RSS2 Free Tickets for Graphing Social Patterns East
May 23rd, 2008
Graphing Social Patterns East is quickly approaching June 9-11 in Washington, DC! O’Reilly and Dave McClure have pulled together a fantastic lineup as usual, with full days devoted to each the business and technical aspects of building on social platforms, with a workshop day to kick it off.
I’ll be moderating the Social Games for Social Platforms panel on Tuesday, discussing ways that new companies are creating viral and engaging social games on social networks. I’m excited to be joined by Shervin Pishevar, CEO of SGN, Siqi Chen, Co-Founder of Serious Business, Andrew Trader, VP of Business Development at Zynga, and Robert Balahura, Co-Founder of J2Play. (In case you haven’t heard, social games are hot!)
Inside Facebook readers can register with a 15% discount by entering discount code “gspe08ifb“. In addition, Inside Facebook has 2 passes to give away to GSP East! The best 2 answers to the following question will win the passes:
If you had $100,000 to invest in any company building Facebook applications, who would it be, and why?
Please respond in the comments (or if your thoughts are super secret you can email mail AT insidefacebook.com with “GSP East Tickets” in the subject line).
And now for a word from O’Reilly’s lawyers:
- Only one attendee per pass (two people cannot share the same pass to attend the conference on separate days).
- The prize is nontransferable and non-endorsable; no cash or other substitutions will be offered. Winner cannot sell his/her pass.
- The winner consents to the use of his/her name and/or likeness for publicity, advertising, and commercial purposes, in perpetuity, without further compensation unless prohibited by law. O’Reilly Media and its agents are not responsible for lost entries for whatever reason. Entries will be disqualified if O’Reilly Media determines, at its sole discretion, that entrants have attempted to circumvent the terms and conditions of these rules. All decisions by O’Reilly Media are final.
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May 23rd, 2008 at 12:23 pm
if i had 100K to invest, why would i want a free pass?
May 23rd, 2008 at 7:42 pm
Thanks everyone, got some great responses!
May 28th, 2008 at 9:46 pm
As CEO of CHALLENJ, my honest answer would be: the company I’ve co-founded. Though I’m obviously biased, I’ll provide some rigor in the analysis that leads to that conclusion. Bear with me!
Approaching the problem as a professional investor first requires an understanding of one’s appetite for risk — traditionally, early-stage investors take greater risk for a greater return, while later-stage investors seek more mature companies that have eliminated certain risks, accepting more modest returns. But is that a reasonable way to evaluate companies building Facebook apps? Are there any ‘sure bets’ at all in the social networking space? I say no — at least none that I believe could guarantee I wouldn’t be left with a fraction of my $100k. To me, they’re all high risk, albeit for different reasons.
Investing a market as wildly unpredictable as Facebook apps, the prize to keep eyes on is the potential for liquidity. Which is why it makes sense to evaluate companies not just based on fundamentals (traction, management, etc.), but in terms of their capitalization and the nature of their app — to determine which companies may be ‘hot’ acquisition targets. (For reference, the top four Facebook categories, ranked by number of applications, are: Just for Fun (~10,000), Gaming (~2,600), Sports (~2,100), and Utility (~1,850).
With that in mind, I see three possible ‘buckets’ to dump $100k into:
1) Leading Facebook apps builders
It might seem that the leading apps builders, the 800-pound gorillas with the most installs and actives, would constitute a ‘safe’ bet — modest return, but limited risk. As we all know, these are RockYou! and Slide. They have the best and brightest on board; they also have an experience advantage with the most installs and active users, dominating the Just for Fun category. The biggest risk might be that they are ‘hit factories,’ not unlike the record labels of old — they must continually produce infectious apps to succeed Superpoke and Slideshows, long after throwing sheep and kisses become passé. Now, they’re damn good at it. But how do they shape up as investments? Well, with its most recent funding coming in at a heady $500M valuation, Slide will have to make good on Levchin’s personal goal of exceeding his PayPal exit of $1.5B to even provide a 3x return — and that’s if I got my $100k into the last round. As a more recent data point, it’s been rumored in the blogs that RockYou! has had difficulty achieving a comparable valuation, choosing instead to raise a stopgap $1M. But even if the market holds up, the thing to keep in mind is this: these fellows have big ambitions. They are looking to dominate not only applications, but the placement of ads that ride along with them — which means they are on a quest for the billion-dollar war chest that can only come from an IPO. Will they succeed? Probably. But as a late-stage investor, I could just as easily lose money in that scenario, if the stock drops in the aftermarket, before I get a chance to sell (it happens more often than not).
Prognosis: Risky, mainly due to outasight valuations.
Potential return range: 0.3x to 2x
2: Social Gaming Apps Builders.
It’s been pointed out several times that social gaming might indeed be Facebook’s killer app, because of the strong viral and retention loops — folks invited to play Scrabulous, for example, start games of their own, driving up installs as well as daily-active numbers. Not only that, but social gaming exhibits strong ‘network effect’ properties, accelerating as each company adds more games and more users. Which is why we’ve already begun to see consolidation, similar to how Electronic Arts took a leadership position in consoles — acquiring titles, then the companies themselves, then diversifying into non-action games like The Sims. Thus, Kongregate, Zynga, and SGN appear to be pretty good bets, with good traction, solid leadership, and potential liquidity through an acquisition — potentially by Group 1, above. (Okay, if I had to pick one of these, it would be Kongregate, if for no other reason, Jeff Bezos thought it was a good investment, and he’s one of the smartest guys on the planet.)
Prognosis: Good upside, based on traction and moderate valuations.
Projected return range: 2x – 10x
3: Upstart Acquisition Targets
There are a good number of these, and lots more on the way. The best example is probably Scrabulous, except for that legal thing. They can come from anywhere (like Jetman), but the winning ones distinguish themselves almost immediately by their rapid acquisition rates. This is where CHALLENJ sits. Can’t say too much, since we’re in stealth mode and won’t be launching until later this year, but we make the following bald-faced claims: 1) We’re a social gaming app that could just as easily be categorized as Just for Fun, Sports, or Utility (cf. the top four categories in paragraph 3 above); 2) we will have both a higher inherent viral attraction and better retention — no one will ever tire of us — than any other application; and 3) we have extremely low overhead and infrastructure costs. So, I’d have to say, my $100,000 (actually, it would be an additional $100,000) is best invested in CHALLENJ (in all objectivity
Prognosis: Excellent upside, based on app’s potential and low current valuation.
Projected return range: 10x – 50x.
June 5th, 2008 at 3:13 pm
Is this contest still open?