The Hidden Cost of Facebook Applications

Every day I talk with clients and prospective clients about
developing Facebook applications and the best way to go about it. The
reality of the matter is that unless you have some insanely catchy idea
that naturally goes viral, chances are you are going to need some help.
That help comes in the form of marketing. All the larger applications
have been launching new apps which they the cross promote. For all the
remaining applications (who now make up the majority), it is frequently
close to impossible to gain significant traction.

While minimal traffic on Facebook still amounts to more than most
websites drive in the first day, there is nothing that can be done to
increase traffic except for the following:

• Build in viral features (invites, news feed postings, catchy profile boxes … see top 5 viral techniques)
• Invite all of your friends on a daily basis
• Share the about page of your application so that it ends up in your news feed
• Pay for advertising

Aside from that there is not much else you can do. This contrasts to
websites which once picked up by search engines can immediately start
getting traffic and as content is added can grow in size. On this blog
for instance, over 50 percent of my traffic comes from search engines.
This is not the case for Facebook applications since they can’t be
crawled. The result?

As the application market becomes saturated it is going to become
increasingly challenging to make your application go viral. Not that it
wasn’t already challenging to make things go viral (see the book “Made to Stick“),
but without search engines, driving traffic suddenly became a lot more
expensive. In contrast to a website, your only hope of success is
having your application go viral. While your odds of going viral are
significantly increased on Facebook, I question the long-term
sustainability. The number of applications that go viral without the
assistance of marketing are going to decrease significantly in a short
period of time. What do you think?

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The Startup King's new gig

Bill Gross has more than 50 disruptive
Internet companies under his belt. Now he's looking for moneymaking
opportunities in the physical world.

By Erick Schonfeld, Business 2.0 editor-at-large

September 26 2007: 5:54 AM EDT

(Business
2.0 Magazine) -- Some people can't stop thinking about food. Bill Gross
can't stop thinking about new businesses. One of the world's great
serial entrepreneurs, he's launched more than 50 startups through
Idealab, his incubator in Pasadena, Calif. His track record includes
both winners (CitySearch, Cooking.com, NetZero/United Online) and
losers (eToys, Eve.com, Free-PC). But he's best known for inventing the
pay-per-click advertising model behind Overture Services (formerly
GoTo.com), the pioneering search engine he sold to Yahoo! in 2003 for
$1.6 billion.

Now, after more than a decade of launching
dotcoms, Gross has rediscovered the pleasures - and profitability - of
the physical world. Idealab's current lineup is crowded with companies
that make actual products: robots, 3-D printers, electric cars, rooftop
solar collectors. As Gross puts it, he's much more interested today in
"atoms businesses" than "bits businesses." He recently sat down with
Business 2.0 Editor-at-large Erick Schonfeld to talk about why.

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Facebook graduating on

Few websites can reach the status of Google and have their name be used as multiple parts of speech. But "Facebook Friends" from around the world have been "Facebook-ing" each other—sharing photos, keeping in touch, and finding long-lost friends—via the uber-popular social networking site since it was founded in 2004.

Originally only available to college students, Facebook opened its doors to high schoolers in September 2005, then to work networks in May 2006, and finally, in September 2006, to anyone and everyone. Now, the site has more than 31 million active users and is growing at a rate three times that of rival social networking website MySpace.com. Facebook's constant growth and popularity with a younger audience gives the site a reputation that is hip, welcoming, and increasingly huge.

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12 Year Old Gets $6.5M for Gaming Company

A Silicon Valley company co-founded by a 12-year-old has just raised $6.5 million in venture capital.
PlaySpan, based in Santa Clara, Calif. says it offers game publishers a
technology that lets users make payments and shop for other items. It
calls itself the first "publisher-sponsored in-game commerce network."
Arjun Mehta, a 6th grader, says on his Web site that he is passionate
about software that can make the game experience more "rewarding," and
that he started the company last year in his garage. He paid for it
from earnings made from selling online game items he won."

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Club Penguin: Re-imaging Game Mechanics With Tip The Iceberg

The first thing you notice is that everyone is really
dressed up. When you click on another penguin, their “Player Card”
appears. This shows all of the pins, hats, props, and accessories that
the penguin has acquired by completing various missions and shopping at
various stores. The net result is that a lot of penguins end up looking
like Elton John. (As Emily Yoffe points out, you must have a paid
subscription to Club Penguin to properly outfit your penguin.) Many
initial penguin-to-penguin comments are sartorial in nature, such as
“Where did you get that hat?” or “Nice outfit.” A common opener,
though, is the one that the pink penguin directed my way: “boy or girl?”

…Going to someone’s igloo usually means admiring how they’ve
decorated it with three flatscreen TVs, an aquarium, and a drum set.
You might do a little dancing to the booming rock soundtrack (penguins
can acquire special dance moves) and then go your separate ways. After
all, there are constant parties to attend.

…The iceberg is the site of Club Penguin’s most resilient urban
legend: If enough penguins gather on one side of the iceberg, it will
tip… The iceberg has never tipped, yet the idea will not die. If you
hang around for a bit, a penguin might show up and start drilling, or a
penguin would appear and shout, “TIP THE ICEBERG,” and start corralling
everyone to one side. One tipping theory held that all penguins on the
iceberg had to be the same color, leading to some incidents of
colorism: “Get out of here blue!” A legend like this is a sign of a
healthy game. Players are so invested in trying to figure out how the
world works that they go beyond what the designers have intended.

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Raising Money

One of the primary directives of a non-profit organization is to raise money. For accedited US non-profits Firstgiving (which we profiled yesterday),
makes it easy for members of your organization to set up donation pages
and collect donations from friends, family, colleagues -- or total
strangers. Non-profit groups can also use the service to manage fund
drives of their own.

Fundable and ChipIn are two other fundraising web applications that work very well for charities that are not accredited non-profit organizations.

There are a large number of for-pay payment processing solutions --
many of which include offline software packages as part of the product.
PaySimple is one of the more affordable packages, costing not too much more than a normal merchant account. Blackbaud is one of the more well-known enterprise solutions for non-profit fundraising (they offer other services as well, such as CRM).

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Lending Club Breaks $1 Million, Expanding

Lending Club, the Facebook exclusive person-to-person lending service has passed the $1 million mark in loans to Facebook users.

The milestone comes just short of 3 months since the the site hit the $100,000 mark, and 3 1/2 months since going live as an original Facebook Platform partner.

Lending Club will also announce today that it is expanding beyond
Facebook and will now offer similar ways to connect borrowers and
lenders through thousands of alumni associations and professional
organizations via LendingClub.com.

The new site includes tools for building diversified loan portfolios
composed of pieces of 20 to 30 individual loans, hosts a forum for
financial experts to share their knowledge with the Lending Club
community, and “Better Rates Together,” a blog community that features
expert advice on P2P lending and personal finance.

Lending Club recently secured $10.26M in Series A financing led by Canaan Partners and Norwest Venture Partners.

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