable juggernaut of world internet domination.

Facebook opened up its platform to 3rd party developers- it moved from Facebook 1.0 to Facebook 2.0- and nothing has been quite the same since.
I am not sure if it’s the applications themselves, or just the fact that we have something new to share with eachother, but without a doubt we (the blogosphere?) have all adopted a new interface which is capturing more and more of our attention.

I like the way Pulver put it when he said that:

In LinkedIn, everything centers around establishing a connection. In Facebook, connecting is just the beginning. Facebook is all about community. And this can been seen by doing things like leaving messages on users’ walls, joining groups and having discussions, as well as some of the more social applications built for Facebook.

I tend to agree with this. While page views persist, and connections are being made in MySpace and LinkedIn and other networks, the only place where people are actually engaging socially in virtual real-time is within their Facebook feeds and profiles.

My friend Ted here in Mill Valley confided in me that “yeah, well I think I am now spending two hours a day on Facebook after having never used before a couple of months ago.”

I no longer Twitter.

Or Flickr so much.

Or del.icio.us anymore.

It gets harder and harder to maintain the heavy responsibility of a WordPress blog when I can communicate so quickly to specific social groups within Facebook.

My friend Pierre told he how much he enjoyed tracking my progress across the East Coast the past few weeks on Facebook, with status updates and pictures and video, even while I was feeling guilty about not properly blogging.

I still search with Google, and use it for email and docs and calendaring.

I wish that my Facebook inbox would talk with my buddy list and keep a record in my Gmail search, but I am willing to suffer through this lack of interoperability because the Facebook communication kit has become so vital to me (and so quickly for that matter).

A number of people have commented about how Facebook has enabled them to connect with long lost friends, who they are suddenly back in touch with in strangely, suddenly intimate ways.
It’s like StumbleUpon for people.

What if Web 3.0 is not about the “semantic web” or about any major revolution in natural language search?

What if, instead, Web 3.0 is really about moving from pagerank to peoplerank?

And what if the Facebook Newsfeed, opened up as it was in May to third party applications, marked the dawn of this next phase?

Netscape browsed the Web. Yahoo! organized it. Google searched it. And now Facebook has made it social.

What we actually want to do within this social platform is the big new question in Silicon Valley, where everybody is scurrying to figure out what are the Social OS equivalents of Word Processing and Spreadsheets.

Walls and pokes?

You can look at the fact that millions of people are turning their friends into zombies, spraying grafiti on others’ walls, getting super-poked, and sending “poop” at eachother as simply so much chatter.

Or you can look at these gestures as new forms of language, crude in their pronunciation but rich in meaning and intentionality.

I turned the page on Attention and the back of it reads: “Engagement.”

Focusing on banner CPMs and click-thru rates in this new medium is like focusing on the Television set as opposed to the shows.

Facebook users are more engaged with their media, in a truly social way, than anybody else. This is why my friend Rich Greenfield of Pali Research who is a *media* analyst on Wall Street is so f-ing excited about what is going on.

This is different than Google which is an accidental media company. Nancy Peretsman of Allen & Company told me how Google kept thinking they were a technology company until she (and no doubt others) revealed to them that they were in fact a media company.

I doubt Facebook needs this clarification.

The bear case on Facebook has become somewhat clear in recent weeks:

Advertising does not work
Few of the Applications that people are installing and spamming their friends with have any staying power
Facebook is throttling back the viral coefficiency of applications and offers no clear path to monetization
There are no barriers to exit for Facebook users, who will inevitably move to the next “cool” social network

Against this critique, the only legitimate responses are usage, engagement and responsiveness.

How many people are using Facebook applications?
How engaged are they in these activities?
How responsive are they to interact with 3rd parties (friends, friends of friends, marketers, etc)

Some of these metrics are available (for example usage of apps via our Appsaholic service) but the critical metrics on engagement and responsiveness are still to be determined. The early indications across a few million users in our Social Media network, however, suggest that users are interacting far more often with applications and are more than willing to interact with marketers, than the Facebook bears would lead you to believe.

Facebook Sugar: How to Build Successful Facebook Applications

20 Jun

I am still not sure exactly how Facebook relates to the Attention Economy. But that has not stopped us from embracing the challenge to develop innovative social applications on top of this new platform. As you can see from the graphic above, we have created enough Facebook applications in the past few weeks to fill the profile above the fold. Our first application for Facebook was Trakzor, which we ported from MySpace, where it has millions of users who use the service to see who is checking them out. Within days, Trakzor for Facebook went from nothing, to thousands, to hundreds of thousands of users. It was such an adrenaline rush to see social media growing at scale; at its peak growth spurt two weeks ago, more than 7,000 people were adding the application per hour.

On the heels of this growth, we decided relax the focus on Attention with a capital A and start developing fun, interactive software that leveraged the implicit social graph of Facebook. And so FoodFight was born.

As “cooked up” by one of my co-founders Dave Gentzel, FoodFight reimagines the archetypal mess hall brawl as a distributed social media game: every day you get $5 for lunch money and can choose from a list of foods to throw at your friends. In perfect social media fashion, users have been (1) asking how to increase their lunch money (read: microtransactions) and (2) coming up with new food ideas to throw at their friends. By the time you read this there will be more than 1,000,000 FoodFight users (in less than two weeks).

Earlier today we launched Tag, which brings Web 2.0 tagging to tag the game we used to play as 2nd graders. In order to find out what you have been tagged as, you need to tag a few of your friends. We are learning to embed the viral coefficient directly into the user experience. It’s not longer just software as a service, it’s now software as a sequence. I bet you will see more and more Facebook applications that do not deliver their money shots until you first agree to share them with your friends. This is the socialization of the Free ipod concept which proved so successful as a cash cow in the online lead gen world.
Whether you think that the Facebook platform represents the reincarnation of Netscape in terms of its impact on the Web, or whether you think that this is just so much twiddling, the fact is that nobody really knows how this will play out. Which is all the more reason to get out there early, learn the language, and start having conversations while other people are still wondering whether they should or shouldn’t jump in. All of us would likely agree that if we had it to do all over again, we would have bought up short vanity domain names before they became trophies, or loaded up on Adwords and SEO early to maximize our Pagerank on Google. I believe that many of us will look back in a few years with similar regrets wrt Facebook if we do not start taking risks now.

As a treat, I wanted to share some tips from Dave Gentzel, founder of Trakzor and part of our AttentionSoft posse that includes Sourabh, Roj, David, Jonas and Ted. He is 24 years old and is quickly becoming the “Tom” of Facebook, friending everbody who downloads one of our apps.

<!–

SG: What is the secret to developing a killer Facebook application?

DG: There isn’t a formula at this point. It seems that the most popular applications are the ones that are simplest, already exist in the real world, and live almost exclusively in one’s profile. It goes to show that a good idea, a two minute brainstorming session, and a quick development turnaround is all it takes. Oh, and “integrated social distribution mechanisms.” Lots, and lots of those.

What do kids really want versus what grown-ups think kids want?

DG: Kids want simple applications that their friends will find cool. Profile bling is only worth something if other people see it. There’s always something to be said for being an early adopter and influencing friends, even if it’s with a pet rock application.

What was your key to getting Trakzor to scale on Facebook?

DG: Trakzor is a product that works well if no one else has it, and really well if tons of people have it. This gives people a real incentive to invite their friends and encourage them to get Trakzor, and even if they don’t, their experience is still solid. Lots of consumer demand didn’t hurt either.

What was your key for succeeding with Trakzor on Facebook?

DG: Tens of millions of people know Trakzor from MySpace. Even though the migration to Facebook required that the Trakzor service operate somewhat differently, people were enticed by the prospect of knowing who was paying attention to them and knew Trakzor could assist in that social discovery process.

How did you come up with foodfight?

\u003cbr\>I'm a day dreamer. There's really little else I'd rather be doing than thinking about new product ideas. Food Fight and most everything else I've ever done was something that just popped into my head at one point or another. The trick with Food Fight was to turn the "throw food" brainstorm lightbulb into a deeper and nostalgic experience. Thus, cafeteria menus were born, lunch money was given, and now even 40 year olds are dying to throw that "mystery meat" they never were able to forget.\n\u003cbr\>\u003c/div\>”,1] ); D(["mb","\u003cspan class\u003dq\>\u003cbr\>\u003cblockquote class\u003d\"gmail_quote\" style\u003d\"border-left:1px solid rgb(204, 204, 204);margin:0pt 0pt 0pt 0.8ex;padding-left:1ex\"\>- what fbook app are you most impressed by (other than ours) ?\u003c/blockquote\>\u003c/span\>",1] ); D(["mb","\u003cdiv\>\n\u003cbr\>Graffiti is a winner. Simple, social, self expression.\u003cbr\> \u003c/div\>\u003cbr\>\u003cblockquote class\u003d\"gmail_quote\" style\u003d\"border-left:1px solid rgb(204, 204, 204);margin:0pt 0pt 0pt 0.8ex;padding-left:1ex\"\>-----------------------------\n",1] ); //–DG: I’m a day dreamer. There’s really little else I’d rather be doing than thinking about new product ideas. Food Fight and most everything else I’ve ever done was something that just popped into my head at one point or another. The trick with Food Fight was to turn the “throw food” brainstorm lightbulb into a deeper, nostalgic experience. Thus, cafeteria menus were born, lunch money was given, and now even 40 year olds are dying to throw “mystery meat” at their friends.

What Facebook application are you most impressed by?

Graffiti is a winner. Simple, social, self expression.

What is your ultimate goal?

Having somebody recognize me at the mall.

Comments 3 Comments
Categories Attention, Facebook, Social Media

Schilling’s Laws for Perfect Start(up)s

12 Jun

Last Thursday I took my son to the Red Sox vs A’s baseball game in Oakland. Curt Schilling was starting for the Sox; we were celebrating Jacob’s graduation from 2nd grade: it was a perfect day for baseball. We settled into our seats and ended up witnessing the greatest pitching performance I had ever seen.

For 8 2/3 innings Schilling was flawless. No hits. No walks. Julio Lugo, the otherwise sure-handed Red Sox shortstop, muffed a routine grounder in the 5th inning; otherwise, Schilling was perfect. As the game wore on, the significance of the moment began to emerge. The Red Sox fans around me, who had been so vocal in the early innings, got quiet. They appreciated the significance of this moment- the fact that Schilling had never thrown a no-hitter during his Hall-of-Fame career. Our normal trash talking bravado gave way to an even stronger puritanical superstition: don’t talk about it (the no-hitter) otherwise you will ruin it.

As many know by now, Schilling made it all the way to the bottom of the ninth inning, with two outs, before giving up a solid hit to Shannon Stewart. He retired the next batter and we celebrated the victory, enjoying such a tantalizing brush with immortality. In the days since watching this performance, it has dawned on me that there are many lessons for entrepreneurs embedded in Schilling’s performance.

1. THROW STRIKES

Do not waste time nibbling around the edges. Don’t be cute. Don’t fall behind. Get up there and hit your target. Get the opposing player in a hole, force him to catch up to you, get him to play your game. Schilling threw 71 out of his 100 pitches for strikes. He walked nobody, and only got to 3 balls on one batter. The entire game lasted a bit over two hours and lost that “drag” that ruins baseball today for all but the most hard core fans.

Corollary: dont waste time up front with branding, market research, business partnerships, investor presentations; get your product to market quickly and hit the problem on the head with a solid solution.

2. TRUST YOUR DEFENSE

Schilling was not afraid to throw it over the plate because he trusted his defense behind him. This was clear from the first pitch. He may not be the most popular player because of his arrogance, but he is loyal and his teammates trust him to let them do their jobs. Coco Crisp made a spectacular play in the bottom of the sixth inning, leaping to keep Mark Kotsay’s long fly ball from going over his head.

Corollary: don’t try to do everything yourself. Let your people play their positions, and trust that they can support you if you bring them the business.

3. LISTEN TO YOUR CATCHER

Schilling is blessed with one of the greatest catchers a pitcher could have: Jason Varitek. Varitek possesses a remarkable ability to call pitches and locations, and has a firm sense of pacing and rhythm. Not only does he understand the batters but he also knows how to read his pitcher, sometimes better than the pitcher himself- who may be caught up in the “emotion” of the game.

Schilling took his cues effortlessly from Varitek throughout the game. There were few if any times he waved off his catcher’s sign. The body language between them, even at 90 feet away, was as tight as the best moments of Starsky & Hutch bust. At least up until the very last out, when Schilling’s emotions did in fact overtake him and he waved off Varitek’s call. From Schilling’s own great blog post about the game:

Now comes the infamous ‘shake’. In talking with Tek after the game it’s clear to me that he was 100% spot on with his thought, and I was completely wrong with mine. Why would he take a strike at this point? I had gone to 1 three ball count all day. I wasn’t going to walk him and the only thing you do at that point, by taking a strike, is allow me freedom to use my split. There was no way in hell he was taking. I was sure otherwise. So I shake off the slider, execute the pitch I want, and he lines it to right.

Shannon Stewart promptly swung at the fastball (that Schilling thought he would take) and lined it to right field for the first hit of the game.

Corollary: listen to your board. Listen to your advisors. Listen to your investors. They want you to succeed, they see the field better than you do, they know what you are capable of and whether you are having a good day or if your stuff happens to be “off.” If you listen to them, they can help you compensate for your own weaknesses, or for the strength of your opponent. They can help you match the right pitch, the right delivery, and the right direction to the situation at hand. This is not to suggest that you aren’t in control. These are of course your pitches, your delivery, your mechanics. At any time you can wave off the catcher because of a gut feel, since in the end nobody knows your body (or your vision!) like you do. But don’t make a habit of ignoring or overriding your catcher’s signs, else your mistakes will compound quickly and expensively.

4. PITCH, DONT THROW

Ten years ago when he was 30 not 40, Schilling had the power to throw balls by people. Today he needs to pitch. Changing locations and speeds are more important, and more efficient, than simply whizzing the ball by batters. During the game, Schilling was locked in. He alternated fastballs with splitters with sliders. He threw strikes inside and then outside. He knew that if he followed his gameplan, listened to his catcher, that he could keep the aggressive A’s hitters off-balance and force them to hit weak fly balls and grounders to his fielders. By the end of the game, his legs were still fresh and he could lean back and hit 93-94 as he did throughout the ninth inning.

Corollary: pick your spots, modulate your energy, don’t try to sprint through a marathon. Like a baseball game, a startup takes a long time to develop and the founder is rarely still around at the end. In order to achieve the equivalent of a complete game, you need to carefully balance your passion and your wisdom: too much of the former and you will burn yourself and your team out; too much of the latter and you will never get up the hockey stick of growth.

There will always be a few entrepreneurs who have the technical genius or unlimited salesmanship to realize their vision without needing to change a thing; but most of us need to grind it out one pitch at a time and adjust our strategy accordingly. To achieve as a startup what Schilling achieved on the field last week is to balance a complex set of priorities- vision, engineering, distribution, monetization, without taking a single customer, partner, employee or investor for granted. It does not happen often, but when it does, it is inevitably a combination of raw talent, hard work, and a few lucky plays by your defense.

Comments 3 Comments
Categories Attention, Baseball, Entrepreneurs

← Older Entries

Newer Entries →

Search

@seth

Answering the Facebook Platform Bears- #1: “Facebook apps are not real media”

Closed is the New Open

web 3.0 = facebook 2.0?

Schilling’s Laws for Perfect Start(up)s

About

* My Identities

* My Key Essays

Companies I Have Seeded

Companies I Have Started

Funds I Have Invested In

Twitter Updates

Past

Top Posts

Email Subscription

Meta

Follow “@seth”