Serious Business, Inc., makers of popular Facebook social game Friends For Sale, has raised a $4 million Series A venture round from Lightspeed Venture Partners at an undisclosed “healthy double-digit” valuation. The investment will be announced by Lightspeed’s Jeremy Liew, who is becoming a board member, and Siqi Chen, co-founder of Serious Business, at this morning’s Games 2.0 panel at Web 2.0 Expo.

Along with SGN (through parent company Freewebs) and Zynga, Serious Business becomes the third Facebook game developer to raise a solid round of venture financing. As social gaming has proven its potential to keep users engaged on social networks more than almost all other applications, investors have taken notice. Friends For Sale alone has over 600,000 daily active users on Facebook.

Inside Facebook had the opportunity to speak with Siqi Chen, fellow co-founder Alex Le, and Jeremy Liew about the investment and vision for the company.

Inside Facebook: Siqi, what is your vision for Serious Business?

Siqi Chen: We’re building social games. While most games on social networks use the platforms merely for user acquisition, we’re more interested in creating original game play experiences native to the social networking environment.

If you know what you’re doing, building games that get distribution on social networks is not a problem. If you’re good at designing games, engagement is not a problem. And if you have a good team, monetization is not a problem.

Inside Facebook: Who’s on your team, and what were you doing before?

Siqi Chen: Right now, we’re just a small team of engineers. Friends For Sale was just built by me and Alex. Ryan Ferrier is our COO, and he’s handling all of our operations and biz dev. We’re just focused on scaling and building a world class engineering team.

Alex Le: We’ve hired 3 people in the last week – all Ruby developers. We’re building one of the, if not the, largest Ruby clusters in the world. We’re already profitable, and the investment is going to help us get a head start.

Siqi Chen: Before Friends For Sale, Alex and I built the Facebook game Mafia. It’s a very social game and perfect for the social networking world, but it wasn’t very viral, so we switched and built Friends For Sale instead.

Inside Facebook: So do you think of Serious Business as a developer or a publisher?

Alex Le: We don’t plan to help other games get distribution. The idea of being a publisher is a little outdated in this world.

Inside Facebook: Jeremy, you’ve been speaking about your interest in social games for quite a while now. What originally got you interested in Siqi and Alex?

Jeremy Liew: Siqi and Alex have created a native game mechanic for social networks. They have done a fantastic job of transferring the social context into the game mechanic.  It’s not just about inviting 10 friends and getting X thousands of dollars, though that’s a component. They’ve also created viral mechanisms into the game play itself.

By taking advantage of people’s existing relationships – for example, wanting to own your girlfriend or your wife, being peeved that some random dude buys that person away from you, buying nicknames for people, and baking that into the core app – I think it’s interesting.

I think there’s plenty more where that came from with this team. They’re well positioned to take advantage of the digital goods economy. And the growth speaks for itself.

Facebook Chat has enabled quicker communication than was ever before possible on the site. New features unique to Facebook Chat include live notifications, integration of mini-feed events in the message windows, and the ability to maintain state (such as whether conversations are minimized, and which are open). And as a sign that the product is being actively improved, Chat started working today in at least two more browsers – Opera and Firefox 3 beta.

However, the current Chat feature set is still relatively limited. Among the commonly requested features, we have to wonder: which features will be added next?

Some possibilities:

• Chat logging
• Sounds
• Support for an open chat protocol, or another software-based approach
• File transfer
• Ability to disable chat completely, so that it doesn’t show during the Facebook experience at all
• Chat rooms
• Support for mobile clients or browsers
• Integration with the Facebook Platform
• Friend grouping, perhaps by friends list (although duplicates might be annoying)
• Ability to change the order of friends
• Privacy controls, so that you can prevent chatting with certain friends, or blocking for that matter
• Ability to sign on as “invisible” to other users
• Away messages or states, separate from the Facebook Status

If you have any other suggestions, be sure to leave a comment here and let us know.

I won’t add much editorial to these stories because they speak for themselves, but these three sobering headlines crossed my desk today:

• Israeli soldier jailed for Facebook photo

A member of the Israeli Defence Force (IDF) has been jailed for 19 days after posting a picture of himself on Facebook without permission…

• Egypt frees Facebook activist

Egypt on Wednesday freed a woman detained earlier this month for forming a group on the Facebook social networking site that called for protests over price hikes, a security official said…

• Police in Hong Kong quiz student over Facebook protest appeal

In a sign of Hong Kong nervousness over pro-Tibet protests during the Olympic torch relay on May 2, police were Friday reportedly quizzing a female student over her Facebook blog…

Even though MySpace hasn’t turned on all its viral channels yet, the MySpace App Gallery is now live for all users and is being promoted in the header of all MySpace pages.

Since the MySpace App Gallery launched in beta just six weeks ago, over 1,000 applications have been created by developers and approved by the MySpace team, resulting in about 2 million total installations. However, the App Gallery was largely unpromoted by MySpace – users primarily discovered apps through profile boxes on others’ profile pages. The new link should drive much more app traffic and adoption than developers have experienced in the last few weeks.

As part of the App Gallery launch, MySpace is also launching a new way for developers to promote their apps called “Featured Applications.” It’s not clear whether the apps in this section are selected by an editor or if it’s purely an ad service that allows developers to pay for premium placement.

With the launch of the App Gallery, MySpace has also switched the default sorting of apps to Most Popular from Most Recent. This will make the browsing experience better for users exploring MySpace apps for the first time.

Rich Miller points out some notes from a recent MySQL user conference during which Facebook VP of Technology Jeff Rothschild gave some stats on Facebook’s server infrastructure:

• Number of MySQL servers – 1,800
• Number of MySQL DBAs – 2
• Number of Web servers – 10,000
• Number of Memcached servers – 805

Microsoft Windows Live Platform server architect James Hamilton comments:

The Facebook fleet has grown fairly dramatically of late. For example, Facebook is the largest Memcached installation and the most recent reports I had come across have 200 Memcached servers at facebook.  At the Scaling MySQL panel, they report 805 Memcached servers.

The 1,800-to-2 ratio is pretty impressive.

This morning at Web 2.0 Expo San Francisco I moderated the Comparing Social Platforms panel, which was comprised of awesome folks speaking on behalf of the top social platforms on the web today:

• Allen Hurff, SVP of Engineering at MySpace
• Dave Morin, Senior Platform Manager at Facebook
• Jessica Alter, Director of Platform and Business Development at Bebo
• Patrick Chanezon, OpenSocial Evangelist at Google
• David Recordon, Open Platform Lead at Six Apart

While the panel covered a variety topics that each merit more discussion (there are entire conferences devoted to doing just that), this morning the panel discussed key issues for the social platform economy – such as each platform’s philosophy on key product integration points (profile, feeds, viral channels), aligning user and developer interests (engagement, marketing channels), monetization roadmap (ad networks, commerce), data portability, and potential business conflicts (in verticals like photos and music).

Since I was moderating the panel, I didn’t have time to take notes, but here are some paraphrases of some noteworthy panelist comments:

• Jessica Alter: We’re going to be driving developers to focus more and more on engagement. While I don’t have any specific announcements today, things like time spent and page views are going to become more important on the platform.
• Allen Hurff: On the question of verticals like music, of course MySpace is going to continue to work with major music distribution partners around the world. But we really want to remain as agnostic as possible. In fact, I expect there to be many more app feed items than MySpace system feed items.
• Dave Morin: We’re spending a lot of our time right now thinking about data portability, or perhaps it would better be called “privacy portability.” You should have the option to have your privacy settings follow you around the web.
• David Recordon: The term “data portability” almost can’t be used in that way any more, since the branding of the term now means something else.
• Patrick Chanezon: Unlike most of these social platforms, iGoogle is much more of a social content discovery service than social network. It’s a pretty different type of service that’s built on OpenSocial that we think is really interesting.
• Allen Hurff: The MySpace Platform actually represents a pretty big shift just in the last year from the way MySpace has traditionally viewed opening up its data. We’re going to push this even further in 2008.
• Dave Morin: Creating a platform is like creating a marketplace. You have your arbitrageurs, and we have those, you have your hedge funds, they’re like the guys staying up all night finding ways to tweak their way into the viral channels more.
• Patrick Chanezon: OpenSocial is really just an overlap of the most common set of services needed to run social applications. We may begin to see platforms on top of platforms in the coming year.

Despite the early start time (8:30!), by midway through the panel there were folks crowding in the back of the room. We only had time for a couple audience questions before we had to make room for the next panel. Thanks to everyone for a great discussion! For more, check out GSP East.

Update: Here’s a video of the panel, thanks to Simon Chen:

New Inside Facebook Top Jobs for April 23:

• Software Engineer (FamilyBuilder.com / New York, NY)

Two and a half weeks after Facebook Chat launched in beta to some US college users, as of early this morning Chat is now available for all Facebook users. Facebook has been slowly rolling out the launch since April 6 – users in San Francisco, Los Angeles, Philadelphia, New York, and Boston got access in recent days.

Scaling chat infrastructure is an extremely challenging technical problem. We haven’t received any reports of downtime for the service – a big achievement by the Facebook ops team.

So far, Facebook hasn’t made any announcements on whether Facebook Chat will support Jabber interoperability – though Facebook has suggested it would add Jabber support in the future. Facebook also hasn’t announced any plans to build chat APIs, which would be a major boon to those building chat services on the Facebook Platform.

When the Facebook Platform launched in May 2007, it included access to a number of Facebook’s powerful communication channels right from the start (unlike some other platforms that have launched since). Access to these channels – profile boxes, invitations, notifications, and feed items – allowed applications to spread quite quickly. However, due to user experience complaints, Facebook has been putting in place limits on how much apps can use these viral channels throughout much of 2008.

While Facebook has not been explicitly clear in explaining what that feedback is, we thought we’d try to gain some at least anecdotal quantitative evidence on what users are complaining about. So we ran a Facebook Poll (which was really easy, by the way) to ask them. While the sample size was very small (only 200 responses, and disclaimer: this is not a proper way to do real user experience testing, etc etc), the results may offer some clues on upcoming Platform changes.

First, the question:

What do you hate most about Facebook apps?

• Too many invitations
• Too many notifications
• Too much clutter on my profile
• Too much clutter in my mini feed

We ran the same poll in 2 geographical regions to compare results between technophiles in Silicon Valley and folks in more “normal” places – in this case (lovely) Topeka, Kansas. The results, however, were quite similar (guess there’s not a red state/blue state bias either), so we’ve included only the Silicon Valley data below.

The results:

• Invitations are still the most annoying thing about apps (especially for women).
• Mini Feed stories are clearly the least annoying thing about apps.
• Profile clutter is still a big problem (especially for older folks).

So, assuming Facebook is seeing roughly the same data in its user experience testing, what are some possible conclusions for the Platform?

• Facebook will likely update the rules on invitations again. Per-user limits or stricter per-app limits are possible changes.
• Given that the new profile page is about to become dominated by the Feed/Wall, expect apps to be given more room to run here.
• Facebook is also solving the profile clutter problem with the new profile page design. Only 3 apps will have a box on the default tab. The rest will be, um, migrated.

Thoughts?

Poll data:

New Inside Facebook Top Jobs for April 22:

• Internet / Facebook Engineer (VoxPop.TV / SF Bay Area)