Inside Facebook

Facebook just tonight has modified the way Beacon works to make it now fully opt-in. Until now, Beacon-generated items appeared in your News Feed by default - now, nothing appears in your Mini Feed or News Feed unless you explicitly give Beacon the “OK.”

Here are the specific changes Facebook is making to Beacon:

• Stories about actions users take on external websites will continue to be presented to users at the top of their News Feed the next time they return to Facebook. These stories will now always be expanded on their home page so they can see and read them clearly.
• Users must click on “OK” in a new initial notification on their Facebook home page before the first Beacon story is published to their friends from each participating site. We recognize that users need to clearly understand Beacon before they first have a story published, and we will continue to refine this approach to give users choice.
• If a user does nothing with the initial notification on Facebook, it will hide after some duration without a story being published. When a user takes a future action on a Beacon site, it will reappear and display all the potential stories along with the opportunity to click “OK” to publish or click “remove” to not publish.
• Users will have clear options in ongoing notifications to either delete or publish. No stories will be published if users navigate away from their home page. If they delay in making this decision, the notification will hide and they can make a decision at a later time.
• Clicking the “Help” link next to the story will take users to a full tutorial that explains exactly how Beacon works, with screenshots showing each step in the process.

These changes will keep users from accidentally publishing News Feed stories generated by their actions on other websites.

Just as with the launch of the News Feed, Facebook is responding quickly by giving users more privacy controls while pressing forward with their intention to build a powerful system that distributes news about you to your friends.  Will this change assuage the critics this time around? As always, the devil is in the details.

As we initially wrote in September, Stanford University students had a unique opportunity to take a cutting-edge class this fall: “Create Engaging Web Applications Using Metrics and Learning on Facebook.” The class, taught by Dr. BJ Fogg of Stanford’s Persuasive Technology Lab with the assistance of Dave McClure, quickly swelled in ranks as students jumped at the chance to learn how to build and market Facebook applications.

While the quarter is now wrapping up, two teams in the class have achieved unexpected levels of success: both KissMe (by Joel Darnauer, Eduardo Abeliuk, and Chris Mocko) and Send Hotness (by Joachim De Lombaert, Ed Baker, and Alex Onsager) have been installed by over 1 million Facebook users in under 30 days, each with over 100,000 daily active users (in fact, Send Hotness just reached 2 million installations and currently has over 300,000 daily active users).

We spoke with KissMe team member & Stanford undergrad Chris Mocko and Send Hotness team member & Stanford GSB student Ed Baker about their experiences in CS 377W and the success of their apps.

IF: Why did you decide to take this class? What was your background with social web apps?

CM: Throughout the summer, I never really had too much interest in Facebook applications and only supported the applications because of my addiction to Scrabulous. I did not comprehend the possibilities made available by the Facebook API, nor did I have any experience in other social web apps and widgets. I did know, however, that when I received an e-mail from my department mailing list announcing the class, I had to do anything, even drop a course required for my major, to be a part of the class.

I did not come in with much experience in web development, but I had a very strong interest in learning everything and anything about the subject, and what better way to learn than by pairing up with the smartest students in the country! I have been fortunate to be paired with two excellent partners, Joel Darnauer and Eduardo Abeliuk, who have been essential in setting up the servers and the database and implementing the code.

EB: I decided to take this class partially just because it sounded cool, but also because I was impressed with the professors and with the other students in the class. I helped virally tune a Facebook app called Compare People over the summer, and as a result they grew from a couple thousand users to millions of users.

I have been practicing viral tuning for several years now and have been amazed by the viral metrics of Facebook apps versus stand-alone sites. Not only is it easier to get a higher viral factor, but the periods are much shorter, which result in an even higher “effective” viral factor. Alex and Joachim had built a really cool Graffiti app before taking this class, so I knew they’d be good partners to team up with.

IF: What metrics of your success are you the most proud of, and why? What did you do (tactics, strategies, clever tricks) to get there?

CM: We are most proud of reaching one million users. We remember during the first weekend after our application’s launch being thrilled when we reached 500 users. To think that we could reach one million installs in a month, with no prior experience and no investment to “buy” installs, boggles our minds. A metric that we are currently tracking and very intrigued with is our daily active users because this number stagnated for a couple of days, but is currently on the rise again! Getting users is one thing, which we owe to the application’s inherent virality, but keeping these users engaged is a much more challenging task.

We attribute the majority of our success to KissMe’s simplicity. The name KissMe is simple but memorable, descriptive, and provocative and the application itself is basic, but intuitive to use. Too many applications out there have lengthy instructions that bore and confuse the user, and too many actions that force the user to think and choose. Another great feature of KissMe is that by sending a kiss, the user is inviting a friend to join the application without making the user feel like he is spamming a friend with another “invite” message.

EB: I think I’m most proud that we were able to get 1 million installs in less than three weeks. We didn’t use any specific “clever tricks”, but it basically all comes down to math formulas. It’s a mix of art and science — we are very scientific about the way we track our viral growth metrics, and we try to be more “artistic” about the way we actually affect those metrics. The face that Joachim and Alex have been able to iterate quickly on new ideas has also been key.

Joachim and Alex: We’re thrilled by the rate at which our application has grown. Joachim and I treated this very differently than Graffiti - rather than building every feature we could think of, an area we focused on instead was acquiring as many users as possible. We hit a million users this past weekend, and it looks like we’re on track to hit 2 million by this coming weekend.

IF: What do you think were the most important points you learned in class?

EB: BJ and Dave have been great professors. I think the most important thing they have emphasized in the class is how you should keep your app simple in order to make it as easy as possible to get users engaged. We have also really enjoyed all of the guest appearances from experienced entrepreneurs in the Valley who have given our class some good tips.

CM: The lectures have been very different than what we expected. Since this course is listed in the computer science department, we assumed each lecture would have a technical focus. In reality, the lectures have instead been devoted to teaching the class the fundamentals of building engaging applications so that we can apply our new-found knowledge to a plethora of other disciplines. BJ has not given us the secret formula to creating a great Facebook application, but rather promoted a series of procedures that lead to user engagement in any field. One of the useful strategies BJ has discussed is getting qualitative feedback. While delving into the numbers that our database and Google Analytics provides is quite useful, BJ promotes interacting with users to discover problems, hear suggestions, and define a focus. We often assume that we share the same opinions as all Facebook users, but of course the surveys and pair-wise testing we have done prove otherwise.

Dave McClure has been an unbelievable mentor as a man who has been through nearly everything and knows almost everyone. His AARRR model (Acquisition, Activation, Retention, Referral, and Revenue—see 500 Hats for more!) has greatly influenced how we measure our success and develop our application. Just as important, though, every lecture and lab session he brings with him his portfolio of entrepreneurial success that has provided great guidance for our group especially as we decide on the future of KissMe.

IF: What were the key mistakes you made early on, and what did you do differently as a result?

EB: When we were first brainstorming app ideas, we came up with some ideas that we thought would be cool, but they were much more complex. These apps would have taken longer to develop, and because of their complexity, it probably also would have been more difficult to get users engaged.

CM: Our biggest mistake was not thinking down the road. We had no idea that our application could and would grow so quickly, and we did not plan accordingly. The scaling issues we experienced were far greater than we expected, and for about a week we were running into server problems and optimization issues with our SQL code which slowed down the site, and on occasion shut it down completely. Now that we have migrated our code to Amazon’s EC2 servers, we think most of our scaling issues will be easier to fix down the road.

IF: What are your goals with the app after the class ends?

CM: Now that we have found some initial success with our application, we are definitely interested in developing more social network applications in the future in addition to improving KissMe. We are not sure whether we are going to turn our unofficial partnership into a business or try to sell our application to the highest bidder, but this is something that is definitely on our minds right now as the quarter wraps up.

EB: We don’t want to stop at one app. We have ideas for several more apps that we hope to implement in the next few weeks. Please stay tuned!

IF: Have you spoken with any potential investors?

CM: We have had a couple of meetings with investors and some unofficial discussions with VCs, but we have not formulized anything yet. At first, we were most interested in creating a viral app and establishing a large user base, knowing that more parties would become interested as the KissMe brand became more familiar. Now that we have exceeded expectations, it is time to turn from a purely technical focus to a more business-centered approach. Thankfully, some of our teachers and classmates have been through similar experiences already, and should be able to provide us with quality, trustworthy advice.

EB: Fortunately our revenues already far exceed our costs, so we don’t think we need to raise any money at this point in time.

—

Finally, I asked BJ Fogg to share his thoughts and reflections on the first edition of this pioneering class.

BJ: When planning the course, Dave and I wondered if any team would get more than 100K installs during the quarter (students would have only six weeks to do so). We thought 100K would be amazing. Now two teams have over 1M installs in about four weeks. And it seems that half a dozen teams may break 100K installs soon.

Creating virable apps for Facebook is definitely “learnable.” Our class doesn’t just have one hit app. We have these two big apps and more successes ramping up. So I believe people can learn to create viral apps; it’s not pure luck.

The key to success hasn’t been my expertise or teaching style. Instead, the successes come from giving motivated students excellent resources. This includes the many people who have helped with the class this quarter. We have lots of folks to thank — that’s for sure.

This week there has been a lot of hoopla in the press regarding the privacy implications of Facebook’s new Beacon program.

Beacon is a way for businesses to let their customers “share the actions they take on your website with their Facebook friends.” In other words, it’s a new way for Facebook users to log and broadcast their outside-of-Facebook online activity inside Facebook.

The chief privacy concern raised by MoveOn is that Beacon is opt-out, not opt-in. (Dave McClure walks through the user experience for those who haven’t seen it themselves.)

However, as many will remember from the days of yore (September 2006), similar privacy concerns were raised when Facebook turned on the News Feed itself for the first time. There was even a group called Students Against the Facebook News Feed that grew to 750,000 members (about 100 times the number currently in the group petitioning against Beacon).

Nevertheless, a funny thing happened on the way to the protest: everyone realized how valuable the News Feed was and stopped complaining. And the same thing is going to happen this time around for the same reason.

The bottom line is most people want to be in their friends’ attention stream. Whether that is offline or on Facebook or off Facebook, people want their real friends to know what is going on in their lives. Because most people have built their Facebook friend network to accurately reflect their “real life” friend network, most people will not have a problem sharing some new types of activities (that happen to occur off Facebook.com) with their friends. Instead, they’ll probably like it a lot, and find it a valuable addition to both their News Feed and their own Mini Feeds.

Personally, I’m glad MoveOn is making a stink about Beacon; activists play an important role in any social system - curtailing abuse. However, I think they will find that most Facebook users don’t share their level of concern.

Google (!) is hosting the Bay Area Facebook Developers meetup tonight at 6:45pm in Mountain View…

7pm: Open Social API

• Speaker: Patrick Chanezon, Google Developer Advocate
• Moderated by Dave McClure, 500 Hats.

8pm: Demos by Facebook Developers

• 1. iThink by Raymond Rouf
• 2. OpenSocket by Dan Lester (a proof of concept that embeds OpenSocial gadgets inside Facebook)
• 3. PuzzleBee by Markus Weichselbaum
• 4. Kiwee by Kathy Golden and Jason Jhonson

Last week, Dank Apps announced $250,000 funding from Bay Partners as part of the AppFactory program. Dank Apps is the developer of The Lotto, which has gained popularity by offering daily cash prizes to Facebook users. I spoke with Dank co-founder (and Graphing Social viral strategy co-panelist) Jason Beckerman about the funding and his company’s unusual structure.

IF: Why did you decide to take money from Bay Partners, as opposed to angel investors or a traditional VC round?

JB: Actually, we wanted to pitch Teach The People, since that was the idea and business that submerged us into the Silicon Valley scene. (We presented at Techcrunch40 and had been in San Fran trying to raise money.)

We walked in, presented Lotto for the first time ever, and Bay was very interested. Seeing the companies Bay has been involved with in the past, it was hard to not want to work with them. The process was seamless, and Angela and Salil from Bay have been AWESOME and supportive.

IF: Will someone from Bay Partners be joining your board? If so, who?

JB: As of now, no.

IF: Did you apply for a fbFund grant?

JB: Nope we never did. Mainly because we didn’t think this was ever going to happen. We were shocked and super excited for the opportunity!

IF: It sounds like Dank is not a traditional startup. How are you structured?

JB: Our company uses a new organizational model. We always concentrate on the how will we make money first, worry about attracting users second. Therefore, we actually outsource everything to various parties. From business software, to coding, to design, to accounting, to legal, we believe they can do all of that better than we can. We manage the projects and their success but the design and coding is done by others. Since we have a great relationship with them, we actually keep their identities hidden on the development side. As for design, Carrot Creative does most of our design work .

Other than that, we have a team of about 8 people, but without standard roles. As we grow and take on additional rounds, we will not need to hire anyone, we have a great team in place with a very diverse skill set. One of our founders works on the Colbert Report while another works for one of the largest financial software firms in the world…another is obtaining a PhD in art history at Emory. We really have a diverse group with very differing view points on the industry.

IF: How much revenue is Lotto generating on a daily basis?

JB: We are working to streamline our revenue generation now that we have the money to do so (up until now we really spent very little to get to market. We are really, at this point, giving away most of our revenue to our users. We call this Robin Hood Marketing. As we grow, our users will make out very well. We also have a lot of new ways we plan on making money in the future, but they are under wraps for now

IF: What are your future plans?

JB: After we perfect the lotto in the next few weeks, we have 10 new applications planned. The first is Be Santa which will launch the end of next week. We truly believe it is a next generation Facebook application. More info to come on this next week!

TechCrunch has the story tonight of Facebook’s $85 million offer for Zhanzuo.com, the largest college-focused social networking site in China, with over 7 million users. Zhanzuo’s CEO Jack Zhang and Mark Zuckerberg have been in discussions, but nothing official has been announced yet.

About Zhanzuo, according to its site:

Like the popular SNS website in the US, such as Facebook, Zhanzuo has captured the dynamic of active young Internet user through connecting them with its interactive communication platform. Meanwhile, unlike those US based SNS sites, Zhanzuo goes deeper into the Chinese youth’s life, before, during and after their time in school. With many unique interactive features and applications that fit into the tradition of college life in China, zhanzuo appears to the college-bonded Internet users as essential, fun and dynamic ways to get in touch with friends.

Zhanzuo’s Alexa graph looks a little confusing. Anyone know why?

Another wave of Developer Garages are coming this week, as well as a workshop on the business of apps in Palo Alto:

Facebook Developer Garage Dallas - Register here

Tuesday Nov 13, hosted by Blake Burris at the SMU Lee Center

Speakers include Dave Morin (Facebook Platform), Lee Lorenzen (Altura Ventures), David Young (Joyent), Eric Yieh (RockYou)

Business Remix: Amplifying the Power of Social Networking - Register here

Friday Nov 16, hosted by Social Power Advisors in Palo Alto, CA

Speakers include Jen Grant (Google), Dave McClure (500 Hats), Jefferson Scher (Carr & Ferrell), Sajjad Jaffer (SocialPower Advisors), Ellen Leanse (SocialPower Advisors)

Facebook Developer Garage San Francisco

Friday Nov 16, hosted by RockYou

Speakers include Dave McClure (500 Hats), Adam Rifkin (Renkoo), Blake Commagere (Mogad), Mark Schulze (Quantcast), Jameson Hsu (Mochi Media), Eric Klotz (Videoegg)

This week, Facebook launched Pages, a new way for businesses and brands to build a presence on Facebook. Shortly thereafter, Eric Eldon reported that iLike, makers of the popular iLike application on Facebook, had “pre-created 160,000 new advertising ‘Pages,’ using the features that Facebook is launching today for brand advertisers, that include all of a musician’s ‘fans’ and other iLike information.”

Then, on Wednesday, Facebook application developer Trey Philips noted in the Developer discussion forums, “amazing. all the iLike band pages just disappeared.” Eh?

Upon further inspection, this appears to be the case for many iLike pages, but exactly how many is unclear. While many iLike band Pages still exist, like this one for the Dave Matthews Band, others, including the 50 Cent Page featured in this TechCrunch post, have since disappeared.

Apparently, Facebook wants to keep Pages out of the hands of third parties and securely in the hands of the brand owners. This makes sense given how they are positioning Pages to marketers. So what is Facebook’s policy on removing pages? Hope to have comments soon.

Technorati Tags: facebook, pages, thirdparty, ilike

Facebook made two updates to the Platform this week that makes it easier for app developers to reach new users.

First, Facebook launched an important feature that we’ve written previously about - allowing application-use News Feed items to be viewed by friends without the app. Inside your Developer settings, just register your feed item template and check “Show stories of this template to users who have not added this application.” This is a big boost for highly engaging apps.

Second, Facebook enabled a streamlined way for new Facebook users to register with applications already added to their accounts. This screenshot from the Developer Wiki shows the co-branded registration experience:

Technorati Tags: facebook, developer, newsfeed, cobranded, registration

The Facebook Ads page on the Facebook developer wiki has new information about the integration points available to Facebook developers building for pages:

Facebook Pages expands the social graph by enabling brands, businesses, celebrities, and other entities to have a presence on Facebook…Facebook Pages provide a business with a profile similar to a user profile, with many of the same features. As a developer, you have access to new integration points:

• Pages Profile Box - You can create a profile box for a Page just like you can for a user profile
• Pages Mini-Feed - As businesses add your application to their pages, your application will be shown in their Mini-Feed. Additionally, you can generate Mini-Feed stories for Pages in the exact same way as user profiles.
• News Feed: All stories that are shown on a Page’s Mini-Feed are candidates for News Feed, and you can generate News Feed stories in the exact same way you do for user profiles.

What kind of businesses will Facebook Pages target? According to the Pages.getInfo documentation, it looks pretty broad — local businesses, big businesses, and media:

• website
• location - Contains five children: street, city, state, country, zip
• hours
• band_members
• bio
• hometown
• genre - genre of music. Contains the following children: dance, party, relax, talk, think, workout, sing, intimate, raunchy, headphones
• record_label
• influences
• founded
• company_overview
• mission
• products
• ticker_symbol
• release_date
• starring
• written_by
• directed_by
• produced_by
• studio
• awards
• plot_outline
• network
• season
• schedule

So…it looks like Facebook will look a little bit more like MySpace. However, the primary means of information distribution about businesses with Pages will still be the News Feed. But are Pages really just Groups with Feeds and Apps?

Technorati Tags: facebook, pages, ads