Does Facebook Really Have Three Years To Figure Things Out?

Facebook founder Mark Zuckerberg tells us, via an interview with a Frankfurt newspaper, that they are currently experimenting with a number of models and expect to have worked out their optimal way to monetize within three years.

I agree with his premise that the model for social networks is different to the Google ad-based revenue model – people visit socnets to hang out, not to click through. I also agree that experimentation is good, but will it seriously take them three years?

Perhaps something got lost in the translation from Zuckerspeak to German to English.

[via Silicon Alley Insider]

VentureWrap: Friendster, SpaceX Raise $20M Funding

One of the earlier social networking pioneers, Friendster, has continued its Asian-led comeback with a $20 million infusion from IDG Ventures and previous investors [Benchmark, DAG Ventures, Founders Fund and Kleiner Perkins].

In addition to the cash Friendster has secured Richard Kimber, formerly Google’s South Asian Regional MD, as CEO.

Also raising $20 million is SpaceX, the Elon Musk-led space transporteer. The round was provided by Founders Fund. Musk is a former South African and founder of Paypal and Tesla. The recent test of their Falcon 1 rocket hit a snag with stage separation lock. This led to the craft not achieving orbit. Elon has unequivocally stated that they are still on track – the message from this funding round backs him up.

Founders Fund are having a busy time of it lately. One of their other portfolio companies, Facebook, is apparently contemplating empowering staff to sell off a portion of their vested stock. This accords with the philisophy of letting founders cash out along the journey, which has been a key Founders Fund differentiator – extending it to all employees is an interesting move.

Incidentally LinkedIn is also reportedly [via VentureBeat] contemplating this route.

“Great Apes!” Facebook Favorites Apps, Flushes Others

A year ago Facebook announced its F8 Platform – open architectured and a new frontier for all app developers to populate. But a chosen few apps were lauded as the leading lights. This gave a huge first mover advantage to a handful of players.

Today, Facebook has essentially named the frontier won. A select few apps will be chosen (not by the users, but by Facebook) as “Great Apps” and they will be rewarded with a higher level of visibility and early access to new features.

Other apps, essentially the “Great Unwashed”, will either be chosen to be part of an Application Verification program and receive some form of certification that gives users more assurances of their good character or they will be flushed to the lower recesses of the Facebook platform with the implied certification: “Install at Your Peril”.

I can see benefits for Facebook users, who have become saturated with spammy apps, but for developers who have built apps that deliver high levels of engagement and value to users, it remains to be seen whether the inside track will be fair and equitable. Facebook’s current track record in delivering on its developer promises is not crash hot at present — anyone remember the Facebook Fund?

VentureWrap: Zynga Brings Kleiner Into Play With $29M

The Potrero Hill, San Francisco-based Mark Pincus social games venture, Zynga Game Network has closed a $29 million Series B funding round led by Kleiner Perkins.

New Kleiner partner and former Electronic Arts Chief Creative Officer Bing Gordon will be joining the board and getting actively involved in operations.

This follows a recent $10 million Series A and the investors in that round (Avalon Ventures, Foundry Group and Union Square Ventures) have participated alongside Kleiner and IVP in the Series B.

I suspect this funding will be used to fuel a number of acquisitions. This is borne out by Zynga’s additional announcement that they have acquired YoVille, a virtual-world app that has over 150,000 daily active users on Facebook.

[Hat tip to Fred Wilson at Union Square Ventures]

Flushing The Data Portaloo: The Looming Portability Squareoff With Users

How close are we to true data portability? It depends who is asking the question as to how it gets answered.

As one of the chief catalysts for the current wave of discussion and (some) action, Chris Saad, points out none of the current high profile implementations are completely true to the overall understanding of portability.

Writing on his blog, Chris sees Facebook Connect, Google’s Friend Connect and MySpace’s Data Availability as important first steps. They are the first shots across the bow to the industry that a data portability battle is coming.

That battle will involve a squareoff between the user: me, you – and the networks collectively.

I like Chris’s address book analogy:

DataPortability is about a different social contract – a contract more closely resembling the one found in the email address book.

My address book is my own. When you email me, or when you communicate with me, you are revealing something about yourself. You define a social contract with me that means that I can use your information to contact you whenever and however I like – I could even re-purpose my address book for all manor of other things.

If, however, you violate that trust, either directly or indirectly, you break the social contract and I will tend to not deal with you again. We can not perfectly engineer these sorts of contracts into systems – we can try, but in the end social behavior will be the last mile in enforcing user rights.

Also, the dichotomy between who ‘owns’ the data is false. In my mind there is shared ownership. While you use a service, it is a shared custodianship of the data. By giving the service your data you’re getting something else in return – utility. In many cases free utility.

You personally, however, have shared (and overriding) ownership over your data. This has been declared as universally true by all the vendors I’ve spoken to.

The question is not one of ownership though, it’s one of control. If you own your data but can’t control it as you choose then ownership is a mute point. Further, the question is not one of if you own it, but rather how much of it you own.

For example, do you own your friends profile data since you have access to it via the social tool you are using? Or have they only granted you access within that social context and under that social contract. These considerations blur the analogy of the purely personal address book.

So where does this leave us. The industry continues to engage in discussion and analyse the meaning of both data portability and the current implementations. As long as this dialogue continues the looming squareoff will remain just that – looming. We are in a honeymoon period in which users are coming to grips with their rights and freedoms and comparing the various networks to determing whether and to what extent they are being violated.

For now, data portability continues to have relevancy and I do not believe our rights have been flushed away. However, I would encourage all players to listen very carefully to the conversation going on.

As I’ve said many times: the Internet giveth, the Internet taketh away – and it can do both with blinding speed. This is especially relevant for Facebook, given the current meme around its intentions started by Umair Haque.

UPDATE: Robert Scoble has a sound analysis of the situation, after an initial misunderstanding on his part. Have a read, the best part is him putting his participation on the Gillmor Gang on mute, having a shower and then coming back on the show. I know it’s been hot in the Bay area the last few days, but this is hilarious and about all the GG seems good for – cooling off.

[Picture courtesy of willgrant]

Appspace: App Grant Funders Urged To Release Early And Often, Android Apps Get Grants

The Open Handset Alliance’s Android Developers Challenge has released the 50 apps that have been given $25k in funding in Part 1, Round 1. As Jason Chen says on the Android Developers Blog, the list is being put out in the spirit of releasing early and often.

I strongly urge other specific funders of grants to app developers to do the same. Think about it, the space is moving at a rapid pace and app development does not have a long lead time. So why should the giving of small grants be a black box affair?

I recently contacted Bay Partners, who run the Facebook-specific appfactory, and also Facebook themselves regarding the fbFund.

Salil Deshpande from Bay Partners tells me the appfactory is going well and that they will be putting out a detailed status update shortly. I look forward to this and commend them on this move.

Facebook has been a black hole. No response back from either official press channels or through direct contacts. No discussion anywhere (that I can find) by Facebook on the fund’s status, which apps have received funding etc. I hear (unverified) they have made some funding decisions, so why the silence?

More coverage on the Android apps:

Silicon Alley Insider

TechCrunch

[Picture courtesy of EggOnline]

And Coming In Third, Here Comes Google

TechCrunch has broken the news that Google intends following MySpace’s Data Availability and Facebook’s Connect with an Open Social product called Friend Connect.

Similarly this will be a set of APIs for Open Social participants to pull profile information from social networks into third party websites.

Perhaps if Google had played nice with Open Social all along they would not be third to market and other players would’ve followed Open Social more closely.

[picture courtesy of squarewithin]

Social Network App CPMs Start To Emerge

Inside Facebook has done a great job of collecting CPM/eCPM stats from a numer of app developers. Granted, this only relates to Facebook – it would be useful to get a wider view taking into account ad rates on other networks as well.

While this data only proves that the range of monetization is wide, it does provide grist for the mill of folks like Phil Morle, who has been trying to delve more deeply into this area.

[Picture courtesy of white_shadow_photography]

On Echo Chambers & Viral Loops: Why Twitter Works, Unfocused Conferences Don’t

I was marinading some chicken this morning in one of my favorite mixes (there’s a good food franchise in there), when it dawned on me – as social beings, we have an innate desire and need for feedback and feeling like we are part of a community.

This is one of the reasons I love cooking so much. As a creative I not only get to produce something way better than its individual parts, but I have instant gratification through a viral feedback loop – the people I am cooking for. I don’t get any joy cooking for myself, love cooking for my family and adore doing big dinners (circa 16 guests) — the bigger the echochamber in this instance – the more gratification potential.

However there is a tipping point — pulling together a meal for a group larger than that and it becomes more of a painful logistics exercise than fun. I believe this is also due to the fact that there is a law of diminishing returns at work here as well — the more people who tell me they loved my portugese-southern african, peri peri chicken the less of an impact this will have.

And so it is with blogging. I remember hacking together my own blog back in 1998 (I think the term then was “zine”) and really enjoying getting my voice out into the nascent blogosphere. But I also found it somewhat disparaging when I received minimal feedback. This prompted me to find other ways of connecting with my potential audience and I set up a number of online groups that morphed into a collective think tank.

Spurred on by the depth of engagement and reinforcing feedback I was receiving, I got involved with one of the first social networking phenomena to achieve scale: First Tuesday. But that’s a story for another day.

Fast forward to 2003, when blogging started to get real traction. Why did it take off? Essentially, the blogosphere had achieved sufficient critical mass to become an effective echo chamber.

Blogging software promoted interaction through comments, trackbacks and more recently leaderboards (instant viral feedback loops) like Digg and today’s Techmeme. We continue to see innovation in this area, for example you can video comment on this post via a Seesmic plugin.

Let’s helicopter out a bit. The blogosphere as echo chamber seems to work best within niche areas. The early adopter, tech geek set is a classic example. A relatively small, but vocal group, geeks are highly adept at creating reverberating conversations and memes. The same cannot be said for all niche groupings, but as a general rule: niche promotes echo.

Before this becomes a missive, let’s now zero in on the miniblogosphere and in particular the tool that has ignited this space, Twitter. It works because it is an even more effective echo chamber than the broader blogosphere. And it comes as no surprise that is has achieved exponential growth within the tech geek grouping. Twitter is the perfect storm for geeks.  Twitter is a double wave instant viral loop – tweet quick, achieve nanoinstant feedback.

This miniblogging tool is also being used as an echo chamber funnel by the geek community. Blog posts are promoted to a tight knit group of followers through a tweet that, if picked up, is pushed out more broadly.

Conferences can also form effective echo chambers provided they are focused. Perhaps this is why the Web 2.0 Expo, which took place in San Francisco this past week receives mixed views. Personally I find its coverage too broad, preferring instead to participate in the Web 2.0 Summit where I know the quality of the noise echoing around me is higher.

Finally, social networks would do well to look at how they can create more effective echo chambers, both at a macro cross network and micro level. For example, groups are a common feature on social networks – Facebook groups have not been particuarly effective. Why – they are a very poor echo chamber. There is limited ability to create conversation through them.

Contrast this to Ning‘s roll your own social network – each micro network has the ability to become a micro echo chamber for a niche that its creator will promote to his or her personal network.

Time to bbq that chicken…bon appetit!

[Photo courtesty of jolou]

Google set to outopen in face/space race

Application developers are the clear winners of Google’s pending release of Open Social.

Richard MacManus explains:

Open Social is a distributed social network framework…a ‘third place’ of social networks…a set of three common APIs that allow developer to access the following core functions and information at social networks:

  • Profile Information (user data)
  • Friends Information (social graph)
  • Activities (News Feed).

 The following companies/social networks have apparently signed up to be a part of Open Social – Friendster, Hi5, LinkedIn, Ning, Oracle, Orkut, Plaxo, Salesforce and Viadeo.

So far a bunch of  Facebook app developers, including Flixster, iLike, RockYou and Slide, have also signed up.

Richard rightly points out that this is an example of Google playing to its strengths – namely creating a distributed system and owning a chunk of a space through its own platform. It will be interesting to see how Facebook and MySpace react.

While some commentators are expressing doubt that they will come to the party, it is possible that this move by Google will lead to some de facto standardization across open APIs. Standards would assist app developers greatly by reducing the friction inherent in mastering the intricacies of every set of open APIs and should lead to a much wider distribution of apps across various social networks.

Om Malik feels that Open Social is attacking Facebooks achilles heel – its quintessential closed nature. A standardised Social Networking Markup Language far outweighs a closed Facebook-only ML.