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Facebook to Start Letting Employees Sell Shares Posted: 04 Aug 2008 01:41 PM CDT Looking to buy some hot Facebook stock? It looks like you may be able to start purchasing shares from insiders at a $4 billion valuation starting this fall according to Eric Eldon. Eric cites some “well connected” sources about this new ability to sell out early. The employees can’t sell all their shares though, only up to 20 percent for the time being. Given the rumors of a number of employees trying to sell out early on and given that Facebook won’t be going public anytime soon there’s a good chance that a number of employees will take this option. It also provides them with an incentive to stay on longer while increasing the liquid value of their nest-egg. How are buyers going to be able to value the company exactly? I have no idea given that buyers most likely don’t have access to internal company financials. Instead the buyers will need to rely on publicly available information that is published by the press. If you have a ton of cash and are eager to invest some of it in a hot tech “start-up”, you might want to consider purchasing some Facebook shares. How exactly do you buy these shares? Well you can either start to randomly ping Facebook employees on the Facebook website or you can opt to try to reach out to large financial intermediaries that will most likely sell these shares on behalf of Facebook employees. Are you going to jump at the chance to buy some of these shares?

Are Profile Aggregators and Status Ping Tools Good Businesses? Posted: 04 Aug 2008 12:01 PM CDT Over the past couple years, we saw an upward trend of profile aggregator start-ups hit the market. As we registered for one site after the other, we quickly realized that there was a serious problem with not having a central identity. As a result, thousands of people have tried to release services that help solve the problem. Some of those solutions came under a commercial organization while others were set up as organizations that were run by the collective (e.g. OpenID) and weren’t for profit. This morning Corvida at Read/Write/Web wrote about one of those profile aggregators that rather than trying to be the destination serves as a control panel for users. It makes a lot sense in theory except for one problem: this is what Facebook Connect, MySpace Data Availability and Google Friend Connect are trying to accomplish. The Battle for Our Identities vs Center of Communication While the few hundred thousand people reading Read/Write/Web, Techcrunch and similar sites will now know about this service (and a small portion will end up using it), the mainstream user will never know about this site. I don’t want to be the pessimist but I think when it comes to the center of identity, the large social networks and potentially the large email providers (GMail, AOL, Yahoo, etc) will become the center of our identities. In addition the battle for our identities is another battle taking place: the center for our communication. Currently the most likely winners for the center of our communication are the same people winning the battle for our center of identity. There are some new players though as a new form of communication has become ubiquitous: status updates. Suddenly a large group of users are communicating via short-form messages via profile statuses and “micro-blogging” tools. Statuses have been around for a long time but only recently did we begin to think of those status updates as a two-way conversation. The current platforms winning in this space are Twitter, Facebook statuses (with commenting) and FriendFeed. AOL Instant Messenger (AIM) also has status updates but for now it’s still not a two-way communication. That’s because most people sent instant messages as a follow-up to a status on AIM. As statuses have become available across a number of platforms we are seeing the launch of status pinging tools such as Ping.fm. While all of these tools are great for communication, it still begs the question: how are these companies going to make money? Are These Businesses? So Twitter, FriendFeed, Ping.fm, Atomkeep (the tool covered by Corvida this morning) are all useful tools but how on earth are these going to make money? Many of the companies (such as Twitter), will say that they don’t need to make money, they just need to build critical mass and then figure it out. That makes a lot of sense but what happens when Facebook and MySpace adapt and create what is nothing more than a feature change? On the web, trying to analyze any company’s business model is a relatively mundane task because for the most part there is no model aside from advertising. So why don’t these sites just slap up some ads and start making money? Honestly, I have no idea! Whether or not their future could be doomed by changes that Facebook and MySpace make, they should try to make money while they have the traffic. Do you think that these companies can generate legitimate business models? Do you think their existence lays in the hands of Facebook and MySpace?

Is Social Over-Hyped? Posted: 04 Aug 2008 08:50 AM CDT Over the past two years there has been a significant amount of buzz about the social web. Some of that buzz has gone as far as suggesting that social could end up defeating search. I’ve made comments in the past of such things happening. One sign of peoples’ belief that social could take on search is the buzz surrounding Facebook. Microsoft invested in the company at a $15 billion valuation and since then the company has continued to grow and the hype behind it hasn’t exactly disappeared. So where is the money on the social web? Currently there are a number of theories about where companies in this space will make money in the future, three of which appear most prominently: Social Shopping - The concept of social shopping has been passed around for years. The theory goes like this: if your friend ends up making a purchase of an item (possibly reviewing it as well), you will receive a notification of that purchase. As you are notified of friends making a purchase, this comes as a recommendation which ends up driving you to make a purchase. While the theory makes sense, it is still unproven. Hyper-Targeted Advertising - A number of sites are already provide this including Facebook and MySpace. Having the ability to accurately target users based on specific demographic information as well as there interests sounds like a marketer’s dream. The only problem? Click through rates are currently horrendous on the sites that offer hyper-targeted advertising. The remaining hope for this theory is that when these advertisements are moved outside of the social platforms, click through rates will jump through the roof. Social Search - Social search provides the best opportunity of defeating traditional search. So far nothing stacks up against the competition (Google) though as Don Reisinger pointed out last night. Even this has a long way to go if it works and there is no proof that social search is feasible. So where does this leave the social web? Well, we continue to communicate more via the internet but that doesn’t necessarily translate into dollars. This Wall Street Journal emphasizes the promise of social advertising in an article this morning: One initiative that could be critical to MySpace’s success, according to media buyers and industry analysts, is a system that lets marketers aim their ads at particular groups of users. As part of this “hypertargeting” system, MySpace has analyzed the profiles of its users to gauge their interests and then categorized them into more than 1,000 “buckets,” including rodeo watchers, scrapbook enthusiasts and “Dancing With the Stars” viewers. So how is this working out for advertisers? The Wall Street Journal article continues: For some marketers, especially small ones, more generic targeting suffices. The New York Health & Racquet Club spent $5,000 on a MySpace campaign that displayed 2.3 million ads to users on the site. Though the health club could have chosen to target ads at people who say in their profiles that they enjoy rock climbing, yoga or working out, it chose instead to simply target by age and ZIP codes near its facilities. The club said it was relatively happy with the campaign, which generated roughly 1,000 clicks, a response rate of just 0.04%. Adam Bain, a Fox Interactive executive whose team created the hypertargeting technology MySpace is using, argues that the system won’t just pay off by boosting ad sales. It is also a way for marketers to glean valuable information about their target audience. If the advertiser wanted to reach scrapbooking hobbyists, for example, it could find 236,475 of them on MySpace. But the system also shows that 99% of them are female, and lists several other hobbies they tend to be interested in, including sewing, baking and watching the TV show “Grey’s Anatomy.” As of yet, hyper-targeted advertising has yet to display any breakthrough profits similar to those produced by search. This is a big problem and if one of these companies doesn’t produce something soon, social platforms and other sites on the social web could be seen as companies where people spend a ton of time but not much money is made. Will the overly hyped opportunity provided by all this user attention go unrealized or will the social websites pull out a miracle? Do you think the social web is over-hyped?

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