In my last post, I talked a bit about what the decreasing value of the dollar means for social media start-ups.  Yesterday in Tech Crunch, there was an interesting article on who is “winning” and “losing” as a result of the dollar on the slide.  It is well worth a read, offering an interesting and valid short-term perspective on the impact of the fluctuation of the dollar.

I hope that we’re only seeing a short-term devaluation that will turn around in 2008 with the promise of a change of administration (and hopefully war and economic policies), but if I’m wrong, the number of “losers” (to use Tech Crunch’s term) will increase.   By way of example, most of the 3rd party mobile developers I’ve worked with abroad do business in Dollars but have to pay rent, expenses, etc. in Pounds or Euros, and they’re feeling the pinch.  If the dollar’s downward spiral continues, this could mean a decrease in innovation and/or an increase in cost of goods worldwide.

In addition, anyone (like me) who is based in the US but does business with companies abroad and/or frequently travels abroad is feeling the pinch with increased operating and travel costs.  I could go on (and on), but I’m feeling a little nauseous thinking about it, so I’ll continue to think optimistically in the hopes that things improve (or that I find a way to get paid in Pounds!).

I just got back from a 2 week work + vacation trip to London.  On the night I arrived (Sept 26), I was invited to a London Girl Geek Dinner in London sponsored by Astraware, a company I worked closely with while I was a consultant at Palm.  The Girl Geek Dinners are increasing in popularity and a great way for women who are involved in technology to meet each other.  (Sarah Blow, the founder of London Girl Geek Dinners tells me that they recently had over 100 people attending one of the events!)  This particular event had about 50ish ‘geeks’ and included a few talks (including one from me).

John Phillips and Alison Barclay (VP of Business Development and Marketing respectively) from Astraware asked me to speak to the group about trends in social media/ social networking.  I talked about how I see social networking evolving and where I think its going (regurgitating topics I’ve spoken about before in this blog).  I also highlighted the business opportunities that abound for entrepreneurs and developers in this space (thanks to several new Facebook-related venture funds).

At the end of my talk, there was a Q&A, and (gasp) networking (the Brits hate the term “networking”).  Most of the people I spoke to had Facebook or other social networking accounts, but interestingly many were not convinced of the viability of business opportunities for UK-based Facebook developers.  Instead, most of the women I spoke to felt that the big opportunities in social media/ social networking are in the mobile applications space.

While I continue to believe that there is a huge opportunity for Facebook developers (mobile app or web), I agree with those I spoke to that the opportunities are currently largely US based.  With the British Pound valued at an all time high against the US Dollar, the cost of doing business in Britain has reached an all time high (£1 now equals ~$2.04. Three years ago £1 was about $1.75).  And, this can’t have gone unnoticed by those VCs investing in social media, which are largely based in the US.  I expect that this is a short-term problem.  Currency fluctuations eventually ‘right’ themselves, and by the time the US Dollar is a little stronger against the Pound,  I’m betting that the value of business opportunities for 3rd party developers on Social Media/ Networking platforms will be well proven and opportunities will increase for UK- based developers.

For all you tech-savvy women out there… There’s a new, 2-day technology event coming up at the end of October (22-23) in Mountain View, CA called “She’s Geeky,” which should be good.  Unfortunately, for wireless geeks, it overlaps with the first day of CTIA’s Wireless I.T. and Entertainment 2007 at Moscone Center in San Francisco, but it She’s Geeky sounds like a great couple of days.

It’s an “unconference” with an agenda molded by the attendees.  According to the website,

It is designed to provide women who self-identify as geeky and who are engaged in various technology-focused disciplines with a gathering space in which they can exchange skills and discuss ideas and form community across and within disciplines.

I don’t identify myself as being geeky (after all, there’s a difference between being geeky and well informed), but based on the women I know going, I’m sure that’s not a pre-requisite.  The goal of the event is to get women in technology fields to learn from each other, talk about what’s happening in technology, and network.

If you’re interested in going, register here.  The event is being sponsored by Google, Plaxo, and others.  If your company would like to be a sponsor, email She’s Geeky.

The social media quote of the day goes to the International Herald Tribune, who published a great article on social networking for the retired set:

Technology investors and entrepreneurs, long obsessed with connecting to teenagers and 20-somethings, are starting a host of new social networking sites targeting their parents and grandparents. The sites have names like Eons, Rezoom, Multiply, Maya’s Mom, Boomj and Boomertown.

Think Facebook with wrinkles.

The sites are being built to capture the attention of a generation of Internet users who have more money and leisure time than those several decades younger, and who may be more loyal than teens flitting from one trendy site to the next.

Having watched the adults I know get older, I can see how online social networking can benefit web savvy retirees.  But, after reading the article, I can’t help but think that sites that specifically target older people, while excluding the younger generation are missing the boat.  As tech savvy baby boomers get older, it’s inevitable that over time, there will be fewer users, which jeopordizes advertising revenue. Beyond that, from what my own grandmothers tell me, the hardest things about getting old are watching all of your friends die or lose it.  To mitigate this, as you get older, it’s important to surround yourself with friends and family of all ages.

The other thing that a good social networking site should do for seniors is keep them in touch with what the younger people in their lives are up to (kids, grandkids, etc.).   I don’t know any kids who’d want to show their grandparents their MySpace page, and I don’t know any Grandparents who would seek solice in discussing health problems or dating with their grandkids.  But there’s a happy medium somewhere in between, easily achieved by expanding tiered privacy structures and allowing people to target specific content on their social networking pages to specific demographics of their “friends” and hide other content from other demographics of their “friends.”

The bottom line is that generic senior-focused social networking sites aimed only at seniors that don’t target a specific shared interest (like being a grandparent, dating, etc.) are short sited and won’t endure the test of time.  This leaves mainstream, leading social networking sites like FacebookOmniture (who just acquired Offermatica).

Facebook is the most successful mainstream social networking site in terms of attracting a wide age demographic.  If it is able to continue to grow it’s 3rd party developer network AND increase privacy and personalization features, it will be easy to grow an enthusiastic user base with wrinkles without becoming wrinkled.
opportunities to find ways to acquire older users by creating personalized content delivery networks (capable of delivering different messages to different demographics), while beefing up privacy filtering capabilities which allow users to determine which of their own content they want to share with which demographics of their online “friends”. I don’t think this is too far off.  Webmarketers can already change the look and feel of their sites and appeal to different age and socioeconomic demographics using tools like

Today, Reuters published an interesting article “Social Network Sites Tempt Investors” talking about the liklihood of a flury of social networking IPOs.  The article is well worth a read for all of you social media fans out there.  According to the article, so called “Wall Street observers” believe that United Online Inc.‘s recent registration for an IPO of its Classmates Media Corp. arm (i.e. Classmates.com) will  “test the IPO waters” for other social  networking sites like Facebook and LinkedIn.

While I believe that the remainder of 2007 and early 2008 will bring more social networking IPOs than we’ve seen so far (not many), I don’t
believe that Classmates.com will be an accurate indicator of the success of future social networking IPOs.   Even if Classmates.com’s IPO bombs, Facebook, LinkedIn IPO, and Bebo IPO have a strong liklihood of being successful IPOs.  To have a solid IPO, a social networking company will have to do more than just link people socially.  It will need to be a platform for relevancy, discovery, sharing, and search.

When Google IPOed, it was successful, not just because it enabled search, but it provided a platform that wove together search, information, email, and
more with relevant and targeted advertising.  Facebook will succeed with an IPO not because it is a social networking site but because it is a social networking platform that allows 3rd party developers to plug-in and users to benefit.  In other words, it is, in effect, a social media operating system.  LinkedIn and Bebo will have successful IPOs if they continue to grow their user base, expand their platform capabilities, and quickly develop a useful API for 3rd party developers.  However, to be clear, it will take a lot of effort, great skills, good timing, (and, perhaps, a miracle) for either Bebo or LinkedIn to have a more successful IPO than Facebook.

By engaging 3rd party developers so early, Facebook gained a clear lead over the competition, which will be hard for competitors to surpass.  By creating a social networking operating system, which allows entreprenurial developers to plug in, contribute to, and profit from a wider economy, Facebook has peaked the interests of investors – not only as a company in which to invest but as an economy in which to invest.  As I mentioned in my last post,
VCs are expressing a strong interest in the players within the facebook 3rd party developer economy, and is easy to see why.  Facebook is creating a social media operating system that has the potential to revolutionize the web by changing the way people find and interact with content and applications.

Yesterday, Robert Scoble posted an interesting video trilogy on his blog in which he predicts that if they work together, Facebook,  Mahalo, and Techmeme will trounce Google in 4 years by providing superior SEO-free, reduced-noise, social search that does more than Google.  While I’d be seriously surprised if Google didn’t have something up its sleeve to compete with the vision Scoble outlines and I don’t think we’ll see the end of SEO, I do think Scoble makes some good points in his vlogs.  His musings on the topic of social networking, social media, and search highlight a growing interest in social networking as a space and its potential to change the way we surf the net.

There is nothing more attractive to investors than strong possibilities and good ideas, and it’s clear in the quickly growing and evolving space of
social networking, there is a high concentration of both.  Which social networking companies will choose to ride the wave with an IPO remains to be seen, but I’m betting with Reuters in thinking the numbers will increase very soon.

Note: I’m not an investment advisor, and my blog posts do not constitute financial advice.

Tonight is the first chance I’ve had to write about the Facebook Developer/ Influencer conference that I went to last week.  The event was an invite-only afternoon of panel discussions hosted by Seth Goldstein of SocialMedia.  Attendees included about 50 developers, entrepreneurs, investors, and a couple of bloggers, and the discussions ranged from “When, if ever, will Facebook start ‘taking back’ core chunks of its platform?” to “What metrics really matter for gauging success on the Facebook platform?”

The conference began at Noon with lunch and networking followed by the first panel discussion at 12:30: “What is Engagement and why is it so important?” In the first session, Dave McClure from 500 Hats and Seth Goldstein  set the stage for the rest of the event.  Dave emphasized the importance of establishing more meaningful metrics for measuring the success of Facebook apps – beyond counting user installs.  His point was well taken… Clearly we need a way of measuring user engagement in apps, especially given that people are often compelled to download apps that their friends send to them and never use them again.  Just because an app has great word of mouth success initially, doesn’t mean that it will latch on for the long haul.  Similarly, time spent on the app isn’t the right measure for success either.  As Seth asked (and I’m paraphrasing), ‘What’s a more important to Facebook’s success- a graffiti app that allows Facebook users to draw for 3 hours, or an application that encourages shorter but more frequent interactions?’

Rumor has it that Facebook will be unearthing at least a few 3rd party app success metrics internally in the next couple of month, but it remains to be seen whether they’ll share this information with the world.  So far, Facebook hasn’t released any helpful metrics for measuring user engagement on apps.  Perhaps this is because they don’t have them, or perhaps they’re holding their cards close to the vest in the hopes of determining the best way to move forward (i.e. by taking back parts of the API they already opened and/or extending new Facebook features that leverage lessons learned by observing user engagement stats on leading apps).  Either way, in order for the 3rd party developer community to flourish on Facebook,  developers will need a better understanding of what makes a winning app and which apps are the most successful based on those metrics.

The next session of the day was about “Creating, Spreading and Scaling Multi Million User Facebook Apps.” The all-developer panel included:

• R. Tyler Ballance from Slide,
  
• Blake Commagere of Vampires / Zombies / Causes,
  
• Dave Genztel from SocialMedia,
  
• Jia Shen from RockYou,
  
• Joe Winterhalter and his colleague, Eric (didn’t catch his last name), of Quizzes and
  
• James Hong from Hot or Not.
  

Slide had over 10 million Facebook users at the time of the conference, and Tyler initiated the conversation by talking about what he thinks users want to do with their friends.  In cases where users have a large number of Facebook ‘friends’ (Tyler had a whopping 630 at the time), Tyler felt it was important to be able to quickly engage with lots of people, while having the option to more intimately engage with closer ‘friends’.   He attributed the success of applications like Happy Hour, which allows users to send virtual drinks to their ‘friends’, to this very phenomenon.  Dave Gentzel from SocialMedia, who developed apps like Happy Hour and Food Fight, agreed that user engagement is key.  In addition, he felt that speed in development was a key component of success.  Anything that’s taken him longer than 2 days to develop hasn’t paid off.

Tyler also brought up the issue of Facebook’s need to communicate more proactively and effectively with Developers.  He and others expressed concerns that Facebook had made some code changes without talking to developers in recent weeks, which resulted in killing thousands of profiles within Slide’s database alone.  Generally, the developer panelists felt that Facebook’s attempts to help a large number of small developers may unintentionally hurt larger developers.  As I’ve mentioned in previous blogs, I’m a huge proponent of investing in developer relations.  When you allow ISVs/ developers (at least large ones) to plug into your API, you should be treat them as strategic alliance partners and give them insight into what you’re planning in exchange for quality assurances.  If you don’t, you run the risk of alienating thousands of your users if/when something goes wrong with the apps that plug into your platform.

Blake Commagere, who helped develop popular facebook apps like Causes went on to talk more about developing Facebook apps.  It took 4 engineers to develop the Causes app (which was written in Ruby on Rails).  Blake pointed out that to develop a successful Facebook app, you don’t need 100 app servers, you just need to make sure the app and database are solid.  By way of example, Causes runs using 11 app servers, which serve 2.5 million users, and it is working well.  Joe and Eric who developed Quizzes, only use 4 servers for their app.  They emphasize the importance of focusing on app quality and investing time in apps that will grow spread quickly virally.

All of the developers mentioned that that Facebook platform is a little sluggish at times.  James Hong from Hot or Not said that to combat delays, his team opted for using Ajax.  The challenge here is that most ad networks don’t currently consider user action as the way by which advertisers pay for ads. Instead, it’s still page changes.  In principle, the ad networks James knows say they’re happy to move towards a user action model, but in the meantime, there are monetary disadvantages to using Ajax on Facebook.  But, most of the panelists seemed okay with the tradeoffs in the short-term because they increase user engagement long-term.  At the time, Hot or Not is apparently making $1000/day off of AdSense, and rumor has it (according to a member of the audience) that Graffiti is making $100,000 month!

Ads were a hot topic on all panels – including the developer panel – with the need for relevant content delivery emerging as a key theme.  Most of the developers on the panel said they’d been approached to do demographic based behavioral targeting of users.  What I found interesting is that the only data anyone would cop to hearing advertisers request is: sex and geography.  If this panel was any indication, for all of those personalization fans out there (of which I’m one), it looks like we’re a ways off from seeing any meaningful movement in this space.

The 2pm panel was on “Facebook Advertising Models.”  Panelists were:

• Aryeh Goldsmith (Acebucks)
• Sourabh Niyogi (Appsaholic)
• Scott Rafer (Lookery)
• Narendra Rocherolle (fbExchange)
• Matt Sanchez (VideoEgg)
• Sundeep Ahuja (Appfuel)

Perhaps the most interesting part of this panel was how so many people are attempting to create ad networks on Facebook.   Matt Sanchez from VideoEgg says he has 20 sales people selling in 4 countries.  Aryeh Goldsmith is creating a new Facebook economy and customer loyalty company by introducing a fake currency to Facebook called Acebucks.  At best, the currency takes off and does just what Linden Dollars are doing for SecondLife.  Appsaholic is hoping to become a fully independent monitor of Facebook Stats (think the AC Nielsen of Facebook).  While, Slide wants to be the “single largest content delivery platform to unique users” across all social media OSes.

How useful are Facebook users to developers and advertisers?  The final session addressed “How to Value Facebook Apps.”  The panelists were:

• Eve Phillips, (Greylock)
• Keith Rabois, (Slide)
• Naval Ravikant, (Hitforge)
• Angela Strange, (Bay Partners’ AppFactory)
• Susan Wu, (Charles River Ventures)

One VC in the audience reckoned that each Facebook user is worth about $500 each.  While, Angela Strange from Bay Partners, whose AppFactory is actively seeking investments in start-ups that make Facebook applications, used a guideline of 25-30 cents per user per app.  In watching this last panel and listening to the excitement relayed through the questions from the crowd and VC responses, it’s clear that there are a lot of people pinning their hopes on Facebook (and other Social Media Platforms) continuing to open their APIs and thus encouraging the growth of a new developer economy that pushes apps for so-called social media operating systems.  There is a frenzy of enthusiasm about the potential, but it remains to be seen whether potential becomes reality.  The VCs aren’t taking any chances.  Each of the panelists said that when they’re looking to invest in a company that develops Facebook apps, they need to see the potential of those applications beyond the confines of Facebook.

For those of you interested in future developments in the Facebook space, Dave McClure mentioned that he’s planning a Facebook conference of his own on October 7-9. Stay tuned to his blog for details.

Today in Boomtown, Kara Swisher talks about a management shuffle at Facebook.  Among the apparent changes is the move of Owen Van Natta from COO to chief revenue officer and vice president of operations.  Swisher elaborates saying:

Van Natta now shares power–how uneasily it remains to be seen–with newly installed Vice President of Marketing and Operations Chamath Palihapitiya, a former AOL exec; longtime exec Matt Cohler, vice president of strategy and business operations (and a LinkedIn co-founder); newly installed CFO Gideon Yu (a former Yahoo and YouTube exec who replaced the quickly departing Mike Sheridan); co-founder and Vice President of Product Engineering Dustin Moskovitz; and CTO Adam D’Angelo…
Now, areas like human resources, customer service, legal, systems (which Van Natta heads) and finance all have different leads, as the company moves to professionalize its management ranks.

Included in today’s Boomtown blog entry is a great video chronicling Kara’s trip to Facebook’s HQ in Palo Alto California.

I’m curious about where, if anywhere, Developer Relations features in Facebook’s re-shuffle.  Marketing and Operations or maybe Strategy and Business Operations?  Facebook seems to have invested a great deal of resources in opening up its API to 3rd party developers.  I believe that establishing a more formal developer relations and/or application incubator program (think a more fun and funky take on Salesforce.com’s AppExchange and similar programs) will keep Facebook user-friendly, further the 3rd party application economy (encouraging innovation and profitability), and allow Facebook’s investors to reap the most from their investment.

In the meantime, today, I’m heading to the “Appsaholic Facebook Developer Developer Conference” in San Francisco.  50ish developers, entrepreneurs and investors that are at the forefront of the Facebook applications conversation are getting together in a town-hall-esque setting to talk about the future of Facebook’s development platform.  It should be very interesting!

The Financial Times reports today that Central Office of Information (COI), the UK Government’s “center of excellence for marketing and communications,” has put a moratorium on advertising on social media sites like Facebook.   COI organizes marketing campaigns to promote issues of public importance (education, health, welfare, etc.) for various UK Government departments.  The organization announced that it is reviewing how it handles advertising on social networking sites fearing that its ads could appear on innapropriate user generated sites.  Alan Bishop, chief executive of the COI, explained the decision to the FT saying:

“We always have to keep a very close eye on the context. People are still getting to grips with this. We don’t want to exclude the use of any of the new social media but we do have to have a very clear idea of what the context is going to be like.”

COI’s decision comes one week after New Media Age reported that Vodafone, The AA, First Direct, and others were pulling their ads on Facebook because they appeared on the Facebook page of the British National Party, a highly controversial political organization.  Last week, Vodafone released a statement saying:

“We advertise our products and services across a wide range of on and offline publications… In the case of online, bundles of space are purchased across a number of sites including the social networking sites. As a result we were not aware that a Vodafone ad would appear next to a British National Party group on Facebook.

Our Public Policy Principles state that we do not make political donations or support particular party political interests and therefore to avoid misunderstandings we immediately withdrew our adverting as soon as this was brought to our attention.

We are working with our media buyer OMD to ensure that more robust controls are in place before we agree to any potential re-investment,” the statement added.”

The concerns raised by organizations like COI and Vodafone are understandable and highlight the need advertisers to have greater control over when and where their paid ads appear.  As far as I’m aware, thus far, website optimization solutions and content delivery platforms are only helping advertisers and marketers understand visitor behavior, segment visitors into groups, and deliver targeted messages that are relevant to specific segments. I’m not aware of any optimization solutions or content delivery platforms that helping advertisers optimize ads and website content so that they’re not only relevant to various segments of website visitors but that they’re also blocked from appearing on pages that promote or discuss controversial topics.  I’m interested to see who will be the first to make this happen.

Marketers can already test and optimize ads and web content so that relevant messages are delivered to different audiences i.e. (Audience segment A “High value customers” sees Ad #1, Audience segment B “First time visitor” sees Ad #2, etc.).  Similarly, search technology makes it easy to identify controversial key words on web pages (i.e. “BNP,” “Political Party,” etc.). I can’t imagine that it would be too difficult to combine these two technologies to create an ad optimization and delivery network that allows advertisers to deliver blank ads on social media pages that have potentially dubious content, or ‘sublease’ that ad space on controversial social media pages to less discerning advertisers.

Instead of simply segmenting users, the ad publishing optimization solution I’d like to see would also segment content.  The ad delivery platform would scan social media pages at regular intervals for controversial words.  If dubious words or phrases that go against a given advertiser’s rules of engagement appear, the ad slot could display nothing at all or an ad from another, less discriminating advertiser, who subleases the ad space in cases where the primary advertisers chooses to bow out.  Having a solution like this would allow social media platforms like Facebook to offer a two-tiered advertising platform that offers the ultimate control to Tier 1 advertisers who are willing to pay for it and exposure to Tier 2 advertisers with a smaller budget.

Could this work?  Post a comment with your opinion.

The Financial Times reports today that Central Office of Information (COI), the UK Government’s “center of excellence for marketing and communications,” has put a moratorium on advertising on social media sites like Facebook.   COI organizes marketing campaigns to promote issues of public importance (education, health, welfare, etc.) for various UK Government departments.  The organization announced that it is reviewing how it handles advertising on social networking sites fearing that its ads could appear on inappropriate user generated sites.  Alan Bishop, chief executive of the COI, explained the decision to the FT saying:

“We always have to keep a very close eye on the context. People are still getting to grips with this. We don’t want to exclude the use of any of the new social media but we do have to have a very clear idea of what the context is going to be like.”

COI’s decision comes one week after New Media Age reported that Vodafone, The AA, First Direct, and others were pulling their ads on Facebook because they appeared on the Facebook page of the British National Party, a highly controversial political organization.  Last week, Vodafone released a statement saying:

“We advertise our products and services across a wide range of on and offline publications… In the case of online, bundles of space are purchased across a number of sites including the social networking sites. As a result we were not aware that a Vodafone ad would appear next to a British National Party group on Facebook.

Our Public Policy Principles state that we do not make political donations or support particular party political interests and therefore to avoid misunderstandings we immediately withdrew our adverting as soon as this was brought to our attention.

We are working with our media buyer OMD to ensure that more robust controls are in place before we agree to any potential re-investment,” the statement added.”

The concerns raised by organizations like COI and Vodafone are understandable and highlight the need advertisers to have greater control over when and where their paid ads appear.  As far as I’m aware, thus far, website optimization solutions and content delivery platforms are only helping advertisers and marketers understand visitor behavior, segment visitors into groups, and deliver targeted messages that are relevant to specific segments. I’m not aware of any optimization solutions or content delivery platforms that helping advertisers optimize ads and website content so that they’re not only relevant to various segments of website visitors but that they’re also blocked from appearing on pages that promote or discuss controversial topics.  I’m interested to see who will be the first to make this happen.

Marketers can already test and optimize ads and web content so that relevant messages are delivered to different audiences i.e. (Audience segment A “High value customers” sees Ad #1, Audience segment B “First time visitor” sees Ad #2, etc.).  Similarly, search technology makes it easy to identify controversial key words on web pages (i.e. “BNP,” “Political Party,” etc.). I can’t imagine that it would be too difficult to combine these two technologies to create an ad optimization and delivery network that allows advertisers to deliver blank ads on social media pages that have potentially dubious content, or ‘sublease’ that ad space on controversial social media pages to less discerning advertisers.

Instead of simply segmenting users, the ad publishing optimization solution I’d like to see would also segment content.  The ad delivery platform would scan social media pages at regular intervals for controversial words.  If dubious words or phrases that go against a given advertiser’s rules of engagement appear, the ad slot could display nothing at all or an ad from another, less discriminating advertiser, who subleases the ad space in cases where the primary advertisers chooses to bow out.  Having a solution like this would allow social media platforms like Facebook to offer a two-tiered advertising platform that offers the ultimate control to Tier 1 advertisers who are willing to pay for it and exposure to Tier 2 advertisers with a smaller budget.

Could this work?  Post a comment with your opinion, and if you don’t have a Vox account, email me with your comment, and I’ll post it manually.