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Facebook: The New Goldrush
By Mark Evans | August 30, 2007
Over the past couple of weeks, I’ve been thinking and reading a lot about the economies of Facebook - not whether it’s worth $100-billion or whether the company will do an IPO rather than accept a zillionaire dollar takeover offer.
In particular, I’m talking about the thriving Facebook application landscape that a growing number of companies are enthusiastically jumping on. If a Web-based company doesn’t have a Facebook application already, they’ve got a team of developers pumped up with Red Bull and Skittles trying to create as soon as possible. According to Inside Facebook, there were 3,261 applications created in the first three months after Facebook opened up its API.
Some applications such as Top Friends, Video, iLike and Graffiti already have millions of users. Meanwhile, an investment community has quickly formed around the
Facebook platform with Bay Partners launching a Facebook-only fund that will invest $25,000 to $250,000 in Facebook start-ups. Then, you’ve got entrepreneurs getting involved hoping to be the next Where I’ve Been, which was reported acquired by TripAdvisor for $3-million.
In thinking about it, the landscape looks like like the Yukon gold rush of 1897 with a small number of lucky miners (Mark Zuckerberg, Peter Thiel, Greylock Partners, Meritech and Accel Partners) scoring the biggest and best claim while thousands of miners scramble to get in while the going is good.
Much like the suppliers during the gold rush made out like bandits by supplying all these miners with equipment, there is a growing number of development firms and consultants emerging to help build and market anything you want…for a fee, of course. It’s all about supply and demand, and right now the demand to get involved is clearly stripping demand.
The big question is monetization, and how these applications can turn users into dollars. CNNMoney has a terrific story looking at the different ways to cash in so there’s little need to elaborate much other than it looks like the most successful entrepreneurs will be the ones who got in early and were able to build a large user base before things got crazy.
Some of these people may be able to make money by selling their large user bases to companies that want to sell to a captive audience. TripAdvisor’s deal for Where I’ve Been a Perfect example. Others may be able to make money by selling things to their users, while others will simply be happy with any marketing zing they get.
For the vast majority, however, Facebook will be a process with no or little rewards. As much as everyone hopes to develop something that resonate with Facebook users, the competitive landscape is way too crowded already. Sure, there will be an exception to the rule but if an entrepreneur thinks there’s a big score to be made by jumping into Facebook now, he and his money will soon be separated.
More: Mike Garrity offers up five Facebook predictions, including the fact it will launch a search tool and roll out out its own ad network.
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