Notes from GSP, day 2 – Getting Funded/Selling Out

As application providers targeting social networks, is getting funded/selling out realistic?  Are they pipe dreams , and big bucks or bust?  The final panel at GSP involved several perspectives on the subject, two VCs and an app developer who recently recieved funding.  Below are my notes from the session:

Why is facebook worth 100b?
  2007, went from 12M -> 60M users
  2008 projected @ 200M users
  open social expected to reach 200M by v1
  600B spent globally in online ads
  – monetization growing daily for facebook app providers
  – crowd sourcing continues to be an interesting trend
  – unprecidented opportunity to engage users

 – would should app providers seek VCs?
  – companies seeking to reach the 100M milestone
  – devs are making 100+K/mo, but ‘businesses’ need more.  

What is UADA – united application developer alliance
  – gaming & dating apps are big right now 2/3 horse race
  – infrastructure for cross-promotion and ad-program alliance
  – Interesting idea, ownership back to developers.  
  – target 10k/daily users
  – 100k installs

Where to start? 
  – start with, covering the costs of the service.
  – then draw a salary
  – focus on apps that attract a demographic (fishing in the facebook ocean)
  – attract fish, that are lucrative to advertisers
  – advertisers (in back of mags targeting similar audiences) will want to help

 – Most recently, the current trend has investors catering to the needs of the founders.
   – FBFund
   – Founders Fund

  – where are the eCommerce for/within apps?
  – vSanata combined with Amazon for social shopping (still early, but interesting)
  – not as easy as people think!

  – scale is difficult, solid revenues, exchange money for value still difficult
  – advertising is low hanging fruit, start here
  – facebook commerce capability coming soon
  – required to reduce the barrier of entry
  – safety/security is key
  – cpc of google may be similar to a transaction fee for FB within Apps eventually
 Who to target first?
   – facebook first, most players there, stable, very useable framework.
   – build first 100k here, before moving to other platforms

   – what protection do you have?  in FB, not much, apps can have the same name!
   – however, FB will take down apps, giving rights to first idea (been done)
   – what protects it, grows it.  principal of consistency
   – once app has critical mass, difficult for next guy
   – risk is, if you have a great idea, should be investigating getting it into other platforms before someone else does
   – traditional ways to make money will eventually work their way into social networks
   – ecommerce, retail sales, distribution

What to expect from VCs
  – 500-1.5M is average investment from VC
  – valuations range greatly, from app to app.  based on track record, exec team, market, maturity of model, 
  – typical engagmenets last 3-5 yrs


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