Category Archives: Israel

Facebook fan pages changes – guest post by Guy Azar

This post is a guest post – an open letter to Facebook – written by a good friend, Guy Azar (http://il.linkedin.com/in/guyazar). Guy has been working hard to build a business on top of Facebook, helping brands promote themselves on the platform.

Facebook significant changes to fan page platform, soon to take full effect on March 30, literally made the fan page as commercially effective as a personal profile. Many existing connection, engagement tools and techniques have become obsolete as a result. Most providers will take weeks to months to restore the usability of their products & services, and achieve partial effectiveness, at best, in continuing to promote their brands and customers.
This excludes, off course, the inner circle of providers such as Buddy media, Involver and others who were in on the hot details well in advance, just enough to be ready on time.

This is the classic move of the platform player: every once in a while making a few smart changes, which gradually snuff out revenues from the echo-system and further empowering platform revenues. Day by day this is causing fan page developers to clearly understand that we will never be able to build a big business on top of Facebook in the long run. Once our business is big enough, the platform will make changes, leaving us, the echo systems inhabitants, with just enough revenue to keep going.

One could say that this change shows how Facebook is facing the final countdown on earnings / IPO move. In fact, Facebook is probably desperate enough for short term profits that they are willing to make long term sacrifices on account of all the providers who leverage the platform. They are hurting the same echo system they were so smart to build in the first place, with their open APIs, available information, and overall pro-developers approach

Facebook knows that the true long term goals are beyond connecting a brand to a person. They wish to function as the main personal history and ID source for each and every one of us. This is their long term goal and its implications are beyond Economical. The vision they will only be realized by fiercely defending user privacy and provisioning commercial actions.
They are life changing, and the vast economical sides effects of this future are more than beneficial.

But the long path is jeweled with many financial challenges. Social media value is proven for corporations, mainly in Marketing: branding, accelerated buzz \ WOM generation, lead generation, customer relations and support, engagement, satisfaction, churn indicators, all decreasing CPA or increasing LTV in some way or another.

However, it seems as if the social media monetizable values are NOT clear for the social media platform itself.
Facebook latest move is, from my point of view, a BIG signal to developers. A big question mark. That question should be reflected back at Facebook – “What is our business model with brands?” and it’s derived from the more basic question mentioned above: “what function in people’s lives does Facebook fulfill?” and “what commercial aspects of people’s lives do we intend to facilitate?”. Facebook should moderate every commercial act over its platform, But they can contribute to the creation of the ethical, legal, foundations of it, shifting some responsibility back to the Brands & businesses. Once it is acknowledged culturally and legally that brands and businesses are responsible for their use of their user’s personal information.

So what will it be? Why can’t Facebook charge businesses for their commercial presence and activity? Facebook has the means to measure the connection, engagement and actions users perform with brands and businesses. With so many valid indicators, why can’t those indicators serve as the pricing and business model for brands and businesses on Facebook?
it makes sense – presence itself could to be billed for. With that model Facebook will be better aligned with it’s developres echo system, effective leveling the playfield by letting any developer share revenues with Facebook when their bring brands that engage with users on Facebook.

To summarize, as a fan page builder I am very disappointed with Facebook. letting the providers take the fall for their monetizing challenges. Instead they could come up with a vision in which presence, connection, and engagement indicators will function as billing meters. That could provide us the liberty to go back to the work with relevant customers who are interested in engaging users at a brand’s fan page, deliver a special customer experience, exclusive information, opportunities and offers, and share them with the brand and with fellow customers.

Yours,
Another ex-fan page builder.

Social Gambling is right around the corner

Social Gambling (i.e. Zynga Texas-Holdem Poker, the world’s largest poker site of any kind) has been around for years now with virtual currency, but only recently has the media picked-up this theme and started playing around with it, drawing parallels to social gaming, and suggesting the Zynga might actually switch to real currency.

Investors and corporates, however, have been going back and forth with this for a while now and a few recent acquisitions in this space include Playtika and Double Down Interactive.
Harrah’s, a unit of Caesar’s Entertainment Corporation, acquired 51% of social games developer Playtika Ltd. at a company value of $90 million. This acquisition is astonishing by almost every measure, as it is the largest acquisition of an Israeli online gaming company, and for a company that has been around for less than a year(!). Meanwhile, Double Down Interactive, creator of multi-game app Double Down Casino, was just bought by International Game Technologies in a deal worth up to $500 million.

The potential in Social Gambling should come as no surprise to anyone.
Gambling is inherently social (think about any casino game, other than maybe slot machines), and social gaming (i.e. Farmville) has much in common with gambling.
One very good example of how close social gaming is to gambling, and how it basically triggers the same kind of brain reaction, was recently posted here.
See if this sounds familiar to you: To play, you put currency into the game. You then pull the knob and wait for the result. When the result is presented, you are rewarded with a cacophony of exciting sounds, attention-grabbing images, and some form of currency. You also have the opportunity with each play to win a rare prize of significantly higher value than the value of the currency you contributed to play the game.
That sounds a lot like a slot machine, right? Wrong. It’s the basic action loop in FarmVille.
Here is the same description again, but this time, with FarmVille specific details: To plant a crop, you must first spend resources on the seeds. You then plant the seeds and must wait for them to grow. When you harvest the seeds, you are rewarded with a cacophony of exciting sounds, attention-grabbing images, and some resources. You also have the opportunity with each play to win a rare prize of significantly higher value than the seeds that you purchased.

Couple that with the distribution channels available in Facebook and other Social Networks and here comes “Online Social Gambling”. Many online gambling sites have been dying to leverage the social customer acquisition channels for ages now, but have been barred by Facebook’s reluctance to approve gambling content, to avoid legal complication in the US. Those companies are more than willing to pour billions of dollars into customer acquisition in Facebook, just because they knew that they will optimize those acquisition channels to reach a rock-bottom customer acquisition cost. Social will also help drive stickiness and time spent, increasing the customer’s life-time-value in the game.

With the new Obama administration ruling that opens the door for states to allow some online gambling we are bound to see a slew of companies move aggressively into this space. Some of the more obvious candidates include PartyGaming.com, traded on the London Stock Exchange; Betfair, and other operators, like Bodog, Bet365 and 888.com. After all, there are billion of dollars to be made in this business…

The Israeli VC market gap

The fact that there is currently a sizable gap in the Israeli VC market is not new, but lately it seems that the situation is slowly improving. Also, US based venture firms have noticed this market gap and are making a move to benefit from it.

A quick recap of the he Israeli VC industry history shows that 2010 has been the most difficult year for Israeli VC funds since it’s inception in 1992. Despite improvement in macro economical factors in 2010, Israeli VC funds were not able to attract new capital during 2010 (Yes, that’s right, they have raised $0). 2009 wasn’t that good either, with only $234 million raised by Israeli VC funds and $200 million of that amount raised by just one fund – Sequoia Israel.
Local Funds still hold approx. $1.2B and are able to continue investing in 2011. Accordingly, Hi-Tech investment in Q1 2011 have gone up by over 100% compared to Q1 2010, with 140 Israeli high-tech companies raising $479 million from venture investors, both from local (69%) and foreign firms (31%).
However, the future doesn’t look as promising and the ability of Israeli VC firms to raise follow-on funds in 2011 and 2012 will have a strong impact on the future of Israel’s high-tech sector.

Meanwhile, a few US firms are moving to close the market gap. This week, two firms have expanded their Israeli activity – Innovation Endeavors and Greylock Capital.
Eric Schmidt’s innovation endeavors, Founded a year ago, does not manage a predetermined amount of capital, but locates and invests in early-stage start-ups. Innovation endeavors appointed Doron Alter to head its local team and the fund’s managing partner, Dror Berman, will closely supervise the Israeli operations.
Greylock Capital has just announced a new $160 million fund aimed at internet technology companies, deployed between Europe and Israel. This is Greylock Capital’s second fund, with he first one investing in Israel since 2006.

With new and improved dynamics in the US IPO market and Israeli internet startup firms such as Conduit and Wix doing well the IVC’s (Israeli Venture Capital research center) outlook for capital raising is cautiously optimistic. Furthermore, Israel’s Ministry of Finance has recently announced an incentive program for Israeli Limited Partners to invest in Israeli funds and the program is expected to increase investment by $220 million in 2011-2012.
Hopefully the improved dynamic coupled with renewed US interest will help keep Israeli innovation on track and further boost the local Hi-Tech industry, which is the Israel’s most notable economy’s growth engine.