Christopher Herot's Weblog: GraphingSocial

At Graphing Social Patterns Charline Li of Forrester Research gave a talk on Big Brands & Facebook that had useful information for brands of all sizes. One of the more startling data points she presented was that according to Facebook's data, only 6% of it's US users are 35+ years old, but Nielsen's stats say the number is 45%. WHen asked later, Charlene said one plausible explanation for the discrepancy was the sampling method used. In any case, her advice was that things were changing rapidly and that whatever works this year would almost certainly require adjustment to work in the future.

In addition to presenting a load of interesting statistics, she offered some examples of brands that we successfully leveraging Facebook as a platform to communicate with customers and not merely advertise to them. One of the best was Ernst & Young, who in order to further their program of hiring 5,000 college graduates every year has one of their recruiting executives answer questions from students. In contrast Wal-Mart keeps trying but may just not be the type of business that college students want to brag about being associated with.

Some other advice:

Create useful apps than model what friends do naturally
Plan out how to make the app viral (a recurring theme at the conference)
Get feedback once you launch

I'm here in San Jose along with 300 other Facebook fans and followers at Graphing Social Patterns: The Business & Technology of Facebook, organized by Dave McClure. Dave teaches Creating Engaging Facebook Apps at Stanford and is most recently known for a post on TechCrunch that I thought was a pretty good overview of how to build a Facebook strategy, but was also a lightning rod for those who think the Facebook phenomenon is overblown.

Reid Hoffman gave the keynote, starting with a history of Social Networking, starting with Friendster and covering such milestones as MySpace's (almost accidental) ability to hack in widgets and the launch of the F8 platform. He pointed out that unlike MySpace, Facebook gave the widgets access to the social graph and unlike Ning, it gave application developers a way to leverage the existing customers and a communications scheme for reaching them. He also dealt with the difference between social (Facebook) and professional (e.g. LinkedIn) networking sites, pointing out that Facebook shows information on member's social connections, such as pictures of friends, while LinkeIn has more data on business skills and relationships. As an example he said to try searching for "open source" or company affiliation. Both applications do overlap in areas such as providing a public presence for profiles and both can potentially support business applications.

Is there One Graph to Rule Them All? Reid thinks not, given the different sorts of relationships (friend, familly, acquaintance, and professional). While it would be technically possible for one system to contain all of this, most non-technical people would probably prefer to use different systems that were optimized around specific types of networks.

What type of applications should we expect will come after today's communications, games, and media? Probably improvements of the same, plus new "friending" apps like TopFriends. To date, there haven't been successful applications in Business, Politics, and Money, but Facebook's challenge now is the "second act" which exploits the current wave of interest.

Reid observed the parallels between the Facebook boom and the last Internet gold rush. Most installations are financed by future hope rather than revenue today. The future may bring targeted ads and currency, virtual or real. Some challenges to any developer:

someone else will try to give away anything you charge for
competition will come from individuals as well as companies

Some new opportunities:

New forms of communication, most based on sharing
Discovery - search that leverages one's friends
Applications that take advantage of the social graph

In summary, many entrepreneurs coming out of college will write Facebook applications as their first effort. There will be an interesting ecosystem between Facebook and the Web, with some acquisitions to come. For now, Reid recommended keeping costs low until the economics get figured out. As it's not clear that building a Facebook app is a route to a billion dollar business, most app development will be financed by angels and entrepreneurs, not VC's except for a few of the more adventurous.

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