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Lee Lorenzen
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11 months ago
in Breaking: Facebook Changes Reporting to Monthly Active Users on AllFacebook
Nick,
WRT Adonomics, our business model is tied to providing the best possible analytics and web services available to Facebook and other social network developers. Any changes that Facebook makes, so long as they are applied to all companies equally, will not have a major effect our business model.
WRT the specifics of reporting monthly vs. daily active users, Adonomics will adjust and adapt. This is similar to when Facebook stopped reporting total installs but still showed Daily Active Users as a % of total installs. This allowed us to compute the total installs via a simple formula (although not to the hourly granularity that was true in the first few months that the platform launched).
WRT Adonomics, our site provides a wealth of services to developers and advertisers who want to track their own and their competitors' apps. The Adonomics 100, the Adonomics Leaderboard, the individual app profile pages, the marketplace, the GEM System, the Ad Management service and the App brokerage service all provide ongoing value. In addition, app developers that want to ensure their app stats are fully insulated from facebook changes can send them directly to us (as 5,000 apps do today).
Thanks,
Lee Lorenzen
CEO, Adonomics
LeeL@altura.com
WRT Adonomics, our business model is tied to providing the best possible analytics and web services available to Facebook and other social network developers. Any changes that Facebook makes, so long as they are applied to all companies equally, will not have a major effect our business model.
WRT the specifics of reporting monthly vs. daily active users, Adonomics will adjust and adapt. This is similar to when Facebook stopped reporting total installs but still showed Daily Active Users as a % of total installs. This allowed us to compute the total installs via a simple formula (although not to the hourly granularity that was true in the first few months that the platform launched).
WRT Adonomics, our site provides a wealth of services to developers and advertisers who want to track their own and their competitors' apps. The Adonomics 100, the Adonomics Leaderboard, the individual app profile pages, the marketplace, the GEM System, the Ad Management service and the App brokerage service all provide ongoing value. In addition, app developers that want to ensure their app stats are fully insulated from facebook changes can send them directly to us (as 5,000 apps do today).
Thanks,
Lee Lorenzen
CEO, Adonomics
LeeL@altura.com
1 year ago
in TheUADA Launch Goes Unnoticed on AllFacebook
Nick,
I'm happy to comment. As I've told you in the past, I'm always available to answer any of your questions in detail by e-mail or phone.
You are completely wrong to say that most people that I've contacted are saying that they don't wish to join TheUADA. We are currently evaluating for membership 30+ companies with 100+ facebook apps that collectively have over 80+ million installs. Everyone who has agreed to be considered for membership in TheUADA is now under NDA and perhaps this explains why you aren't getting any confirmations.
Since TheUADA page went up this morning we've been contacted by several Facebook developers of apps with sufficient traffic who also wish to be considered for membership.
Participation as Founding Members of TheUADA is a privilege that I believe those chosen for membership will appreciate. These folks will receive a significant equity stake in TheUADA as well as upfront cash for their agreement to be part of what we believe will be an organization that will be as effective as the CAA has been in promoting the interests of the stars that they represent.
We've designed TheUADA to be 100% upside for the developer. Membership offers developers higher RPM levels, access to lucrative sponsorship deals, the ability to efficiently cross-promote with other developers and ownership in an entity that gives them a second way to win big on the Facebook platform. In exchange for this, all we ask them to do is test our ad management system. Any of these developers can terminate this test at any time and remove their name from consideration for membership in TheUADA.
Finally, TheUADA is helping developers win by creating additional near term and long term revenue opportunities. Had eBay or PayPal done the same things with the power sellers who helped their businesses grow and become so successful prior to their IPOs, it would have been a much better deal for the individuals behind these companies.
So, TheUADA is not dead on arrival and I suggest you stay tuned.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- The First Facebook-only VC
I'm happy to comment. As I've told you in the past, I'm always available to answer any of your questions in detail by e-mail or phone.
You are completely wrong to say that most people that I've contacted are saying that they don't wish to join TheUADA. We are currently evaluating for membership 30+ companies with 100+ facebook apps that collectively have over 80+ million installs. Everyone who has agreed to be considered for membership in TheUADA is now under NDA and perhaps this explains why you aren't getting any confirmations.
Since TheUADA page went up this morning we've been contacted by several Facebook developers of apps with sufficient traffic who also wish to be considered for membership.
Participation as Founding Members of TheUADA is a privilege that I believe those chosen for membership will appreciate. These folks will receive a significant equity stake in TheUADA as well as upfront cash for their agreement to be part of what we believe will be an organization that will be as effective as the CAA has been in promoting the interests of the stars that they represent.
We've designed TheUADA to be 100% upside for the developer. Membership offers developers higher RPM levels, access to lucrative sponsorship deals, the ability to efficiently cross-promote with other developers and ownership in an entity that gives them a second way to win big on the Facebook platform. In exchange for this, all we ask them to do is test our ad management system. Any of these developers can terminate this test at any time and remove their name from consideration for membership in TheUADA.
Finally, TheUADA is helping developers win by creating additional near term and long term revenue opportunities. Had eBay or PayPal done the same things with the power sellers who helped their businesses grow and become so successful prior to their IPOs, it would have been a much better deal for the individuals behind these companies.
So, TheUADA is not dead on arrival and I suggest you stay tuned.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- The First Facebook-only VC
1 year ago
in How Much is a Facebook User Worth? on AllFacebook
Nick,
I have valued Facebook at $300 per user based on the $15 billion valuation deduced from Microsoft and two other cash only investors in Facebook when they had 50 million users. This number implies that the Lifetime Value of these users from yet-to-be implementated monetization will be $300. Assuming a lifetime of 5 years for a facebook users inside their system, this means earnings of about $60 per year to Facebook per user or $5 per month per User or $0.16 per day in earnings. Facebook could achieved this today with about 1 web search per user per day with 50% of these leading to a click on a $0.32 Sponsored Link.
The value of a Facebook user to an application is a different matter. My own estimate on a per install basis is around $0.40 to $0.60 depending on whether or not the app is growing and the % of daily active users from the app's install base. The ultimate metric is really the Revenue Per Year for the app from its install base of users. Once you know this number you can apply a multiplier based on your expectation of how many years that revenue or higher can be achieved.
Most private software companies are sold for between 1x and 3x annual revenues. Most small cap public software companies trade at 5x to 10x annual revenues. So, the analysis provided of $1.40 per active user implies a 5x sales revenue figure for SNAP Interactive which seems reasonable. The equivalent number for a single app private facebook app user would be $0.28 on the low end (1x sales) and $0.84 on the high end (3x sales).
This all dovetails nicely with the $0.50 per install that RockYou and Slide charge to purchase facebook installs.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first Facebook-only VC
I have valued Facebook at $300 per user based on the $15 billion valuation deduced from Microsoft and two other cash only investors in Facebook when they had 50 million users. This number implies that the Lifetime Value of these users from yet-to-be implementated monetization will be $300. Assuming a lifetime of 5 years for a facebook users inside their system, this means earnings of about $60 per year to Facebook per user or $5 per month per User or $0.16 per day in earnings. Facebook could achieved this today with about 1 web search per user per day with 50% of these leading to a click on a $0.32 Sponsored Link.
The value of a Facebook user to an application is a different matter. My own estimate on a per install basis is around $0.40 to $0.60 depending on whether or not the app is growing and the % of daily active users from the app's install base. The ultimate metric is really the Revenue Per Year for the app from its install base of users. Once you know this number you can apply a multiplier based on your expectation of how many years that revenue or higher can be achieved.
Most private software companies are sold for between 1x and 3x annual revenues. Most small cap public software companies trade at 5x to 10x annual revenues. So, the analysis provided of $1.40 per active user implies a 5x sales revenue figure for SNAP Interactive which seems reasonable. The equivalent number for a single app private facebook app user would be $0.28 on the low end (1x sales) and $0.84 on the high end (3x sales).
This all dovetails nicely with the $0.50 per install that RockYou and Slide charge to purchase facebook installs.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first Facebook-only VC
1 year ago
in Should Facebook Allow Aliases? on AllFacebook
It seems to me the answer to this problem is in two parts:
1. Organizing facebook friends by tagging which are social, college, family, business, church, etc. -- this features is coming from facebook and assuming each of these groups of tagged individuals will see a slightly different profile page for me, a different mix of photos, etc., then there is no need for an individual to have an alias
2. Expansion of the Groups concept (see http://blog.adonomics.com/2007/10/12/is-supergr...) -- this will allow folks who want to write a blog (and even make money from it), or companies who want to have a sustained presence that is not dependent on an individual to create their own personal brand (vs. their identity) inside of facebook.
With these two changes facebook can keep its subset of the social graph pure. This is important for social interactions (e.g., I want to know that the Steve Ballmer account I'm interacting with is the real Steve and not a another FakeSteve). It is also important for advertisers and for merchants who will want to know that an individual in facebook is the real deal and someone they can trust to pay with the credit card that they have registered inside of facebook.
So, IMHO the solution is coming. That being said, I do feel like the Backup my Facebook Identity (including e-mail, notes, wall posts, photos, etc.) is a great idea for an app. I would hate to lose all of this data due to a bug in facebook. I also think that if an account is turned off that there should be some kind of appeal period where you can still use the account and back your data up but perhaps be restricted from sending too many messages (since this is how they prevent fake-account spamming).
I had my account disabled for a period one time through some kind of false positive report and it was VERY DISCONCERTING. Part of facebook's power to reinvent the web is the fact that unlike the wild west chaos of the web, facebook is like a town with an all-powerful sheriff. However, with tremendous power comes tremendous responsibility and I'm hopeful that facebook will use some of their new resources to focus on this part of their system.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
(c) 2007 Altura Ventures LLC.
1. Organizing facebook friends by tagging which are social, college, family, business, church, etc. -- this features is coming from facebook and assuming each of these groups of tagged individuals will see a slightly different profile page for me, a different mix of photos, etc., then there is no need for an individual to have an alias
2. Expansion of the Groups concept (see http://blog.adonomics.com/2007/10/12/is-supergr...) -- this will allow folks who want to write a blog (and even make money from it), or companies who want to have a sustained presence that is not dependent on an individual to create their own personal brand (vs. their identity) inside of facebook.
With these two changes facebook can keep its subset of the social graph pure. This is important for social interactions (e.g., I want to know that the Steve Ballmer account I'm interacting with is the real Steve and not a another FakeSteve). It is also important for advertisers and for merchants who will want to know that an individual in facebook is the real deal and someone they can trust to pay with the credit card that they have registered inside of facebook.
So, IMHO the solution is coming. That being said, I do feel like the Backup my Facebook Identity (including e-mail, notes, wall posts, photos, etc.) is a great idea for an app. I would hate to lose all of this data due to a bug in facebook. I also think that if an account is turned off that there should be some kind of appeal period where you can still use the account and back your data up but perhaps be restricted from sending too many messages (since this is how they prevent fake-account spamming).
I had my account disabled for a period one time through some kind of false positive report and it was VERY DISCONCERTING. Part of facebook's power to reinvent the web is the fact that unlike the wild west chaos of the web, facebook is like a town with an all-powerful sheriff. However, with tremendous power comes tremendous responsibility and I'm hopeful that facebook will use some of their new resources to focus on this part of their system.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
(c) 2007 Altura Ventures LLC.
1 year ago
in OpenSocket: a Thought Experiment on AllFacebook
Dan,
Very interesting post. You and I are on the same wavelength. As somone who built a 15+ year-old business around mapping API's (i.e., Mac2Win -- the Mac Toolbox API implemented as a Windows DLL so companies like Fractal Design, Macromedia, Claris, etc. could port their Mac apps to Windows with just a recompile and link).
In the porting technology business, all you have to do is map one Native API to another Target API and this insulates the developer from having to learn all the nuances necessary to write apps for these other platforms. The idea you described would be as trivial as what Marc Andreesen did when he spent the weekend mapping the OpenSocial API's into Ning's existing API's.
So, I agree that anyone (not just facebook) could build an API mapping layer and voila! you would be able to write an OpenSocial-compliant app that when linked together with your OpenSocial2Facebook layer would work just fine as a facebook app. The problem with this approach is that there are no OpenSocial apps that need to be ported over to facebook.
Therefore, I suggest this thought experiment. What if Facebook (or someone else) wrote a porting technology that would take the facebook API's and build a mapping layer from them over to the OpenSocial API's. This way you would be moving in the direction from LOTS OF APPS needing porting to LOTS OF WANNA-BE SOCIAL OPERATING SYSTEMS needing apps. Whoever writes this mapping layer could also target MySpace and Yahoo.
In this case, Facebook developers focus on facebook first (which is where all the innovation is) and the Facebook Porting Technology company keeps up with Facebook by writing updated porting layers for each other Social Network that manages to get a critical mass of users.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
(c) 2007 Altura Ventures LLC.
Very interesting post. You and I are on the same wavelength. As somone who built a 15+ year-old business around mapping API's (i.e., Mac2Win -- the Mac Toolbox API implemented as a Windows DLL so companies like Fractal Design, Macromedia, Claris, etc. could port their Mac apps to Windows with just a recompile and link).
In the porting technology business, all you have to do is map one Native API to another Target API and this insulates the developer from having to learn all the nuances necessary to write apps for these other platforms. The idea you described would be as trivial as what Marc Andreesen did when he spent the weekend mapping the OpenSocial API's into Ning's existing API's.
So, I agree that anyone (not just facebook) could build an API mapping layer and voila! you would be able to write an OpenSocial-compliant app that when linked together with your OpenSocial2Facebook layer would work just fine as a facebook app. The problem with this approach is that there are no OpenSocial apps that need to be ported over to facebook.
Therefore, I suggest this thought experiment. What if Facebook (or someone else) wrote a porting technology that would take the facebook API's and build a mapping layer from them over to the OpenSocial API's. This way you would be moving in the direction from LOTS OF APPS needing porting to LOTS OF WANNA-BE SOCIAL OPERATING SYSTEMS needing apps. Whoever writes this mapping layer could also target MySpace and Yahoo.
In this case, Facebook developers focus on facebook first (which is where all the innovation is) and the Facebook Porting Technology company keeps up with Facebook by writing updated porting layers for each other Social Network that manages to get a critical mass of users.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
(c) 2007 Altura Ventures LLC.
1 year ago
in Is Facebook Overvalued? on AllFacebook
As I've written, Microsoft Expects a 7x Return on Their Recent Facebook Investment:
http://blog.adonomics.com/2007/10/24/microsoft-...
The value will come from three things:
1. Growth to 200 million active users
2. Powering 18 to 36 billion web searchs in 2008 and 2009 which will generate $2 and $4 billion in Cost Per Click Keyword-driven (i.e., Google-style Text Link) ads
3. Offering a Facebook Mall with 1,000 top merchants each paying $1 million per year in base rent plus 5% of Gross Sales in Overage Rent
This gets facebook to a $100 billion IPO at between 25 and 50 PE ratio (depending on how soon they go out).
It doesn't take much execution or any new inventions to enable these huge new sources of revenue.
Thanks,
Lee
http://blog.adonomics.com/2007/10/24/microsoft-...
The value will come from three things:
1. Growth to 200 million active users
2. Powering 18 to 36 billion web searchs in 2008 and 2009 which will generate $2 and $4 billion in Cost Per Click Keyword-driven (i.e., Google-style Text Link) ads
3. Offering a Facebook Mall with 1,000 top merchants each paying $1 million per year in base rent plus 5% of Gross Sales in Overage Rent
This gets facebook to a $100 billion IPO at between 25 and 50 PE ratio (depending on how soon they go out).
It doesn't take much execution or any new inventions to enable these huge new sources of revenue.
Thanks,
Lee
1 year ago
in Facebook Lets Spammers Back In! on AllFacebook
Nick,
This is one of the key steps for Facebook to turn Groups into Super Groups which is my pick for the Killer App for Marketers. You can read more about this in my post of a few weeks back:
http://blog.adonomics.com/2007/10/12/is-supergr...
They have also said they are now going to put updates to group pages in facebook members' news feeds. With this in place, all that is left is to allow Group Creators to add apps to their Group Profile pages and to sell advertising / subscriptions to their content via a single facebook payment system. When this happens bloggers and product advocates / merchants will have huge incentives to build Super Groups for their key customers.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
(c) 2007 Altura Ventures LLC
This is one of the key steps for Facebook to turn Groups into Super Groups which is my pick for the Killer App for Marketers. You can read more about this in my post of a few weeks back:
http://blog.adonomics.com/2007/10/12/is-supergr...
They have also said they are now going to put updates to group pages in facebook members' news feeds. With this in place, all that is left is to allow Group Creators to add apps to their Group Profile pages and to sell advertising / subscriptions to their content via a single facebook payment system. When this happens bloggers and product advocates / merchants will have huge incentives to build Super Groups for their key customers.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
(c) 2007 Altura Ventures LLC
1 year ago
in Breaking: Microsoft Investment With Facebook Closes on AllFacebook
Nick,
It is nice to see balanced reporting on Facebook and not the kind of hack job that Kara Swisher of AllThingD.com seems to go in for. Even on a day when the naysayers should be pretty impressed with what Mark Zuckerberg and his team have pulled off, she can resist trivializing what is going on in the social operating space.
All I can say is there she goes again...
She just don't get it and it is getting a little boring to hear her constantly claim to be "the adult in the room" while making fun of Facebook, Mark Zuckerberg and the 160,000+ facebook developers (like her recent highly insulting video of team at the RockYou headquarters).
Throwing verbal or video volleys of sticks and stones just for dramatic or comedic effect is not really "adult" journalism but is something akin to a spoiled bully on a playground who happens to have access a major media outlet -- something that the targets of her posts and videos do not.
All she ever really comes around to saying is that "she bets facebook's valuation is a bubble that will soon burst" and she completely ignores the fact that 50+ million users (growing from 10 million this time last year) might just know better than Kara Swisher what they like to do on their computers.
I would like to ask her, "What are the consequences to you for being completely wrong about facebook?" The world will little note nor long remember what she says there in herr articles but real individuals who ignore facebook (based on her bad advice) may miss the chance to be part of what I've called "God's Gift to Developers" and what with the advent of the "Super Groups" Killer App for Business will soon be "God's Gift to Marketers."
As the first facebook-only VC, we are betting that Facebook is no fad. The good news is that our investment in Adonomics.com is already paying dividends in terms of facebook application developers who are hiring us to find buyers for their apps at or above their Adonomics valuations (e.g., iGift recently hired us to sell their gifting app). In addition, facebook developers of some of what Kara calls "apps for toddlers" are making $30K to $100K per month. This is why I think iGift will sell for at least $300K.
WRT Kara saying Facebook's $15 billion valuation is that high only because they artfully played their king-maker role between Microsoft and Google for the future dominance of online advertising, she should note that when a hedge fund invests at this same valuation, it will be because another group of rational adults (besides Bill and Steve) believe that an investment at the $15 billion valution today will yeild a nice ROI in a short period of time.
You can read a detailed discussion of why Facebook is actually worth $100 billion at blog.adonomics.com
(see http://blog.adonomics.com/2007/10/24/microsoft-... )
and how Facebook can earn $2 billion in 2008 and $4 billion in 2009 without inventing any new type of advertising or e-commerce system. I challenge Kara or any of the facebook naysayers to refute the business points I make in this post like an adult and not like a toddler (e.g., like in Kara's earlier previous post where her cogent argument was "I'm right because I say I am.")
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
(c) 2007 Altura Ventures LLC
It is nice to see balanced reporting on Facebook and not the kind of hack job that Kara Swisher of AllThingD.com seems to go in for. Even on a day when the naysayers should be pretty impressed with what Mark Zuckerberg and his team have pulled off, she can resist trivializing what is going on in the social operating space.
All I can say is there she goes again...
She just don't get it and it is getting a little boring to hear her constantly claim to be "the adult in the room" while making fun of Facebook, Mark Zuckerberg and the 160,000+ facebook developers (like her recent highly insulting video of team at the RockYou headquarters).
Throwing verbal or video volleys of sticks and stones just for dramatic or comedic effect is not really "adult" journalism but is something akin to a spoiled bully on a playground who happens to have access a major media outlet -- something that the targets of her posts and videos do not.
All she ever really comes around to saying is that "she bets facebook's valuation is a bubble that will soon burst" and she completely ignores the fact that 50+ million users (growing from 10 million this time last year) might just know better than Kara Swisher what they like to do on their computers.
I would like to ask her, "What are the consequences to you for being completely wrong about facebook?" The world will little note nor long remember what she says there in herr articles but real individuals who ignore facebook (based on her bad advice) may miss the chance to be part of what I've called "God's Gift to Developers" and what with the advent of the "Super Groups" Killer App for Business will soon be "God's Gift to Marketers."
As the first facebook-only VC, we are betting that Facebook is no fad. The good news is that our investment in Adonomics.com is already paying dividends in terms of facebook application developers who are hiring us to find buyers for their apps at or above their Adonomics valuations (e.g., iGift recently hired us to sell their gifting app). In addition, facebook developers of some of what Kara calls "apps for toddlers" are making $30K to $100K per month. This is why I think iGift will sell for at least $300K.
WRT Kara saying Facebook's $15 billion valuation is that high only because they artfully played their king-maker role between Microsoft and Google for the future dominance of online advertising, she should note that when a hedge fund invests at this same valuation, it will be because another group of rational adults (besides Bill and Steve) believe that an investment at the $15 billion valution today will yeild a nice ROI in a short period of time.
You can read a detailed discussion of why Facebook is actually worth $100 billion at blog.adonomics.com
(see http://blog.adonomics.com/2007/10/24/microsoft-... )
and how Facebook can earn $2 billion in 2008 and $4 billion in 2009 without inventing any new type of advertising or e-commerce system. I challenge Kara or any of the facebook naysayers to refute the business points I make in this post like an adult and not like a toddler (e.g., like in Kara's earlier previous post where her cogent argument was "I'm right because I say I am.")
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
(c) 2007 Altura Ventures LLC
1 year ago
in Does Facebook Need A Golden App? on AllFacebook
Nick,
In the early days of the PC, your concept of the "golden app" was called a "Killer App" and it was defined as the single app that would convince people to buy the machine that the app ran on.
At the dawn of the PC era with a product called the Apple II that Steve Jobs and Steve Wozniak thought was cool and might impress their friends had interesting color graphics when hooked up to a TV monitor and a stripped-down BASIC. I believe it may even have lacked a SHIFT key. Some said at the time (like Kara Swisher claims now about facebook) "How childish… a machine for alpha geeks in the homebrew computer club to make games for and not much else."
Well, I worked in a computer store in San Antonio in 1980 when a little piece of software called VisiCalc came out. I was instantly selling a lot of Apple II’s to businessmen who were dealing with huge ledgers of white-out strewn inventory counts and balance sheets who would give their eye teeth for a spreadsheet template that auto-recalculated their work whenever they needed to correct a mistake.
VisiCalc was the killer app that put Apple and Steve Jobs on the road to billions in wealth. And with respect to
Tim O’Reilly’s concern expressed in his facebook stats report about the fact that only a few big apps are getting most of the use on Facebook, isn’t that always the case? At least with facebook operating system, unlike Microsoft’s, the main apps are owned by 3rd parties. The real point is that Facebook is exactly ONE APPLICATION away from having their Social Operating System embraced and endorsed by the entire business world. This app will quickly zoom to the top of the list and will be the first app that causes new users to join facebook — just like Visicalc caused business people to buy the only computer that offer it.
In my opinion, Groups on facebook could be a possible starting point for a Killer App. The group "Create Event" feature works well and gracefully leverages the social graph and leads to more invitations than eVite.com. Groups also allow the group creator to send messages to their entire group which is quite useful in a business setting.
With respect to sending a message to the entire group, the group owner(s) can do this at the beginning of the group's formation but Facebook cuts off this capability when your group exceeds 1,000 members. I think this is kind of a silly restriction and it hampers a real business but I guess they are trying to prevent folks from using groups to spam folks. My own belief is that since groups are opt-in, I’m not sure this makes sense. However, it does show Mark Zuckerberg fanatical dislike of spam and groups could be mis-used to create spam-traps for unwitting users.
That being said, if App Developers could target the group page with the missing group features and if Group owners could monetize their group members by either using ads or charging to join subscription groups via a single facebook payment system, then we have the makings of the first Killer App on facebook that every cataloger, e-tailer, retailer, brand manager, blogger, unique content owner, etc. would want to use to connect with their key influencer customers.
This Super Groups app is my current suggestion for a Killer App or Golden App candidate for Faceboook. If there are developers out there working on it, please contact me and perhaps we'll invest in your company. Past killer apps that drove hardware purchases were:
1. VisiCalc -- Apple II
2. Lotus 123 & WordPerfect -- IBM PC
3. Excel & WORD -- Windows
4. PageMaker -- Mac and Laserwriter
5. iTunes -- iPod
In the case of facebook, the definition of a Killer App will be one that causes people who aren't yet on Facebook to Join Facebook itself. In that since, you might say that Photos and Events apps are already Killer Apps, but they mainly brought in college students. The next Killer App will be one that crosses over and brings in business people.
Thanks,
Lee Lorenzen
CEO, Altura Ventures — the first facebook-only VC
(c) 2007 Altura Ventures LLC.
In the early days of the PC, your concept of the "golden app" was called a "Killer App" and it was defined as the single app that would convince people to buy the machine that the app ran on.
At the dawn of the PC era with a product called the Apple II that Steve Jobs and Steve Wozniak thought was cool and might impress their friends had interesting color graphics when hooked up to a TV monitor and a stripped-down BASIC. I believe it may even have lacked a SHIFT key. Some said at the time (like Kara Swisher claims now about facebook) "How childish… a machine for alpha geeks in the homebrew computer club to make games for and not much else."
Well, I worked in a computer store in San Antonio in 1980 when a little piece of software called VisiCalc came out. I was instantly selling a lot of Apple II’s to businessmen who were dealing with huge ledgers of white-out strewn inventory counts and balance sheets who would give their eye teeth for a spreadsheet template that auto-recalculated their work whenever they needed to correct a mistake.
VisiCalc was the killer app that put Apple and Steve Jobs on the road to billions in wealth. And with respect to
Tim O’Reilly’s concern expressed in his facebook stats report about the fact that only a few big apps are getting most of the use on Facebook, isn’t that always the case? At least with facebook operating system, unlike Microsoft’s, the main apps are owned by 3rd parties. The real point is that Facebook is exactly ONE APPLICATION away from having their Social Operating System embraced and endorsed by the entire business world. This app will quickly zoom to the top of the list and will be the first app that causes new users to join facebook — just like Visicalc caused business people to buy the only computer that offer it.
In my opinion, Groups on facebook could be a possible starting point for a Killer App. The group "Create Event" feature works well and gracefully leverages the social graph and leads to more invitations than eVite.com. Groups also allow the group creator to send messages to their entire group which is quite useful in a business setting.
With respect to sending a message to the entire group, the group owner(s) can do this at the beginning of the group's formation but Facebook cuts off this capability when your group exceeds 1,000 members. I think this is kind of a silly restriction and it hampers a real business but I guess they are trying to prevent folks from using groups to spam folks. My own belief is that since groups are opt-in, I’m not sure this makes sense. However, it does show Mark Zuckerberg fanatical dislike of spam and groups could be mis-used to create spam-traps for unwitting users.
That being said, if App Developers could target the group page with the missing group features and if Group owners could monetize their group members by either using ads or charging to join subscription groups via a single facebook payment system, then we have the makings of the first Killer App on facebook that every cataloger, e-tailer, retailer, brand manager, blogger, unique content owner, etc. would want to use to connect with their key influencer customers.
This Super Groups app is my current suggestion for a Killer App or Golden App candidate for Faceboook. If there are developers out there working on it, please contact me and perhaps we'll invest in your company. Past killer apps that drove hardware purchases were:
1. VisiCalc -- Apple II
2. Lotus 123 & WordPerfect -- IBM PC
3. Excel & WORD -- Windows
4. PageMaker -- Mac and Laserwriter
5. iTunes -- iPod
In the case of facebook, the definition of a Killer App will be one that causes people who aren't yet on Facebook to Join Facebook itself. In that since, you might say that Photos and Events apps are already Killer Apps, but they mainly brought in college students. The next Killer App will be one that crosses over and brings in business people.
Thanks,
Lee Lorenzen
CEO, Altura Ventures — the first facebook-only VC
(c) 2007 Altura Ventures LLC.
1 year ago
in Is SuperWall Worth $10 Million? on AllFacebook
Nick,
I think you are missing a key point.
Valuation is what a willing buyer and willing seller agree to.
You and I can talk for hours about how silly someone is to pay $57 million for a painting of Irises but that is the valuation because a sale occurred.
In like manner, you may think that Lance is stupid, crazy, naive or arrogant for not selling his app for $10 million but the fact that he is not a willing seller at that price means that the app's valuation is higher. I don't know if we have it right at Adonomics ($11,950,400), but I'm pleased that we didn't value it lower than a price to which he has already said "NO" to in a very public forum.
As I've been writing for some time at http://blog.adonomics.com, developers should not make the mistake of selling their app too early. Lance is smart enough to realize that he is sitting on a gold mine and he shouldn't sell it based on what he is making right now from putting billboards up on his real estate. The real value comes when someone wants to start mining the gold that is represented in 10 million connected users.
Any interactive app that builds enough connected users to represent a sizeable portion of facebook's social graph is going to be worth a lot. In the Adonomics Valuation we provide a premium for these types of apps. The reason is that if facebook's snapshot of the world's social graph (with 43 million users) is worth $10 billion, it just stands to reason that a single app (with 10 million users -- 1/4 of all of facebook) is going to be worth alot -- not 1/4th of $10 billion but certainly more than $10 million.
I hope that helps. The acid test of Adonomics' valautions will be when more apps start selling. Feel free to contact LeeL@altura.com if you are interested in selling your facebook app at a price that is at or near the Adonomics Valuation.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
831-595-7501
I think you are missing a key point.
Valuation is what a willing buyer and willing seller agree to.
You and I can talk for hours about how silly someone is to pay $57 million for a painting of Irises but that is the valuation because a sale occurred.
In like manner, you may think that Lance is stupid, crazy, naive or arrogant for not selling his app for $10 million but the fact that he is not a willing seller at that price means that the app's valuation is higher. I don't know if we have it right at Adonomics ($11,950,400), but I'm pleased that we didn't value it lower than a price to which he has already said "NO" to in a very public forum.
As I've been writing for some time at http://blog.adonomics.com, developers should not make the mistake of selling their app too early. Lance is smart enough to realize that he is sitting on a gold mine and he shouldn't sell it based on what he is making right now from putting billboards up on his real estate. The real value comes when someone wants to start mining the gold that is represented in 10 million connected users.
Any interactive app that builds enough connected users to represent a sizeable portion of facebook's social graph is going to be worth a lot. In the Adonomics Valuation we provide a premium for these types of apps. The reason is that if facebook's snapshot of the world's social graph (with 43 million users) is worth $10 billion, it just stands to reason that a single app (with 10 million users -- 1/4 of all of facebook) is going to be worth alot -- not 1/4th of $10 billion but certainly more than $10 million.
I hope that helps. The acid test of Adonomics' valautions will be when more apps start selling. Feel free to contact LeeL@altura.com if you are interested in selling your facebook app at a price that is at or near the Adonomics Valuation.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
831-595-7501
1 year ago
in http://www.rev2.org/2007/09/30/ebay-auction-for-facebook-app-yields-interesting-results/ on Rev2.org
James,
I'm Lee Lorenzen, CEO of Altura Ventures -- the first facebook-only VC and interim CEO of Adonomics.
As I said in my post a few days ago, when I first saw the I am Hungry app on eBay:
http://blog.adonomics.com/2007/09/24/an-adonomi...
===
A current example is the app “I Am Hungry†which originally went on sale on eBay with an initial minimum bid of $5,000. Had someone bid this amount, the app developers would have been forced to sell their app without fully exploring its potential value. As you can see in their current eBay listing, they now have put in place a hidden reserve price which is hopefully closer to what Adonomics projects the value to be:
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&a...
In my opinion, if you are going to sell in an app on eBay, this is a much smarter way to do so because our Adonomics Estimated Valuation for the “I am Hungry†app is $25K.
http://adonomics.com/about/2367258038
This number could go even higher if the app developers provide Adonomics with the data to turn this estimated number into an Adonomics Certified Valuation.
==
After my post, Dan Peguine put a link to the Adonomics valuation at the bottom of the auction listing and Altura Ventures did what it could to spread the word about the app and our view of its value being much higher than the $1500 to $1600 range. I also advised him that an installment sale was a better structure because it would allow the buyer to re-coop the price overtime from the advertising potential that the app represented. Since Dan didn’t need the money right away and since his Intellectual Property would come back to him if he wasn’t fully paid, it was an easy way to get the bidding to go beyond the $1600 range.
In the last hour before the auction ended, the bidding jumped over $20,100 (which met Dan’s new reserve price) and effectively ended the auction.
As you mention, this is particularly impressive for an app with only around 600 active users and fits in with Altura Ventures’ view that the total install base of an app and the square inches of the 250,000 users’ profile pages that “I am Hungry†controls is worth a significant amount.
IMHO, had “I am Hungry†received an “Adonomics Certified Valuation†by providing their Google Analytics data it is likely their valuation would have gone up significantly and this might have led to even a higher price.
In any case, this bodes well for all facebook developers and I also want to announce that Adonomics will be offering to all facebook developers that want to sell their app a brokerage service where we will do our best to help them get prices at or near their Adonomics Valuations.
Had we provided this service for Dan, I would have suggested that in addition to offering an installment sale approach and getting an Adonomics Certified Valuation that they should have shifted the app into something that showed the logos of the restaurants that their hungry users were thinking of going to. In addition, they should have had a default restaurant choice be something like the “McDonalds — I’m Lovin’ It†logo or “Outback SteakHouse†or “Applebees†logos showing on the user’s page. This way there would be a Let’s Eat Out app that would have shown each friend’s restaurant choice/logo on 250,000 profile pages.
I’m confident that Adonomics could have sold this app for $100K to $250K to the ad agency for McDonalds in a sponsorship deal that would have been lovin’ it if they could have instanly been on the home page of 250,000 users who were too in-active to change their resturaunt setting. And, because this is part of the app itself, it wouldn’t even be a violation of facebook’s TOS about no ads on the profile page.
If you are a developer with an app to sell, friend me and message me in facebook with the particulars about your app and then feel free to give me a call if you have questions at 831-595-7501.
Thanks,
Lee Lorenzen
CEO, Altura Ventures — the first facebook-only VC
I'm Lee Lorenzen, CEO of Altura Ventures -- the first facebook-only VC and interim CEO of Adonomics.
As I said in my post a few days ago, when I first saw the I am Hungry app on eBay:
http://blog.adonomics.com/2007/09/24/an-adonomi...
===
A current example is the app “I Am Hungry†which originally went on sale on eBay with an initial minimum bid of $5,000. Had someone bid this amount, the app developers would have been forced to sell their app without fully exploring its potential value. As you can see in their current eBay listing, they now have put in place a hidden reserve price which is hopefully closer to what Adonomics projects the value to be:
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&a...
In my opinion, if you are going to sell in an app on eBay, this is a much smarter way to do so because our Adonomics Estimated Valuation for the “I am Hungry†app is $25K.
http://adonomics.com/about/2367258038
This number could go even higher if the app developers provide Adonomics with the data to turn this estimated number into an Adonomics Certified Valuation.
==
After my post, Dan Peguine put a link to the Adonomics valuation at the bottom of the auction listing and Altura Ventures did what it could to spread the word about the app and our view of its value being much higher than the $1500 to $1600 range. I also advised him that an installment sale was a better structure because it would allow the buyer to re-coop the price overtime from the advertising potential that the app represented. Since Dan didn’t need the money right away and since his Intellectual Property would come back to him if he wasn’t fully paid, it was an easy way to get the bidding to go beyond the $1600 range.
In the last hour before the auction ended, the bidding jumped over $20,100 (which met Dan’s new reserve price) and effectively ended the auction.
As you mention, this is particularly impressive for an app with only around 600 active users and fits in with Altura Ventures’ view that the total install base of an app and the square inches of the 250,000 users’ profile pages that “I am Hungry†controls is worth a significant amount.
IMHO, had “I am Hungry†received an “Adonomics Certified Valuation†by providing their Google Analytics data it is likely their valuation would have gone up significantly and this might have led to even a higher price.
In any case, this bodes well for all facebook developers and I also want to announce that Adonomics will be offering to all facebook developers that want to sell their app a brokerage service where we will do our best to help them get prices at or near their Adonomics Valuations.
Had we provided this service for Dan, I would have suggested that in addition to offering an installment sale approach and getting an Adonomics Certified Valuation that they should have shifted the app into something that showed the logos of the restaurants that their hungry users were thinking of going to. In addition, they should have had a default restaurant choice be something like the “McDonalds — I’m Lovin’ It†logo or “Outback SteakHouse†or “Applebees†logos showing on the user’s page. This way there would be a Let’s Eat Out app that would have shown each friend’s restaurant choice/logo on 250,000 profile pages.
I’m confident that Adonomics could have sold this app for $100K to $250K to the ad agency for McDonalds in a sponsorship deal that would have been lovin’ it if they could have instanly been on the home page of 250,000 users who were too in-active to change their resturaunt setting. And, because this is part of the app itself, it wouldn’t even be a violation of facebook’s TOS about no ads on the profile page.
If you are a developer with an app to sell, friend me and message me in facebook with the particulars about your app and then feel free to give me a call if you have questions at 831-595-7501.
Thanks,
Lee Lorenzen
CEO, Altura Ventures — the first facebook-only VC
1 year ago
in I Am Hungry Sells for $20,100 on AllFacebook
Nick,
As I said in my post a few days ago, when I first saw the I am Hungry app on eBay:
http://blog.adonomics.com/2007/09/24/an-adonomi...
>
After my post, Dan Peguine put a link to the Adonomics valuation at the bottom of the auction listing and Altura Ventures did what it could to spread the word about the app and our view of its value being much higher than the $1500 to $1600 range. I also advised him that an installment sale was a better structure because it would allow the buyer to re-coop the price overtime from the advertising potential that the app represented. Since Dan didn't need the money right away and since his Intellectual Property would come back to him if he wasn't fully paid, it was an easy way to get the bidding to go beyond the $1600 range.
In the last hour before the auction ended, the bidding jumped over $20,100 (which met Dan's new reserve price) and
effectively ended the auction.
As Nick mentions, this is particularly impressive for an app with only around 600 active users and fits in with Altura Ventures' view that the total install base of an app and the square inches of the 250,000 users' profile pages that "I am Hungry" controls is worth a significant amount.
IMHO, had "I am Hungry" received an "Adonomics Certified Valuation" by providing their Google Analytics data
it is likely their valuation would have gone up significantly and this might have led to even a higher price.
In any case, this bodes well for all facebook developers and I also want to announce that Adonomics will be offering to all facebook developers that want to sell their app a brokerage service where we will do our best to help them get prices at or near their Adonomics Valuations.
Had we provided this service for Dan, I would have suggested that in addition to offering an installment sale approach and getting an Adonomics Certified Valuation that they should have shifted the app into something that showed the logos of the restaurants that their hungry users were thinking of going to. In addition, they should have had a default restaurant choice be something like the "McDonalds -- I'm Lovin' It" logo or "Outback SteakHouse" or "Applebees" logos showing on the user's page. This way there would be a Let's Eat Out app that would have shown each friend's restaurant choice/logo on 250,000 profile pages.
I'm confident that Adonomics could have sold this app for $100K to $250K to the ad agency for McDonalds in a sponsorship deal that would have been lovin' it if they could have instanly been on the home page of 250,000 users who were too in-active to change their resturaunt setting. And, because this is part of the app itself, it wouldn't even be a violation of facebook's TOS about no ads on the profile page.
If you are a developer with an app to sell, friend me and message me in facebook with the particulars about your app and then feel free to give me a call if you have questions at 831-595-7501.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
As I said in my post a few days ago, when I first saw the I am Hungry app on eBay:
http://blog.adonomics.com/2007/09/24/an-adonomi...
>
After my post, Dan Peguine put a link to the Adonomics valuation at the bottom of the auction listing and Altura Ventures did what it could to spread the word about the app and our view of its value being much higher than the $1500 to $1600 range. I also advised him that an installment sale was a better structure because it would allow the buyer to re-coop the price overtime from the advertising potential that the app represented. Since Dan didn't need the money right away and since his Intellectual Property would come back to him if he wasn't fully paid, it was an easy way to get the bidding to go beyond the $1600 range.
In the last hour before the auction ended, the bidding jumped over $20,100 (which met Dan's new reserve price) and
effectively ended the auction.
As Nick mentions, this is particularly impressive for an app with only around 600 active users and fits in with Altura Ventures' view that the total install base of an app and the square inches of the 250,000 users' profile pages that "I am Hungry" controls is worth a significant amount.
IMHO, had "I am Hungry" received an "Adonomics Certified Valuation" by providing their Google Analytics data
it is likely their valuation would have gone up significantly and this might have led to even a higher price.
In any case, this bodes well for all facebook developers and I also want to announce that Adonomics will be offering to all facebook developers that want to sell their app a brokerage service where we will do our best to help them get prices at or near their Adonomics Valuations.
Had we provided this service for Dan, I would have suggested that in addition to offering an installment sale approach and getting an Adonomics Certified Valuation that they should have shifted the app into something that showed the logos of the restaurants that their hungry users were thinking of going to. In addition, they should have had a default restaurant choice be something like the "McDonalds -- I'm Lovin' It" logo or "Outback SteakHouse" or "Applebees" logos showing on the user's page. This way there would be a Let's Eat Out app that would have shown each friend's restaurant choice/logo on 250,000 profile pages.
I'm confident that Adonomics could have sold this app for $100K to $250K to the ad agency for McDonalds in a sponsorship deal that would have been lovin' it if they could have instanly been on the home page of 250,000 users who were too in-active to change their resturaunt setting. And, because this is part of the app itself, it wouldn't even be a violation of facebook's TOS about no ads on the profile page.
If you are a developer with an app to sell, friend me and message me in facebook with the particulars about your app and then feel free to give me a call if you have questions at 831-595-7501.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
1 year ago
in Second Facebook Application for Sale on eBay on AllFacebook
To all:
Adonomics has just created a new service where we use:
1. available facebook data (e.g., active users, total installs, total facebook user populuation, total facebook active users,
facebook's historical growth rate),
2. estimated and/or app provided metrics (e.g., canvas pages views, app users' reachable via the notification API and/or profile page updates, unique visitors per month, time spent on canvas page, current CPM/CPC/CPI ad revenue levels and/or opportunities, app's new user and active user growth rates)
3. assumptions about Facebook's growth rate and the app's new user growth rate extrapolated over certain forward looking time periods, in the app's case, influenced by the size to the app's install base compared to other apps, the age of the app on the
platform compared to other apps of similar age, the category of the app, the competiveness of the app's category, etc.
4. projections relative to ad revenue for the coming 12 months based on expected growth in CPM/CPC/CPI rates over time and with additional user targeting and then applying best practices WRT managing an app's ad real estate
(e.g., testing all ad platforms such as AdBrite, back-filling all available app real estate, creating new ad real estate that enhances app stickiness, cross-promoting opportunities, targeting an app to an attractive end user ad demographic, targeting an app to an appropriate ad sponsor)
5. other variables that relate to our own knowledge of app valuations based on apps we've purchased, developed, marketed via
various existing ad networks and brokered to third party acquirers and/or ad sponsors.
Based on all of these data points, we come up with a valuation for the I Am Hungry app of around $25K (see http://adonomics.com/about/2367258038)
This is the number that we believe the app is worth assuming that the app is properly packaged for sale and the sales process
is managed in a professional way. Simply putting an app up on eBay and seeing what you get is, in our opinion, not how app
developers will maximize their revenue.
Our goal at Adonomics and Altura Ventures is to help the Facebook developers win by helping them get a fair price for their
apps. While we still advocate not selling an app too early, if an app developer does want to sell, then they should do so in
a way that gets a value that is closer to what their app's future revenue potential is.
We believe that the Adonomics Estimated Valuations and Adonomics Certified Valuations are a step in that direction. We will
continue to enhance our formula to ensure that it ties to real world numbers. That being said, valuation is what buyer and
seller agree to. So, feel free to sell your app for whatever you wish and feel free to contact us if you don't think you are
getting a fair price.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first Facebook-only VC fund
Adonomics has just created a new service where we use:
1. available facebook data (e.g., active users, total installs, total facebook user populuation, total facebook active users,
facebook's historical growth rate),
2. estimated and/or app provided metrics (e.g., canvas pages views, app users' reachable via the notification API and/or profile page updates, unique visitors per month, time spent on canvas page, current CPM/CPC/CPI ad revenue levels and/or opportunities, app's new user and active user growth rates)
3. assumptions about Facebook's growth rate and the app's new user growth rate extrapolated over certain forward looking time periods, in the app's case, influenced by the size to the app's install base compared to other apps, the age of the app on the
platform compared to other apps of similar age, the category of the app, the competiveness of the app's category, etc.
4. projections relative to ad revenue for the coming 12 months based on expected growth in CPM/CPC/CPI rates over time and with additional user targeting and then applying best practices WRT managing an app's ad real estate
(e.g., testing all ad platforms such as AdBrite, back-filling all available app real estate, creating new ad real estate that enhances app stickiness, cross-promoting opportunities, targeting an app to an attractive end user ad demographic, targeting an app to an appropriate ad sponsor)
5. other variables that relate to our own knowledge of app valuations based on apps we've purchased, developed, marketed via
various existing ad networks and brokered to third party acquirers and/or ad sponsors.
Based on all of these data points, we come up with a valuation for the I Am Hungry app of around $25K (see http://adonomics.com/about/2367258038)
This is the number that we believe the app is worth assuming that the app is properly packaged for sale and the sales process
is managed in a professional way. Simply putting an app up on eBay and seeing what you get is, in our opinion, not how app
developers will maximize their revenue.
Our goal at Adonomics and Altura Ventures is to help the Facebook developers win by helping them get a fair price for their
apps. While we still advocate not selling an app too early, if an app developer does want to sell, then they should do so in
a way that gets a value that is closer to what their app's future revenue potential is.
We believe that the Adonomics Estimated Valuations and Adonomics Certified Valuations are a step in that direction. We will
continue to enhance our formula to ensure that it ties to real world numbers. That being said, valuation is what buyer and
seller agree to. So, feel free to sell your app for whatever you wish and feel free to contact us if you don't think you are
getting a fair price.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first Facebook-only VC fund
1 year ago
in Lee Lorenzen Strikes Back on AllFacebook
Nick,
Wow, I'm not sure how to respond. I guess I'm glad you agree that Facebook is worth $100 Billion and I'll now count you as a convert in my mission to convince the world that Facebook is indeed the NEXT BIG THING.
In fact, I wrote about how the Facebook story (see http://blog.adonomics.com) is really "Triumph of the Nerds -- Part Deux" (with all proper credit to Robert X. Cringley for his great book and video about the advent of the first mainstream Graphical Operating System).
Facebook's arrival will allow for another HUGE CREATION OF WEALTH and it will be interesting to see how Bill Gates, Steve Ballmer, Steve Jobs, Eric Schmidt, Larry Page and Sergei Brin react to this coming sea change.
The battle of the titans is about to begin and it will only help to accelerate the success of Facebook's user recruiting efforts from my estimate of 200 million to your 500 million number to even numbers beyond these levels.
In that vain, you may have noticed the link about facebook adding "Friend Lists" (see http://www.insidefacebook.com/2007/08/29/specul...). This will allow facebook users to begin to segment family, work, school and social friends into different lists (along with different sections for photos, videos, embarrassing wall posts, etc.) and make it much safer for lots of business folks currently maintaining a profile on LinkedIn to jump ship and join the fun on Facebook.
IMHO, this move is going to kill LinkedIn and their best hope would be to try to find a way to get acquired by Facebook for 1/2% to 1% of Facebook. Which given my valuation will turn out to be $500 million to $1 billion of post-ipo stock value. Not a bad deal (and one I hope my former company SHOP.COM is able to make).
Imagine what would happen if a BIG APPLICATION SUITE PLAYER (e.g., Microsoft) were to fully embrace the Facebook platform and shift all of their tech. support for apps into Facebook Groups like the "Official Microsoft Office Users Group" (see http://www.facebook.com/group.php?gid=2458432518 that I created and Steve Ballmer is already a member of). In addition, it would be trivial for Microsoft to change the install process for their entire Office application suite to encourage folks to register with their Facebook User ID (and perhaps earn some greater level of support or some other benefit like peer support through an app like CrossLoop.com).
This could mean another 50 to 100 million business users on Facebook in under 12 month's time.
How much would this be worth to Facebook?
This is just one way in which Microsoft could quietly lock up an option to purchase some decent percentage of Facebook in the future without spending a dime today. In face, it would be a HUGE MISTAKE for Microsoft to buy facebook outright. It is only important that Microsoft prevent anyone else from doing so. The right kind of deal would allow Facebook to become HUGE on their own but to do so while having an alliance with Microsoft in the advertising domain.
So, the point of my post is not that Facebook will compete with everyone I listed but that they will leverage their gatekeeper / kingmaker role in the facebook eco-system to ensure they own a piece of the winners or extract a long term tax from partners who do most of the heavy lifting in areas like brand and keyword advertising.
Thanks,
Lee Lorenzen
CEO, Altura Ventures
Wow, I'm not sure how to respond. I guess I'm glad you agree that Facebook is worth $100 Billion and I'll now count you as a convert in my mission to convince the world that Facebook is indeed the NEXT BIG THING.
In fact, I wrote about how the Facebook story (see http://blog.adonomics.com) is really "Triumph of the Nerds -- Part Deux" (with all proper credit to Robert X. Cringley for his great book and video about the advent of the first mainstream Graphical Operating System).
Facebook's arrival will allow for another HUGE CREATION OF WEALTH and it will be interesting to see how Bill Gates, Steve Ballmer, Steve Jobs, Eric Schmidt, Larry Page and Sergei Brin react to this coming sea change.
The battle of the titans is about to begin and it will only help to accelerate the success of Facebook's user recruiting efforts from my estimate of 200 million to your 500 million number to even numbers beyond these levels.
In that vain, you may have noticed the link about facebook adding "Friend Lists" (see http://www.insidefacebook.com/2007/08/29/specul...). This will allow facebook users to begin to segment family, work, school and social friends into different lists (along with different sections for photos, videos, embarrassing wall posts, etc.) and make it much safer for lots of business folks currently maintaining a profile on LinkedIn to jump ship and join the fun on Facebook.
IMHO, this move is going to kill LinkedIn and their best hope would be to try to find a way to get acquired by Facebook for 1/2% to 1% of Facebook. Which given my valuation will turn out to be $500 million to $1 billion of post-ipo stock value. Not a bad deal (and one I hope my former company SHOP.COM is able to make).
Imagine what would happen if a BIG APPLICATION SUITE PLAYER (e.g., Microsoft) were to fully embrace the Facebook platform and shift all of their tech. support for apps into Facebook Groups like the "Official Microsoft Office Users Group" (see http://www.facebook.com/group.php?gid=2458432518 that I created and Steve Ballmer is already a member of). In addition, it would be trivial for Microsoft to change the install process for their entire Office application suite to encourage folks to register with their Facebook User ID (and perhaps earn some greater level of support or some other benefit like peer support through an app like CrossLoop.com).
This could mean another 50 to 100 million business users on Facebook in under 12 month's time.
How much would this be worth to Facebook?
This is just one way in which Microsoft could quietly lock up an option to purchase some decent percentage of Facebook in the future without spending a dime today. In face, it would be a HUGE MISTAKE for Microsoft to buy facebook outright. It is only important that Microsoft prevent anyone else from doing so. The right kind of deal would allow Facebook to become HUGE on their own but to do so while having an alliance with Microsoft in the advertising domain.
So, the point of my post is not that Facebook will compete with everyone I listed but that they will leverage their gatekeeper / kingmaker role in the facebook eco-system to ensure they own a piece of the winners or extract a long term tax from partners who do most of the heavy lifting in areas like brand and keyword advertising.
Thanks,
Lee Lorenzen
CEO, Altura Ventures
1 year ago
in How Much Is Facebook Worth? on AllFacebook
Nick,
WRT to my motives, I don't make the point about Facebook being worth $100 billion because I run Altura Ventures the first VC focused soley on investing in Facebook Apps. Instead, I'm investing in Facebook Apps because I truly believe Facebook will be worth $100 billion and unfortunately, I don't have current ownership in Facebook itself nor do I have any way of directly investing in Facebook. Therefore, the only way to win big as Facebook's value is more broadly recognized is to invest in Facebook Apps.
Let me say that I appreciate your skepticism regarding Facebook being worth $100 billion and I hope that you will read the full discussion board post that back up the point and not dismiss it as some kind of random hype.
To summarize the points in my post:
1. Facebook will grow to 200 million users by Dec. 2008. I base this on what they've already accomplished:
FB Year 1 (Dec. 31, 2004) -- 1 million
FB Year 2 (Dec. 31, 2005) -- 5 million
FB Year 3 (Dec. 31, 2006) -- 12 million
FB Year 4 (Apr. 26, 2007) -- 20 million
FB Year 4 (Aug. 1, 2007) -- 30 million
FB Year 4 (Dec. 31, 2007) -- 50+ million
FB Year 5 (June 6, 2008) -- 100+ million
FB Year 5 (Dec. 31, 2008) -- 200+ million
2. Facebook's valuation will be around $500 per user. I base this on the multiple sources of revenue that will flow to them from:
2a. targetted brand advertising -- their Yahoo play
2b. keyword driven search advertising -- their Google play
2c. P2P e-commerce transactions -- their eBay play
2d. B2C e-commerce transactions -- their Amazon play
2e. Industry Alliance transactions -- their Microsoft vs. Google play
3. Facebook is the world's FIRST social operating system and the world only needs ONE such open platform. Therefore, the market power of the dominant player in this upcoming major OS transition will be HUGE. In my opinion, facebook which started in 2004 and is becoming the "first mainstream Social Operating System" is similar to Microsoft Windows which started in 1984 and became the "first mainstream Graphical Operating System." Just like with Windows, whoever controls the OS and whoever controls the dominant applications for that OS will make HUGE SUMS of MONEY over the next 20 years.
WRT your comparison to Google's $160 billion value, remember that Google makes their money by monetizing people as they leave their site. Contrast this with Facebook's multiple sources of revenue which are mostly tied to people staying within Facebook's environment. Everything big and important (but slightly broken) about the current internet has a chance to be re-invented and re-interpreted inside of Facebook as an application with the added value and power of an ever-growing social graph of connected users.
For example, you can already see how facebook has dramatically improved e-mail by offering a constantly updated global address book where everybody you care about can easily find you and by creating an environment that effectively kills SPAM because no anonymous person or marketing company can bother you more than once.
You can read the details about my views in the full post in my Official Altura Ventures & AppFactory Facebook Investment Fund Group (see http://www.facebook.com/group.php?gid=2392191727) and my comments to those who asked questions about this $100 Billion valuation (see http://www.facebook.com/topic.php?uid=239219172...).
Thanks,
Lee Lorenzen
(c) 2007 Altura Ventures LLC
WRT to my motives, I don't make the point about Facebook being worth $100 billion because I run Altura Ventures the first VC focused soley on investing in Facebook Apps. Instead, I'm investing in Facebook Apps because I truly believe Facebook will be worth $100 billion and unfortunately, I don't have current ownership in Facebook itself nor do I have any way of directly investing in Facebook. Therefore, the only way to win big as Facebook's value is more broadly recognized is to invest in Facebook Apps.
Let me say that I appreciate your skepticism regarding Facebook being worth $100 billion and I hope that you will read the full discussion board post that back up the point and not dismiss it as some kind of random hype.
To summarize the points in my post:
1. Facebook will grow to 200 million users by Dec. 2008. I base this on what they've already accomplished:
FB Year 1 (Dec. 31, 2004) -- 1 million
FB Year 2 (Dec. 31, 2005) -- 5 million
FB Year 3 (Dec. 31, 2006) -- 12 million
FB Year 4 (Apr. 26, 2007) -- 20 million
FB Year 4 (Aug. 1, 2007) -- 30 million
FB Year 4 (Dec. 31, 2007) -- 50+ million
FB Year 5 (June 6, 2008) -- 100+ million
FB Year 5 (Dec. 31, 2008) -- 200+ million
2. Facebook's valuation will be around $500 per user. I base this on the multiple sources of revenue that will flow to them from:
2a. targetted brand advertising -- their Yahoo play
2b. keyword driven search advertising -- their Google play
2c. P2P e-commerce transactions -- their eBay play
2d. B2C e-commerce transactions -- their Amazon play
2e. Industry Alliance transactions -- their Microsoft vs. Google play
3. Facebook is the world's FIRST social operating system and the world only needs ONE such open platform. Therefore, the market power of the dominant player in this upcoming major OS transition will be HUGE. In my opinion, facebook which started in 2004 and is becoming the "first mainstream Social Operating System" is similar to Microsoft Windows which started in 1984 and became the "first mainstream Graphical Operating System." Just like with Windows, whoever controls the OS and whoever controls the dominant applications for that OS will make HUGE SUMS of MONEY over the next 20 years.
WRT your comparison to Google's $160 billion value, remember that Google makes their money by monetizing people as they leave their site. Contrast this with Facebook's multiple sources of revenue which are mostly tied to people staying within Facebook's environment. Everything big and important (but slightly broken) about the current internet has a chance to be re-invented and re-interpreted inside of Facebook as an application with the added value and power of an ever-growing social graph of connected users.
For example, you can already see how facebook has dramatically improved e-mail by offering a constantly updated global address book where everybody you care about can easily find you and by creating an environment that effectively kills SPAM because no anonymous person or marketing company can bother you more than once.
You can read the details about my views in the full post in my Official Altura Ventures & AppFactory Facebook Investment Fund Group (see http://www.facebook.com/group.php?gid=2392191727) and my comments to those who asked questions about this $100 Billion valuation (see http://www.facebook.com/topic.php?uid=239219172...).
Thanks,
Lee Lorenzen
(c) 2007 Altura Ventures LLC
