The Business of Facebook Apps
Reid Hoffman, Founder of LinkedIn


Social Nets and Platforms
* Friendster kicked it off in 2003, conversation around it was very feature oriented
* Now we have FB, MySpace, Ning

Social Nets v. Professional Networks
* Difference in context

One graph to rule them all?


Social nets started as a feature

MySpace ecosystem grew out of oversight: didn’t turn off javascript includes

Ning came along with a set of tinkertoys to make your own flavor of social net

FB is the first platform based on a real, broad social graph

Social net takes patterns of social interaction from real life to the web in ways that enable or enrich the experience … can enable applications which can really change people’s lives.

FB Newsfeed == many-to-many messaging

Key differentiator: FB allows you to acquire customers about whom you can know interesting things and message them (and through them, their friends )

FB and LI embody different use cases.
* Search by name on either, you get something that suits the basic context of the app
* Search for “open source expert” on either; FB renders not much, LI is more focused on finding someone of that expertise
* Finding companies for partnerships: not really an FB thing.

The features and general behavior of users in FB vs. LI tends to highlight the different contexts.

SEO: what do you want people to find when they google you?

Trivia: Reid rereads Lord of the Rings every few years.

Q’s: is there only one social graph? is there one which contains all different sorts of relationships?

Reid: there will be multiple social graphs based on “the semantics of the connection”

Geek/Blogger dream: one graph and tag everyone in it.

(is it important to see all graphs integrate?)

A sufficiently large graph can provide the foundation of a successful platform; one big graph not required


Current apps: communications, games, music/pics/movies

Future likely holds iterations of today’s successes

Interested in seeing where friending apps (Top Friends) and honesty apps (Questions, etc) go.

Enabling platform and luring heaps of developers results in getting to that 0.5% of interesting/useful ideas.

With no limits on how many apps get installed and nothing urging users to uninstall apps, you have to work to rise above the noise. Number of installs becomes uninteresting; number of daily users (engagement) is interesting.

FB apps that don’t work so far: biz, politics, money

What’s the second act? How do you know it when you see it? [me: you instrument, iterate, play, and learn]

Economics of FB apps parallels the internet gold rush – cpi installs and advertising inventories/ad network aggregation; these lead to interruptive experiences (crappy ads, etc) and unsupportable models like incented installation or “installations financed by future hope”

Low cost apps with sufficient appeal will survive, as will apps which fit the FB use case which will further define FB’s use case.

Still up in the air: any new use case (anything you try to sell others will give away to acquire customers), major apps

Stickiness and engagement will always matter.

FB is redefining communication patterns based around sharing. Their photo sharing is particular genius with their version of tagging.

What’s the future of discovery/search on the web? Your social network will certainly be a piece of this.

Ecosystems have microcosms; it’s part of the diversity that akes it interesting and sustainable.


FB will be the entry-point for college-age interesting entrepreneurs

Interesting ties between existing sites and FB app (iLike, Flixter)

Economics will be an issue: keep it on the cheap

Constant newness required for entertainment apps: that’s the current model for engagement


Q: Why isn’t LI providing a FB app to [help us merge the two graphs]? (noted that others, CraigsList, et al also don’t)
A: LI will likely provide some FB apps. Biz apps have almost no traction. Bumperstickers, an entertainment app, is one they wrote that has fair traction. Just because you build it doesn’t mean people will jump in (viz profusion of search bars yet most still search from Google or Yahoo). Economics of opportunity development haven’t yet made it possible.

Q: You mentioned a few things that hadn’t worked on FB platform thus far. Do you believe that ecommerce will someday come, or do you believe that social networks will exclude commercial interests?
A:  There will be social commerce on the web, but it might be a year or two off. It’ll likely come through sharing (media, etc). Monthly, the most interesting apps on FB are based on communication; the trend will likely continue. There’s always the chance of something new.

Q: Curious with your position as angel and developer in the space, [how would you recommend someone try to build a social media business]? (references to FB-only, rich experience elsewhere, both … ?)
A: Right now, the FB+rich website model seems most interesting. There will be angel things funded on FB, but VCs are looking towards returns which FB apps haven’t yet proven out.

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08 October 2007


facebook social networks