Highlights This Week from the Inside Network Job Board: 6waves, Mindgames, & More

Recently, we launched the Inside Network Job Board – dedicated to providing you with the best job opportunities in the Facebook Platform and social gaming ecosystem.

Here are this week’s highlights from the Inside Network Job Board, including positions at 6waves, Mindgames, PlayFirst, and Rocket Ninja.

Listings on the Inside Network Job Board are distributed to readers of Inside Facebook and Inside Social Games through regular posts and widgets on the sites. That way, you can be sure that your open positions are being seen by the leading developers, product managers, marketers, designers, and executives in the Facebook Platform and social gaming industry today.

Old Media Lives on This Week’s List of Fastest-Growing Facebook Apps by DAU

The user-generated quiz-and-quote app Phrases heads up this week’s AppData list of fastest-growing Facebook apps by daily active users, but that’s not particularly surprising — at over six million DAU the app has grown so huge that it’s easy for it to dominate the listings. Some of the names following it are of more interest:

Top Gainers This Week
Name DAU Gain Gain,%
1. Original Phrases 6,152,004 +937,277 +18%
2. App_2_90376669494_1016 Yahoo! 3,132,704 +864,702 +38%
3. Original Windows Live Messenger 6,326,967 +484,567 +8%
4. App_2_100569610004322_2416 لعبة الحقيقة 157,441 +157,410 +507,774%
5. Original FarmVille 17,032,212 +149,827 +0.89%
6. Original YoVille 1,031,805 +128,641 +14%
7. App_2_135858749758063_4184 ESPNU College Town 381,210 +127,658 +50%
8. Original Birthday Cards 410,613 +127,087 +45%
9. Original Frases Diarias 970,408 +123,967 +15%
10. App_2_51254684277_9914 Friend Facts™ 727,185 +120,121 +20%
11. Original Millionaire City 2,188,062 +114,984 +6%
12. Original Formspring 337,556 +111,464 +49%
13. Original xo Hearts xo 123,154 +104,292 +553%
14. Original Texas HoldEm Poker 6,189,492 +102,205 +2%
15. Original iHeart 789,120 +98,375 +14%
16. Original TripAdvisor – Cities I’ve Visited™ 396,080 +97,968 +33%
17. Original Music 558,779 +96,146 +21%
18. App_2_124906320895632_5894 Most Mutual Friends 94,933 +94,926 +1,356,086%
19. Original BandPage by RootMusic 356,153 +91,456 +35%
20. Original Backyard Monsters 499,367 +88,578 +22%

Yahoo! comes in second, with a substantial gain of 864,702 DAU. Rather than a “real” gain, the rise probably comes down to a new way of counting users who visit Yahoo while still logged into Facebook. Nevertheless, it’s interesting to see that over three million Facebook users visit Yahoo on a daily basis.

Windows Live Messenger comes in third, but again, this isn’t surprising — the messaging app is the only non-game title with more DAU than Phrases.

لعبة الحقيقة, an Arabic-language app, comes in next with a name roughly translating to “Game of Truth”. This app essentially copies the mechanics of English-language friend quizzes, which ask users questions about their friends. It’s probably reasonable to assume that the questions being asked by this app are a bit more G-rated than some of the uncomfortable questions seen in apps like Friend Facts™, which appears at number 10.

FarmVille, YoVille and other aging games appear next on the list, but as we note this morning at Inside Social Games, they aren’t making real long-term gains. You can check out the rest of the list yourself, but if you’re on the lookout for new apps, check out Most Mutual Friends, which tries to surface the movies, music and other media that people in your network enjoy the most.

I/O Ventures Demo Day Startups Show Off Facebook Integrations

I/O Ventures, an early stage startup incubator, held its Demo Day conference at The Summit work space/cafe in San Francisco yesterday evening. Startups working on video sharing, social video viewing, Page management, social content sorting, app stores presented to investors in hopes of forming connections and securing funding. Five of the six somehow used Facebook, here’s more:

AppRats: Video Distribution Apps

AppRats provides a Facebook distribution channel for YouTube content producers. It offers customizable Facebook apps which allow Facebook users to subscribe to email notifications, or automatically have a story published to their Facebook stream when their favorite content producers post a new video. Users and their friends click through the stories to watch embeds of the videos on the AppRats app. Each producer creates brands their app with their own assets, and distributes it to their fans, driving more video views.

AppRats makes money by taking a cut of the revenue share offered to popular content producers by YouTube, and through advertisements on the apps. It currently has 300 producers signed on to the app, with 50 of the 100 most popular producers on YouTube. The number of YouTube content producers with more that 500,000 subscribers has tripled this year, showing that the market for distribution tools is growing rapidly as well. AppRats is receiving 10,000 new sign-ups a day, and has received permission to publish to the streams of the friends of 450,000 Facebook users.

AppRats is currently looking for investors to help them expand the platform to Twitter and possibly personal websites

Social Vision: Synchronized Video Viewing

Social Vision allows users to watch videos at the same time as friends. Users can user Facebook Connect to send invites to friends who are online via Facebook Chat. One user has the “remote” and controls the viewing experience for all the users in the viewing party, who can discuss the video using an internal chat system. Users can port any YouTube video into Social Vision’s YouTube Social site by simply adding “social” after “YouTube” in a video’s URL.

Social Vision reports that its users spend an average of 12 minute watching videos, over the 6 minutes of the average YouTube user. The company has worked with Direct TV to embed their product within the television provider’s website. has created a website called YouTube Social, and are looking to expand to new video platforms.

Anomaly Innovations: Real-Time Social Content Relevance Sorting

Anomaly Innovations has built a product called Cadmus, a real-time social content personalization system which sorts your tweets, RSS feeds, and other content streams by relevance, and shows you trending topics from your own networks. The product operates on a real-time machine learning algorithm to determine what content is most important to a user.

Anomaly reports that users engage with a sorted tweet stream three times more than the same set of tweets listed chronologically as usual. Along with helping users directly, Anomaly is looking to build technology which can be built into social news sites.

The company is looking for $500,000 for the year to help it add more content services such as Facebook, and partner with more publishers and news services.

DamnTheRadio: Social Action Rewards Focused Facebook Page Management

DamnTheRadio is a Facebook Page management solution provider which lets brands and entertainers incentivize Liking and sharing of their Pages with digital content, discounts, and real-world giveaways. It creates custom landing tab apps for Pages which require users to Like the Page and/or share content with their friends to unlock rewards. Brands and entertainers can easily upload assets, set which content to giveaway for which social action, view analytics on growth and virality, and find influencers and top fans to reward.

The company has helped Wrangler apparel, Sony Music, and Enrique Iglesias engage fans. Linkin Park used a DamnTheRadio Page tab app to exclusively premier a new music video, netting them 4 million new Likes. The company currently has 2 million MAU across its apps and is cash-flow positive. It’s looking for investors who can help them find clients amongst film studios and marketing agencies, and expand to additional social platforms.

AppBistro: White Label App Store Platform

AppBistro is a Facebook Page tab application marketplace. Developers can list their apps on the site as a distribution channel to Page admins. Developers get 70% of the revenue, and AppBistro collects the remaining 30%. AppBistro has made transactions with 15,000 Page admins, seen 25,000 installations of apps bought on it’s marketplace, and is making $5,000 a month in reoccurring monthly fees for apps.

Today, AppBistro announced that it is expanding beyond Facebook and launching a white label app store platform, allowing any development platform with an API to have its own app store. Platforms can entice developers to produce apps fir them by creating a way for the devs to make money off of their creations. AppBistro hopes to create a network of app stores, leading to cross-promotion potential. It’s working with platform companies such as Constant Contact, Twilio, and Foursquare on potential new app stores.

AppBistro recently closed a $600,000 convertible note from investors including Dave McClure and Quest Venture Partners, and is looking for a an additional $250,000 bridge note to help them expand the app store program.

Sometrics’s Game Coins Can Now Be Exchanged for Facebook Credits, Too

Sometrics launched a site called GameCoins.com in March that allows users to earn virtual currencies in their favorite online games by writing game reviews, completing offers, installing toolbars, and other tasks for third party customers. And now it’s expanding the program to Facebook, allowing any user to exchange their earned “Game Coins” currency for its new site-wide virtual currency, Credits.

Similar ideas have been around for awhile on Facebook, most notably in-game advertising offers — ads from other ad networks, that users would participate in for points in a given app.

But Sometrics has more than 250 publishers outside of Facebook signed up already, with a combined 225 million users it says, and it has gained experience figuring out what services to provide gamers, and connect them to publishers. Chief executive Ian Swanson says that 45% of the site’s users are outside the US, and adds that there are millions of Game Coins in circulation. To help people earn points, and pay out to publishers, Sometrics has cut deals with local and regional advertisers in other parts of the world, or created other ways to earn, he says.

For example, by writing reviews about IMVU on the GameCoins.com site, a user without money but with IMVU expertise could in turn earn currency in the virtual world service. Playdom’s Facebook business building game, Market Street, lets users earn Game Coins by completing its tutorial. “We’re trying to be creative,” with the different ways that people can earn, as Swanson puts it.

All Game Coins, whether earned already or not, can now be converted to Credits. This is in some form a new offers channel. Facebook has been pushing Credits to be the single paid currency on the platform, squeezing out many offer wall providers. It instead directs interested users to earn a carefully pre-selected group of high-quality offers in the main Credits purchase interface, available through a partnership with TrialPay. As we’ve covered elsewhere, many offers have been historically low quality if not outright deceptive. Stung by negative press around them, Facebook has more tightly regulated third-party offers providers, and phased in its own through Credits — and even then only slowly.

What Sometrics is offering today, in other words, is a new way for users to earn who don’t want to pay, in a setting blessed by Facebook and all of the other existing Game Coins partners. It’s the latest expansion of what Facebook calls the “App2User” program, which lets companies with a range of virtual currency products exchange them for Credits. Another member is Chase, the bank, which lets people exchange its reward points for the currency. Other recent examples of Facebook’s Credits earning tests including users being able to check in to stores using a mobile app built by Shopkick, or by checking in or gathering item sets in Booyah’s MyTown.

None of these options are redeemable within the generic Credits purchase interface, and instead can be found on Facebook’s Credits splash page, here. Game Coins should start appearing there as well, shortly, although it doesn’t yet. We expect Facebook to feature these payment partners more prominently in the future.

One note for developers is that Sometrics has revenue relationships with all partners, including Facebook. It makes money from the offers provider partner, whether a game site, an online shopping site, or whatever else. Then it pays out to the publisher, which now includes Facebook. Swanson confirms that the Credits that Sometrics is bringing into the system will count as real Credits not the promotional “free” ones that Facebook has given to users, but not reimbursed developers for. In other words, after Facebook gets paid by Sometrics for the Game Coins exchanged into the system, the developers will get their 70% cut from Facebook.

New Facebook Security Features: One-Time Passwords, Security Info

Facebook has launched two new security features to help users stay in control of their accounts. Users can now receive a one-time password from Facebook via text message, and file security information to aide with account retrieval. The previously announced security feature which allows users to end Facebook sessions remotely has now been rolled out to all users. While these features should help most users, there is potential for abuse of one-time passwords.

By texting “otp” (for “one-time password”) to Facebook’s text message short code 32665 (FBOOK), users are texted back an alphanumeric, case-sensitive password which can only be used to log in to their account once and which expires 20 minutes after it’s received. Users must text from a phone number they have registered with their account via Account->Account Settings->Mobile.


One-time passwords help alleviate user worries about logging in on insecure machines such as “public computers in places like hotels, cafes or airports.” This prevents users from needing to change their persistent password as frequently. However, this means that if someone steals your phone, they’ll be able to get a one-time password and access your account. Users should make sure to remove phone numbers from their account which they don’t have access to, such as the number of a lost phone until they have called their mobile phone operator and remotely deactivated the phone’s sim card.

The new security information feature allows users to enter additional email addresses, mobile phone numbers, and security questions which can help Facebook verify a user’s identity. This way a user can be swiftly returned control of their account should they lose access. While there is currently no link to the security information page from the Account->Account Settings->Settings->Account Security panel, users can visit the page at the URL http://www.facebook.com/update_security_info.php. Users will also be regularly prompted to update this info upon logging in.

Recently some users have been locked out of their account by the photo identification verification security feature. The feature requires users to name friends based on the profile pictures of those friends, but profile pictures don’t always show a user’s face, and some users have many friends from social games who they couldn’t identify from a photo. Security information should give users alternative methods of reclaiming their accounts. Registering additional email addresses also prevents malicious parties from using unregistered addresses to create a fake account posing as you.

Lastly, all users can now terminate active Facebook sessions on other machines. This way, if a user forgets to log out of their account after signing in on a friend’s phone or a public computer, they can log out remotely. Users can view and terminate active sessions via the Account->Account Settings->Settings->Account Security panel.

As users increasingly invest time, establish a social graph, store credit card info, deposit money through Facebook Credits, and maintain their reputation through their Facebook account, losing access becomes more costly. Facebook is trying to offer better account security, balanced against the introduction of new security threats and erroneous lockouts.

New Official Facebook Stats Show More Sharing Per User

As it tends to do every few months, Facebook has quietly made another round of updates to its official company Statistics page. Most of the changes are about increased sharing. Even as the number of users increases, the average user appears to be getting more engaged. Here’s how the changes compare to the last update in June and the one before in February.

Facebook reached 500 million monthly active users in late August, by its own measure; that stat and a few others are unchanged, including the fact that more than have of active users log on in a given day, and that the average user has 130 friends.

However, the total amount of time spent by these users on site is up considerably, from 500 million minutes in late June to 700 million now. The surge is most likely due to the increasing size of the user base.

That said, other engagement counts are also up.

Now, there are around 900 million “objects” that Facebook users interact with, way up from 160 million in June. Defined as “pages, groups, events and community pages,” this stat likely presages the launch of the new version of Groups last week, so expect it to go up even more as users experiment with that feature. One caveat is that some Place Pages and Community Pages are created and pre-populated by Facebook, so the increase is not only due to user activity.

Yet the average user is now connected to “80 community pages, groups and events” — and presumably also including Pages — according to the latest update. That’s up from 60 of these “objects” in June, suggesting that more users are finding and using these features.

Users are also creating more “pieces of content,” which Facebook describes as “web links, news stories, blog posts, notes, photo albums, etc.” From 25 billion pieces of content being created each month as of June, now 30 billion are. Strangely, the average user is creating a relatively higher portion than before — 90 versus 70 per month. Given the overall growth of Facebook, and the increase in content being created per user, one would think the total monthly number would be higher.

Most of the other stats now on the page have previously been announced. Notably, more than one million web sites have integrated with Connect, the social plugins or some other Facebook platform feature, including two-thirds of the largest 100 US web sites and half of the largest 100 worldwide, based on comScore data. And, more than 150 million people engage with Facebook off-site per month.

Top 20 Growing Facebook Pages: Turkey, The Simpsons, Eminem and Coca-Cola

There’s an interesting mix of Pages on our list of Top 20 Growing Facebook Pages this week, everything from a Turkish politician to big brands like Coca-Cola to TV shows and movies to a boatload of musicians. We compile the list using our PageData tool, which counts the number of Likes added to a Page each day. It took between 438,500 1.2 million new Likes to make the list this week.

Top Gainers This Week

Name Fans Gain↓ Gain, %
1. Atatürk 1,279,353 +1,269,295 +12,619.76
2. Eminem 15,886,614 +859,259 +5.72
3. Facebook 21,380,830 +830,525 +4.04
4. YouTube 15,576,835 +778,550 +5.26
5. The Simpsons 9,201,887 +659,067 +7.71
6. Rihanna 10,766,159 +607,307 +5.98
7. Coca-Cola 13,549,758 +580,561 +4.48
8. Lady Gaga 19,860,417 +577,840 +3.00
9. Linkin Park 13,946,789 +541,646 +4.04
10. Katy Perry 10,131,941 +526,704 +5.48
11. South Park 14,375,416 +521,406 +3.76
12. Harry Potter 3,538,764 +519,193 +17.19
13. Shakira 10,086,857 +491,887 +5.13
14. Family Guy 18,678,610 +486,428 +2.67
15. Lil Wayne 13,076,536 +479,677 +3.81
16. Bob Marley 11,678,735 +471,525 +4.21
17. Beyoncé 9,030,379 +463,928 +5.42
18. Justin Bieber 13,003,574 +454,462 +3.62
19. Usher 4,535,959 +439,428 +10.73
20. Megan Fox 14,714,960 +438,502 +3.07

First on our list this week is the Atatürk Page, a famous Turkish politician who was the first president of that country. The Page has been experiencing generally slow and steady growth; the spike this week appears to be due to a bug.

Big brands were on the list this week, too. Facebook was in third place, adding 830,500 Likes to its 21.3 million total. The company announced new Groups feature and applications dashboard last week. YouTube was fourth, adding 778,600 Likes to reach 15.5 million. Coca-Cola was seventh, adding 580,600 Likes to total 13.5 million by the end of the week.

Television shows were on the list, too. “The Simpsons” was at number five, adding 659,000 Likes to reach a total of 9.2 million. Then “South Park” at number 11 added 521,400 Likes to reach 14.3 million. Finally, “Family Guy” added 486,400 Likes to grow to 18.6 million.

The Harry Potter Page was at number 12 this week, adding 519,200 Likes to its 3.5 million base; the Page has experienced significant growth in the past week due to the start of the next installment’s December marketing campaign. Megan Fox’s Facebook Page landed at number 20 this week, adding 438,500 Likes to reach 14.7 million, mostly by promoting her Armani ad campaign.

Musicians made up the rest of the list.

Eminem was at number 2, adding 859,300 Likes to reach a total of 15.8 million; his new single and video premiered recently. Rihanna’s Page was sixth, with 607,300 new Likes at a total of 10.7 million. Next was Lady Gaga at number 8, she’s been touring and was nominated for awards in Europe, adding 577,800 Likes to her near 20 million-strong Page. Linkin Park followed at ninth, adding 541,600 to the 13.9 total, perhaps in part because their new music video premiered recently.

Katy Perry was next at number 10, adding 526,700 new Likes to her 10.1 million-strong Page; she’s been touring and made appearances in the press. Shakira’s Page was at number 13, with 491,900 new Likes and breaking 10 million; the songstress has been touring, premiered a new video and is running a fan video contest. Lil Wayne came in at number 15, adding 479,700 Likes to pass 13 million after his new album went up for sale on iTunes and his release from jail is eminent.

Bob Marley’s Page was sixteenth, with 471,500 new Likes, passing 11.6 million.l Beyoncé followed at 17, adding 463,900 new Likes to pass 9 million. Justin Bieber’s Page took eighteenth place by adding 454,500 new Likes to beat 13 million. Finally, Usher’s performances and tour scheduled bumped his Page by 439,400 Likes to a total of 4.5 million.

Kontagent’s Social Analytics Suite V2.0 includes Event Tracking and Funnels

Social application analytics platform provider Kontagent today launches Social Analytics Suite v2.0. The update includes new features such as social event tracking for monitoring user actions, and dynamic funnels for visualizing drop-offs in installations, monetization, sharing, and more. Social application developers can utilize Kontagent’s tools to analyze all their users, not just a sample of them, allowing for accurate A/B testing at a lower cost than traditional analytics platforms.

Kontagent, a fbFund winner, helps Facebook, iPhone, and other social network platform developers perform cohort and virality analysis, allowing them to optimize their apps. The company now tracks 70 million monthly active users and 150 million unique monthly users for clients including PopCap, Tencent, and News Corp. Kontagent operates on a freemium model, offering a free basic service, premium plans ranging from $200 to $3,000 a month, and more expensive full-service, end-to-end enterprise-class social analytics packages.

Kontagent charges on a per user basis instead of on a page-centric, per event basis like traditional analytics tools like Omniture. Kontagent CEO Albert Lai explains that since there are “magnitudes more events before monetization can happen” and lower returns per user in social games than in e-commerce, social game developers end up having to pay too much or analyze too little when being charged on a per event model. By only tracking a sample of users, developers may lose data on lucrative whales, outliers, and details on specific demographics. With Social Analytics Suite v2.0, developers are “not penalized for running more tests or tracking more events. More events tracked means more accurate data, more success, and the more you’ll be happy to pay. We all end up winning.”

New to this release is ability to track the social actions taken by user. Data is accompanied by user profiles of demographic characteristics and cohorts. Data is reported hourly, giving developers enough data to quickly see the results of tests, but without the expense or scalability issues of real-time data reporting. Enterprise clients also have the option to access a raw data feed.

Also new is the ability to view funnels of social events, like those in the Nanigans Ads API tool, making it easy to see where apps are hemorrhaging install, sharing, and monetization potential. Events tracked by the funnels can be dynamically swapped out, causing data to be recalculated to show how different factors such as users creating a female vs male avatar, or buying a virtual boat instead of a house influence outcomes. The insights help developers make decisions such as how many times a user should visit the application before being presented with sharing options to maximize virality.

Facebook ads monitoring shows not only how many installs were generated by ads, but how many additional users were brought in organically due to sharing by those who installed. Being able to accurately measure the second degree of influence users have allows for more accurate user lifetime value predictions. Knowing that a paid install actually generates a certain number of subsequent unpaid installs is key to being able bid above competitors for ad space.

Other features include the custom chart creator which allows developers to mash up data on standard or custom defined events. Charts can be annotated for easy sharing of insights within a company. Granular permission settings on users or chart types help ensure only those who need access to a developer’s most sensitive data have it. Engineers can be given a view of the data without real monetary terms, which are only shown to executives. Clients also receive anonymous, aggregated data on monthly trends from across Social Analytics Suite v2.0 users, allowing companies to determine if changes in the bottom line are due to their decisions, or due to industry-wide situational factors such as holidays or platform changes.

While Kontagent produces great volumes of data, clients must still deduce the optimal decisions for themselves. The current release does not include AIs which can make suggestions of how to change a product based on the data, or automatically make changes or alert clients when certain thresholds in the data are reached. Social context and Facebook Ads for Applications data are also not yet included in ad tracking.

While Kontagent’s Social Analytics Suite v2.0 can help large developers manage their immense amounts of data, it also enables smaller, independent developers to gain insights from tools that would have been far to expensive to create in-house. By outsourcing analytics tool development, developers can focus on optimizing their games and finding the next breakthrough viral mechanic.

Facebook Updates New Groups Interface

Facebook has made a number of changes to the user interface for its new Groups feature. Facebook has changed the “Edit Notifications” button to read “Edit Settings”, and users can now opt not to add a bookmark for a Group to their home page. Facebook also now shows the email address for a Group in the header of its page and has removed the notification options pertaining to the old groups feature from the Notifications page.

Overall, the changes are intended to make Groups more understandable and easier to use, while ensuring user privacy.

As the options the button reveals don’t solely effect notifications, Facebook has changed the “Edit Notifications” button on each Group’s page to read “Edit Settings”. This reduces confusion between a specific Group’s options and the Notifications settings page which applies across the site. The icon on the button has also changed from a pencil to a gear.

Within the new “Edit Settings”, users are now given the option to “hide from home navigation.” When checked, a user won’t see a bookmark to the Group in their Facebook home page’s left navigation sidebar. A link to the Group will still appear on the Groups home page, accessible by clicking “See All” within the Facebook home page’s Groups navigation panel.

CEO Mark Zuckerberg explained at the Groups launch press conference that the site never shows a ranked list of which friends you interact with most, such as ex-boyfriends or people you’re flirting with because “other people might be over your shoulder while you’re using Facebook.” Complementing how Groups offers the “secret” privacy option — making a Group’s name, members, and content invisible to all non-members — users can now also keep any of their Groups from appearing on their home page navigation where they could be noticed by those watching over their shoulders.

Since the launch of Groups, users could go to Account->Account Settings->Notifications to change what actions within Groups generate in-Facebook and email notifications. Previously, the page included options pertaining to the old groups feature. New Groups have no officers or discussion boards, and users are simply added to Groups, not invited. Therefore, options to be notified of when you are promoted to an officer, your discussion board post is replied to, or you are invited to a Group have been removed. Also gone is the option to be notified when someone posts to one of your Groups, as the option was redundant since users manage this on a Group by Group basis.

Lastly, once a Group successfully creates sets its email list address, it will appear in the header of the Group page next to the privacy setting.

A product as deep and thoroughly integrated into Facebook’s other apps as Groups will surely receive numerous updates in the future. Facebook is clearly watching how users take advantage of the product, and how they have trouble with it, and are molding the product to facilitate use.

Facebook, Zynga Add Fees to Stock Sales, as Early Employees Consider Sale Options

Facebook and Zynga are reportedly charging fees of between $2,500 and $6,000 for sales of company stock as employees leaving both companies around the turn of the year may bring more sellers onto private markets.

Both companies are trying to keep their numbers of shareholders below 500, a critical mark that triggers additional financial disclosures required by the U.S. Securities and Exchange Commission. Those fees would go to cover the administrative costs of ensuring compliance with SEC regulations and to ensure they aren’t inadvertently enlarging the number of shareholders.

Employees leaving in 2011 may exercise their options around the beginning of the year to lock in lower valuations and avoid higher capital gains taxes, according to sources familiar with the matter. This could bring additional liquidity to private secondary markets.

Facebook began imposing a fee of $2,500, Sharespost chief executive Greg Brogger told Bloomberg News. Sharespost is an online secondary market for shares in privately held companies and we’ve reached out to Brogger for further comment. Meanwhile, Zynga is charging between $4,500 and $6,000, according to letters between Zynga’s legal counsel at Ropes & Gray LLP and a former employee.

The new stock sale fees will create an additional cost for former employees selling shares, but the amounts are probably not significant because Facebook’s shareholders tend to sell stock in much larger blocks. Sharespost shows sales listings for anywhere from $75,000 to $2 million in Facebook stock.

Furthermore, the secondary market is already very restricted anyway as the number of eligible sellers is likely in the low hundreds. Only former employees and other current shareholders can sell stock now. Current Facebook employees who joined early enough to own actual shares or options for such stock in the company face termination if they decide to sell them, according to sources familiar with the matter.

Employees who joined later and were awarded Restricted Stock Units, or RSUs for short, can’t sell them because they are bestowed stock only once Facebook goes public, according to sources familiar with the matter. Restricted Stock Units give the grantee the right to receive stock at a future date.

Furthermore, Sharespost limits its sellers to “sophisticated” investors, who must have owned the shares for at least a year and be “sufficiently familiar with the securities underlying the transaction” and “understand and manage the risks associated with such transactions.” Buyers must be accredited, meaning they must have more than $1 million in net worth or have earned $200,000 in annual income for at least two consecutive years.

Because of the way capital gains taxes and Facebook’s options are structured, former employees are incentivized to exercise them as soon as possible or within 90 days of leaving the company, according to sources familiar with the matter. It’s possible that we might see more liquidity in the Sharespost market in the beginning of 2011, when more Facebook employees leave and sell a portion of their holdings to cover tax liabilities.

The most recent contracts on Sharespost, show that Facebook shares sold at between $14.40 and $15.20 with an implied valuation of between $31.9 and $33.7 billion. Zynga’s shares sold at between $16 and $18.50 with an implied valuation of between $5 and $5.7 billion.

Inside Facebook Sponsors
LifeStreet Shoutlet Nanigans Frima maudau GREE Votigo
Featured Company
Jobs of the Day

GOOD/Corps
Los Angeles, CA

Creative Circle
Los Angeles, CA

MTV K
New York, NY

More Research & Information from Inside Facebook

Sign up for free email updates beyond today's news.

 

WebMediaBrands
Mediabistro | All Creative World | Inside Network
Jobs | Education | Research | Events | News
Advertise | Terms of Use | Privacy Policy
Copyright 2012 WebMediaBrands Inc. All rights reserved.