Facebook Widgets Take on New Life
Lee Lorenzen is betting his business that Facebook widgets and applications will continue to spread. As CEO of Altura Ventures, which he says is "the first Facebook-only VC," he keeps tabs on the top widget makers on Adonomics.com, one of his portfolio companies, and tries to figure out where social networkers will flock next.
Meanwhile, application developers are trying to figure out what will make advertisers flock to them. The most well-known app companies--Slide, RockYou, iLike, Social Gaming Network--are putting together high-powered ad-sales teams and moving closer to Madison Avenue brands.
What's made these companies grow so fast and get so much attention is the fact that they're cornering specific markets, Lorenzen said. Slide's made a name for itself by focusing on self-expression and acquiring other applications that fit the bill. For a company that started out making photo slide-shows for social networking profiles, getting nearly 100 million Facebook users to install applications is no small feat--and neither is securing $50 million of venture capital funding. Slide says 60 percent of Facebook users have installed at least one of its widgets.
"The fact that Slide got such a premium valuation is because they represent a whole suite of applications," Lorenzen said. "That size of an audience is worth a significant amount."
Social Gaming Network, which is part of Webs.com, the Silver Spring company formerly known as Freewebs, is also gathering a strong base of social games. Shervin Pishevar, SGN's CEO, said the company has 20 games and applications and 50 million have been installed by social network users. In addition, 70 independent games can be found on SGN's network.
Having so many options, and being able to track what games people are playing, helps SGN suggest other games for people. "We have an Amazon-like intelligence...We know what kind of games they like and who they like to play against so we can recommend other games they'll like," Pishevar said. Last month SGN received $15 million in funding from Founders Fund, Greylock Partners and Novak Biddle Venture Partners.
"They have essentially rolled up the casual gaming space," Lorenzen said. "That shows the power of consolidating a suite of applications." Zynga, another popular application maker, is also trying to coax developers to join their team, he said.
David Sze of Greylock Partners, an investor of SGN, as well as Facebook and LinkedIn, also pointed to the various categories developers are catering to, including games, photo-sharing, travel, messaging, virtual gifts and recommendations.
"We're seeing some sense of a group of habits and activities, and we're seeing some companies establish audiences inside those," he said. But he was quick to add: "There's a relatively small set of top-five that have gotten scale around user attention."
Lorenzen sees "dating" as the next category to attract a lot of developer attention. There are clearly lots of widgets out there already that let you find potential matches among your friends' friends, or rate friends as hot, or not.
"If you were able to roll up 10 or 15 of the popular dating applications, you could build a company that has a reach that is bigger than Match.com or eHarmony," he said. And Facebook's platform could be even more effective in the dating realm because users are linked to their "true identities," without the sense of anonymity that pervades online dating sites.
But why are these applications, especially the more whimsical ones, taking off? Jeremy Liew, managing director of Lightspeed Ventures, which invested in RockYou and Flixster, sees these applications as a form of casual communication.
"Sometimes I have friends and I want them to know I'm thinking about them, but I can't necessarily have a conversation with them. So I'll play a game of Scrabble with them or send them a video on SuperWall, but I don't have to think of something to say," he said.
For all their potential usefulness, this explosion of widgets is annoying some users. Friends of mine have even de-friended people for sending them too many invitations for applications. I find a handful fun and actually helpful. But being inundated by too many of them can get rather annoying, even for Facebook fiends.
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