On the eve of over US$60 million in VC fundraisings by apps developers I found attendees at Sydney’s recent Facebook Developer Garage highly motivated to talk value.
I’ve covered the event in the NEXT section of the Sydney Morning Herald/The Age, but here are some additional notes that never made it to print.
Lee Lorenzen noted via video at the event that once acquired as a registered customer, between 50-80% of users will opt out of receiving email marketing from the website owner. This means there is little opportunity to engage in dialogue with these users who the website owner has paid to acquire. This situation is reversed on Facebook as application owners have multiple opportunities to converse with users.
Slide has approximately 74 million Facebook app installs. This gives them tremendous reach and allows them to touch a high percentage of the Facebook audience, some 5-6 million daily active users a day. Lee Lorenzen feels this is rationale for the US$550 million valuation they received recently when raising their fourth round of funding of US$50 million. In the United States, the Slide userbase by itself represents the third largest, app-centric, social network.
He believes that Slide, “anticipates an IPO within the next 12 months that will be north of US$2 billion.”
Echoing Lee Lorenzen’s views, the organiser of Silicon Valley Developer Garages, Stanley Wong said, “Social media applications are unlike any type of websites in the past mostly due to the fact that they are so viral. It is unheard of before for an application to have 5 million new application installs in 5 weeks starting from zero.”
“ As a result there is a lot of competition for the attention of Facebook users and a ton of developers are jumping into this fray. Developers are already building networks of apps around particular interests so consolidation is another factor that is happening.”
The value of a Facebook user is linked to their use of applications on the social network. In turn, the ability to monetise these applications and convert user value into real value comes down to the performance of these applications.
In the article I mention Slide’s daily active user rate of 12% as being an example of a higher engagement app (most apps range between 1-2% DAU). By contrast Creative Enclave’s massively multiplayer Facebook game, Imperial Galaxy, has achieved an average daily active user rate of circa 35% since launching the beta version just over a month ago.
One benefit of events such as the Facebook Developers Garage is that they form a key foundation stone for making connections, they are core building blocks for innovation and entrepreneurialism.
Look at Europe. Fifteen years ago the continent had little in the way of a solid pipeline for networking amongst technology professionals. Whereas today there is a relative plethora of events – Barcamp, VentureCamp, LeWeb3, Web 2.0 Berlin, the Plugg Conference and the list goes on.
Writing for well known technology blog, Techcrunch, Mike Butcher argues that these events have been a key reason for Europe coming of age as a technology investing arena. Events hardwire the network and once hardwired it becomes easier for professional investors to ply their trade.
As a result the continent has reached the maturation point where it has specialised investor capital available for each stage of a company’s development. From initial seed investors, through startup and expansion capital and on to growth equity and finally buyout. Europe now boasts a crop of successful VC-backed companies like MySQL, which progressed along the venture continuum and was recently acquired by Sun Microsystems.
Sriram Krishnan is one of the organisers of similar events in Singapore, where he has found there to a lot of demand from application developers and corporates interested in developing Facebook applications.
There is now a growing community of developers and the National University of Singapore (emulating the highly successful Stanford FB apps class run by BJ Fogg and Dave McClure) has set up a class focused on developing Facebook appliations. Mr Krishnan is keen to make his next event a simultaneous three-way between Kuala Lumpur, Singapore and Stockholm.
As a web community software pundit for a decade, Londoner Toby Beresford was blown away by the Facebook platform when it launched in May 2007.
“The Facebook platform provides a socialised newsfeed, easy authentication, frictionless application install, instant social network and consistent user interface. Pretty hard to beat as a platform to release a new application on.”
He has been organising Facebook Developer Garages ever since and sees these events as a forum to discuss the latest changes on the platform. Like in other cities, developers have left the London events feeling inspired to write apps. For example the review of the Affiliate Window app at an event directly correlated into a spate of shopping apps.
Commenting after a Facebook Garage in Cape Town, Hannes Foulds said, “Right know I just want to sit down and create my killer Facebook application!”
Mr Beresford notes that, “Facebook is very popular in the United Kingdom, it’s hard to express how much it has entered the every day lives of millions of people. Amongst graduates and professionals, rarely a conversation goes by without the mention of Facebook. This is one technology that has crossed the chasm into the mainstream, developing applications for it is only good business sense.”