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The Snap Summit 2.0 conference yesterday in San Francisco was supposed to be about the new wave of social applications, but it turned into a Facebook conference.
Here's why: The number of Facebook applications and downloads just keeps growing -- at a faster rate than other social network companies are experiencing.
Dave Morin, the senior platform manager at Facebook, was the event's main attraction. He opened his talk with a story about a woman he had met outside. She had created a Facebook application “Easter Eggs” three weeks ago. She built it in a week with the Ruby on Rails programming tools. She released it and saw it grow to more than 300,000 users. She sold the application on Tuesday. While this is an unusually good scenario, there are still many developers trying their luck: More than 100 such apps are launching every day.
And now Facebook's going to be launching a new e-commerce technology, giving users and applications better ways to make, bill and receive payments in a "frictionless way," meaning applications can make money beyond just through advertising.
So there's even more reason for developers to jump in and build applications.
Facebook now has 67 million active users. It’s like an obsession for many, despite the general skepticism about the revenue potential of social networks and the widgets that live on them.
Stanford professor BJ Fogg is actually paid to teach on the psychology of Facebook. During his talk at the Snap Summit 2.0, he recounted lessons that came from teaching students who created Facebook applications. These apps had 16 million users by the end of the ten-week class.
Fogg recounted facts well-known to insiders, but which served to remind of the astounding growth of Facebook applications in the early days -- such as iLike, a music discovery app, which hit nearly a million users a week after it launched on Facebook's developer platform in May of last year. “I would wager that no company grew so fast in history,” he said. “It was clear that something special was happening."
There are a half-dozen hooks that explain Facebook’s appeal, he said. One of them he calls “mass interpersonal persuasion,” or a clever use of psychology to get users to do something with their friends. There are 30,000 applications today because people persuade their friends to install, use and share applications. The most persuasive ones of all are the ones that don't seem like they're a sales pitch.
Users pay attention to how popular applications are, Fogg said. If they catch on in a viral fashion and the install rates are high, then they are more likely to adopt it. The apps developers have to measure and test their ideas. Don’t sit around brainstorming until your ideas are perfect. Put it out there. If the metrics are good, go for it and then iterate rapidly on the application until you get it right.
Back to Morin: He said Facebook is continuing to upgrade the profile page that users see when they log into the site. Those changes are aimed at making sure a user knows what’s new with friends as well as the actions that a user can take. There are 4 billion pictures on Facebook, but you only see the new ones that your friends have posted. The “wall,” where friends can leave notes or pictures, will be the centerpiece of the profile page. It will add something called “tabs” as a new point of information integration to the page as well. These are things that will increase application usage, Morin said.
During Q&A, Morin shed light on more details on the e-commerce plans. The company will build native support for credit-card purchases, he said. Facebook wants a simple and secure payment system for users, he said. It will include allowing subscription services. It’s coming in the next couple of quarters, which one VC said means “an e-commerce Facebook Christmas."
One question popped up about TechCrunch’s story on a preferred application provider program at Facebook. The program would would give stronger showcasing to applications Facebook's managers decide they liked, according to the story. In response, Morin said, “Yesterday there was an article on TechCrunch on a preferred app program or something like that. It's something we thought about. It's not something that is being worked on. We know that developer programs have had versions of this. We've always tried to approach the market in a very agnostic way. In a fair way. So it's not something that we are necessarily working on. We are doing these developer roundtables and bringing in developers that are trusted. We've worked with larger developers on some things. But there is no formal program at this point.”
In the latter part of the day, the discussion turned to fear and greed. Does the credit crunch mean the good times are over for the Web 2.0 industry? Some applications developers have been impatient about getting funding, so they can grow their applications into companies and then sell them.
There have been very few sales, with one of them in the low millions, for Facebook developers, said Jeremy Liew, a partner at Lightspeed Venture Partners. That’s even the case with developers who have a top-25 Facebook app. He said people should be patient because Facebook applications are really just nine months old. The bigger valuations and investments are yet to come. Liew said he signed three term sheets in three weeks, presumably on social networking companies.
But Seth Goldstein, CEO of the application network SocialMedia, was less optimistic. He said it has yet to be determined whether the sale of Bebo for $850 million to AOL marks the peak of the social networking valuations, given the current decline in optimism about the economy. Some areas such as Facebook gaming or Facebook dating apps might be ripe for acquisitions. But not every category.
“VCs are cutting down funding and exits will be suboptimal,” he said. Still, he said the big brands have yet to pour money into Facebook and he expects that to happen.