alarm:clock

Venture Capital - Monday, June 25, 2007

VCs To Facebook: Where's The Beef?

Facebook has been on a huge high over the past few weeks. However, over the weekend, a couple of VCs weighed in on Facebook and while the both admire the company, they don't see much utility in Facebook's 3rd party integration program.

Andrew Chen, who is actually an EIR at Mohr Davidow Ventures and who co-founded Revenue Science's online ad network business, says: "The platform is a great opportunity for widget developers to put up some huge adoption numbers, but the revenue opportunity is still very much unproven. It’s unclear how much a Facebook app user is worth, compared to a user on your destination site. On a destination site, you can probably get a $0.50-1 CPM, whereas the CTRs and conversion rates on Facebooks apps imply a much lower CPM. Facebook app users are potentially worth about 1% of what users on your website are worth in my view, but the opportunity is to make it up in bulk."

VC Brad Feld puts it this way:
"As far as I can tell, none of these Facebook apps developers are deriving any real benefits (if you are a Facebook apps developer and ARE deriving a tangible benefit, other than customer acquisition within the Facebook infrastructure, please weigh in.) In addition, Facebook has shifted all of the infrastructure costs to these apps developers, creating the "I have 250,000 users, now what?” problem."

Read - VC Perspectives on the Facebook Platform: Andrew Chen, MDV EIR
Read - The Facebook Problem (Brad Feld)