Venture Explorer

Success factors for Facebook apps

Nisan Gabay of Startup Review has a great post on the factors which make Facebook apps successful - and the most popular apps are so big that success is now measured not just in terms of users but in percentage penetration.  For instance, Top Friends from Slide has about 25% of all Facebook users!

Backpacking the Carson-Iceberg Wilderness

I don't know how it's possible to simultaneously feel sore, stiff, exhausted - and exhilarated, blissful and floating on air.  That's precisely how I feel today, though, after the season's first backpacking trip, to the Carson-Iceberg Wilderness in the Sierra Nevada, about 3.5 hours away from San Francisco.  Sunny skies, glorious sunshine, cool breezes and a grand total of three other people on the 45 miles of trail I covered this weekend.

Pix here .

Finally - Widget Viewership Metrics!

comScore today released the first ever metrics for widget viewership with the launch of "comScore Widget Metrix", a new service to track the usage of widgets across the web.  The numbers are impressive: 40.3% of North American Internet users in April 2007 visited a website with an embedded widget, and the top ten widget providers worldwide had 177M unique viewers.  The top widget provider worldwide was Slide.com (a portfolio company) with 117M uniques, and competitor RockYou was second with 82M uniques - considerable overlap in the visitors, of course.

The existence - and magnitude - of these numbers is good news not just for widget developers but also for advertisers and social networks.  Advertisers now have independent validation of the depth of user engagement with compelling widgets, and brands and widget providers will now have another lever to prod social networks to enlist widgets to more creatively monetize the traffic they generate.
 

Hiring in the Valley? Not So Fast!

The San Francisco Business Times has an article on the difficulties even a well-financed, fast-growing company like Slide (a portfolio company) has in hiring top-notch talent in Silicon Valley.  Aside from the fierce competition among startups, there's the giant sucking sound of Google hoovering away engineers lured by free food, free vanpools with free WiFi, and, last but not least, a stock price defying the laws of gravity.

Reminds me a little of the dot-com boom of 99-00, with one crucial difference.  Back then, for those of my readers old enough to remember, anybody with a weekend's acquaintance with a Java programming handbook could land a lucrative programming gig.  Today, though, companies will pay well for top talent - but only for top talent.  I don't see much dilution of the talent pool; CEOs know that the only growth that matters is in users and revenue - building monuments to their egos, whether they be magnificent buildings or bloated but mediocre armies of engineers, will more likely lead to failure and red faces than the success which awaits the nimble and the humble.

Self-promotion alert: yours truly is quoted a few times in the aforementioned article :-)

The Power of Facebook

I'm very new to Facebook, but in my few weeks on the site I've been blown away by the virality and addictiveness of Facebook.  I was an early beta user of LinkedIn, and have been on MySpace off and on for a couple of years; anecdotally, the rate of growth of my network, as well as the rate of invite acceptance, is astronomically higher than on any other social network I've been a part of.  Not just in the echo chamber of Silicon Valley, but even among late adopters of the digital lifestyle in small towns in India.

And early evidence indicates that Facebook's platform strategy has been a resounding success.  Jeremy Liew has a great post on this topic, and I've been seeing this myself with apps from our portfolio company Slide. Slide's Top Friends app, for instance, added more than 1M users in the past 24 hours to become the top application on Facebook.  That's hypervirality!

Making Money in Web 2.0

Last night I was on a panel organized by Dealmaker Media on how to make money from the profusion of eyeballs generated by Web 2.0 companies.  My co-panelists - Lance Tokuda from RockYou, Joe Hurd from VideoEgg, and Ted Rheingold from Dogster - are addressing this problem every day, as are our portfolio companies Slide and PPLive.  Highlights of our discussion follow.

The naive answer to monetizing eyeballs is, of course, to stick advertising in front of them.  Consider this, though:
- Eyeballs are like real estate - it's all about location.  Eyeballs from the US are very valuable to advertisers, but don't expect to get meaningful ad rates for visitors from Brazil, India or China.
- MySpace (~80% of US social networking traffic, as per Hitwise), Facebook (~10% of US social networking traffic) et al have billions of pageviews per month.  But they also have high pageviews per visit, and an advertiser has little interest in paying to show the same ad thrice in three minutes to the same user.
- Social media "engages" the user; engagement is hard to define and quantify, but when I check my Facebook page seven times a day, I know I'm engaged by it.  To realize the full revenue potential of this engagement requires an ad model more sophisticated than today: the primary advertisers will be building brands and not buying clicks, and they would prefer a targeted, rich and engaging ad experience that transcends the untargeted CPM banner ads available to them today
- Scale is a prerequisite to serious revenue. You have to be big enough to afford a salesforce and big enough for your sales rep to get attention from advertisers; otherwise, you're stuck with low eCPMs from ad networks.
- Advertisers and ad agencies are conservative.  If you want to get more than the penny change in experimental marketing budgets, be prepared to either show a standard IAB ad unit, or get ready for some evangelical selling (as VideoEgg has successfully done).
- Social networks own users, but the widgets which populate so much of a typical MySpace page own the eyeballs of the users.  So is the long term play for widget providers is to be next generation, unobtrusive, rich media ad networks for social media?  It's not about who owns the user - it's about who owns their wallet :-)
- There's a seemingly inexhaustible supply of ad dollars moving online from TV, print and magazines.  Online publishers have their work cut out to keep these dollars from sticking to just a few large hands - Google, Yahoo, MySpace, MSN, AOL and Facebook.  Marketers will choose reach over targeting, unless you can achieve hypertargeting - what pet food company will prefer MySpace over Dogster?