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Overview

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AppFactory

Social Apps

Pseudo-Seeds

Learnings

 


Social Apps

Our seed investments in applications over social graphs

Before reading the following, read the AppFactory overview.

The vast majority of applications we receive are for individual apps. We've made a small handful of investments in pre-traction or pre-launch individual apps. Criteria we used included - how provocative the idea is, founders' prowess (technical, mainly), and our estimation of their ability to learn, change, adapt, and occasionally listen.

Most of the individual app investments are doing well, but it's a tough slog, as we fully expected. It's tough to predict what the "kids" on Facebook are going to like, and some of the ideas are almost too sophisticated for the Facebook crowd.

Post-traction apps, admittedly less bold or creative on our part, are safer. But even here, to compete against rollups and networks (e.g., the Slide's and RockYou's) your post-traction app really needs to be very very differentiated, and despite that, your only exit might be to one of the networks/rollups. Prior to the market correction in late 2008, there had also been an unhealthy froth over post-traction apps in the Facebook ecosystem. The combination of these factors often led us to let other firms invest in these, even the ones we liked.

In addition to the handful of individual apps, we're also invested in a media company -- Buddy Media. This started out as a bet on currency: they have an underground currency called AceBucks (our thesis was that every virtual universe needs a virtual currency), but they evolved into a studio or rollup (they had built or purchased 50-odd applications), and then into a media company that utilizes the social network app as the ad unit, with a run rate of tens of millions of dollars. Because Buddy Media evolved away from currency, we made another investment in currency: a company called Jambool, with a product named Social Gold. FantasyBook, a network of apps that created a completely on-Facebook fantasy sports experience, was acquired by Citizen Sports (protrade.com), and a couple of others are in acquisition discussions. A couple have moved away from Facebook to destination-site approaches.

For a handful of post-traction applications that we liked, rather than invest in them directly, we referred them (with permission) to Buddy Media, and they bought them. If you have a post-traction app and you are interested in such a referral, please let us know. We will forward your interest to Buddy Media. But of course CEO Mike Lazerow runs the company, we don't; so we can only say that they'll follow up if they're interested.

Last but not least, we haven't been thrilled with some of the issues on the Facebook platform, a topic on which there has been ample blogging.