Facebook’s innovation machine

Posted in Social Media, Web, Social Networks on September 26th, 2011 by Itamar Novick – 1 Comment

Facebook’s recent product releases in F8 are potentially disruptive on multiple fronts and very exciting. My plan is to write a few short posts about the changes, and this first post is mostly about Timeline.

Facebook’s strategy
Almost all of the changes announced reinforce Facebook’s strategy on increasing engagement, collecting more personal data, and extending the Open Graph platform outside Facebook. All of those changes will potentially enable Facebook to charge more advertising dollars in the future for letting brands access the Facebook user base.

This latest release also marks Facebook’s entry into new spaces beyond games, mostly entertainment related (music, video). Getting more users is no longer an issue for Facebook, it’s all about how to increase user level of engagement and own all the private and social data out there. Facebook has been doing a very good job so far:

Facebook’s Timeline
This one is a mix between 1000 memories and Myspace on steroids (especially with Facebook boxes back). Polishing profiles is a natural and irresistible behavior and back in the days Myspace (unintentionally) created an entire eco-system of profile enhancement, widgets and layouts around Myspace which drove a substantial part of the engagement there.

Funny that it took Facebook sometime to realize why Myspace worked (until it stopped working…) – because people were busy grooming their profiles. A friend from Facebook mentioned that user activity analysis showed that peeking into profiles (Did anybody say stalking?) and tweaking one’s own profile are key user behaviors, so Facebook decided to further develop that.

  • With Facebook’s focused on building your “Timeline”, developers will fight on who gets to push something into users’ Timelines because it becomes a sticky newsfeed item (and will squeeze more traffic out of newsfeed items)
  • Timeline has the potential to provide a big push for developers in specific verticals. For example, a company like Gogobot, which is working hard on tying in Social and Travel, can greatly benefit from doing a deep integration with Timeline. For Photo sharing and video sharing application timeline might actually be an empowering factor, if they execute correctly on the product side, or it could seriously hurt them if Facebook decides to push hard in this space through its own photo sharing (and Facebook now has 350M mobile users…)
  • Stay tuned for additional vignettes on some of the other interesting features.

    Google+ launch – is it too late to rebuild the Social Graph?

    Posted in Social Media, Web, Social Networks on July 1st, 2011 by Itamar Novick – Be the first to comment

    This week Google has made a bunch of Silicon Valley folks happy with the launch of Google+ and a slew of additional social and communication features (Huddle, Hangout and Sparks). It seems like the Social Network “war” is officially back on, and remarkable this is happening exactly on the same week that Facebook’s old Nemesis, Myspace, is finally put to rest.

    From a user experience perspective it seems that Google’s product is getting positive feedback. I personally like it and think that circles is just fun to play with and that the main Google stream component has a good clean user interface.
    The successful launch and Google’s reach across different products will surely help Google+ acquire users, but the real questions is not whether they will come if Google builds it, it’s whether they will stick around.
    The attention span of users is limited and people use both Facebook and twitter because they provide two pretty different communication channels. Google+, however, is just too similar to Facebook, so it can either steal that attention span from Facebook or bust.

    With user retention it seems that Vic Gundotra and Bradley Horowitz are right on the spot – it all comes down to how broken and awkward online sharing is, but for me there is one question that just keeps lingering out there – do people really care about that anymore?
    Facebook, with over 750 million users, has done an amazing job educating the masses that privacy is dead and surprisingly enough, it’s working. If privacy is really dead, do we really need walls between our friends and peers at work anymore?
    Do young professionals really care if their boss sees their pictures from last night when they were wasted? Maybe not so much – relationship both on the professional setting and on the personal level are getting more informal.
    Does a college undergrad care that his mother knows he was out all night with a random girl? yeah well, mom choose to befriend him on Facebook so that will teach good old mom a lesson.

    Talking to a few startups this week that are focused on professional social networks and data analytic on top of Facebook, it seems that the Facebook environment is increasingly becoming a professional communication channel.
    The thin line between a professional and personal networks is becoming increasingly thinner and people are grouping their personal and business connections together. One startup, FellowUp, a personal productivity tool that taps into social accounts, reports that its users (mostly professionals) are connecting to their Facebook account 50% more often than to their LinkedIn accounts, and are leveraging the Facebook connection to reach-out their peers and counterparts at work alongside their friends.

    With a good product out there, it remains to be seen whether Google is able to change users’ habits and make them switch to Google+, because people think that Social sharing on Facebook is broken and would rather share content on Google+ instead. It’s one philosophy vs. the other and may the best one win. Or at least that is the case on the web browsing front.

    But what about mobile? Facebook faces one additional risk from Google in the Mobile Social Networking space – Google has that mobile DNA with Android and can build on top of that. For example, what would happen if Google preloads Google+ into Android devices? Facebook probably needs to get more serious about mobile, and fast.

    The Israeli VC market gap

    Posted in Venture Capital, Israel on May 30th, 2011 by Itamar Novick – Be the first to comment

    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.

    Social Media monitoring solutions are all the rage right now

    Posted in Social Media, marketing on April 2nd, 2011 by Itamar Novick – Be the first to comment

    In the last two weeks the Social Media monitoring scene has been virtually lit on fire.

    With Salesforce snatching Radian6 for approximately $276 million in cash and $50 million in stock and shelling out another $10 million in stock and $4 million in cash to Radian6′s founders, and Visible Technologies raising an additional $6m in cash, it seems that this space is ripe for consolidation and a lot more action.

    A good question to ask would be whether this market is actually part of the “bubble” that is developing in Silicon Valley (or at least that is what experts are saying) or has some real substance to it – Does a price of $326 for Radian6 really makes sense? is the potential market this big?

    My intuitive answer is no (for this market being part of the “bubble”) and yes (for the market opportunity). I think it makes sense to assume that this market will be as big, if not even bigger, than the Web analytics market is now (Forrester reports that Web Analytics spending are around $600m annually). There are some indications supporting those thoughts:

  • Jeremiah Owyang indicated that corporate willingness to pay for Social Analytics tools has gone up to $294,000
  • According to Salesforce, Radian6 was already at a run rate of $35 million in annual revenue and is expected to bring in $50 million this year. Omniture was at a run rate of ~$100 Million before Adobe bought them back in 2009 for $1.8B
  • Social analytic and monitoring are a growing requirement for multiple groups in the enterprise, including marketing, sales, PR, customer support and research groups and other. Social Media monitoring solutions would potentially be more widely used than Web Analytics tools and those integrated solutions would be essential to business operations in today’s social web
  • 79% of corporates are undertaking Social Media activities right now, but in terms of spending the have a long way to go and we can expect double digit growth, with Social Media analytics and monitoring nicely placed in the top of the stack
  • A reminder about what platform play is all about

    Posted in Social Media, Web, Social Networks on March 1st, 2011 by Itamar Novick – Be the first to comment

    The action on the Twitter platform last week with UberMedia reminded me what platform play is all about.

    Talking to colleges, I was surprised to hear that some people think that UberMedia can “beat the platform” and create an off-Twitter network. Knowing first hand some of the developer policies that platforms like Facebook and Twitter put in place, it’s pretty easy to see that any of those platforms can shut down any service they want, whenever they want, without potentially having a reason. Off course, that can be a highly unpopular move that will result in bad PR and upset users, but if it’s “self defense” they can do it with a blink of an eye and might actually get away with it. Furthermore, even if the consequence of shutting down a company that is positioning itself as a competitor is some loss of users or a slight regression in adoption rate, that might be a small price to pay compared to the alternative.

    Personally, I think Twitter made the right move, they got worried that UberMedia controls such a large percentage of twitter’s user base, so they made UberMedia behaves sooner rather than later, before they have an even greater user reach. Twitter could have looked away and ignored it, but they decided to stop this madness right now, and make sure UberMedia remembers who controls this platform. As a nice side benefit, twitter also enjoyed two days of increased user adoption for their mobile and web tools because the redirected users that wanted to learn more about the outage to their own applications.

    Another recent example is an automatic algorithm used by Facebook to block application according to some criteria. Developer’s claim that Facebook is blocking application algorithmically that are growing “too fast”, regardless of whether they abuse Facebook’s developers policy. You can follow the conversation onQuora here.

    At the end of the day, companies building layers of services on top of those platforms need to understand the rules of the game, and realize that as long as everybody gets along it all good, but if something goes bad, the platform can always pull the trigger on them, at any time.

    Update(3/11/2011): Twitter have formerly announced that third-party developers should stop doing Twitter clients. Here is updated they have just made to their API terms of service:
    “Developers have told us that they’d like more guidance from us about the best opportunities to build on Twitter. More specifically, developers ask us if they should build client apps that mimic or reproduce the mainstream Twitter consumer client experience. The answer is no,” Sarver writes very matter-of-factly.

    “If you are an existing developer of client apps, you can continue to serve your user base, but we will be holding you to high standards to ensure you do not violate users’ privacy, that you provide consistency in the user experience, and that you rigorously adhere to all areas of our Terms of Service. We have spoken with the major client applications in the Twitter ecosystem about these needs on an ongoing basis, and will continue to ensure a high bar is maintained,”

    Is Facebook overvalued at $50 billion?

    Posted in Social Media, Web, Social Networks on December 28th, 2010 by Itamar Novick – Be the first to comment

    Does Facebook valuation indicate that a Tech Bubble is build up?
    In the last week we’ve heard quite a few voices claiming that Facebook might be overvalued at $50 billion, and that a new bubble might be forming in tech sector (Here are a two – Economist – http://www.economist.com/economist-asks/facebook_overvalued_50_billion, Bloomberg – http://www.bloomberg.com/news/2011-01-27/facebook-overvalued-at-50-billion-in-global-poll-of-investors.html).

    There might be a Tech bubble out there, and I’m probably the last person that might have good  insights on whether such a bubble exists or not, but I do think that adding Facebook to the mix and inferring that Facebook’s is overvalued might be wrong. It could be that there is Tech bubble and Facebook may still be truly worth $50 billion or more and there might not be a bubble and Facebook will still be worth that or much more.

    I’m one of strong believers in the notion that Facebook’s Market Cap will quickly reach $100 billion or more, and have been bullish on them for a few years now. Here is why:


    Facebook Connect (Social Graph API)
    Over 250 million users use Facebook Connect each month. 10,000 sites are adding Facebook Connect each month and a total of over a million websites (including most of the top sites) are leveraging the connect technology today. Soon enough almost any site out there would have a “login with Facebook” option, and Facebook will have a staggering number of impressions outside Facebook.com.
    Facebook will be able leverage Facebook Connect to create a huge display and social ad network outside Facebook, adding profile and Social graph to the mix, as well as targeting and retargeting capabilities, to appeal to publisher to allocate more ad inventory to serve effective Social ds.


    User reach and campaign innovation
    Facebook’s key web metrics, such as Time spent, impressions, Unique visitors, and number of active monthly users are consistently growing and fast, while their main competition’s stats (Google and Yahoo) are either falling or standing still. Soon enough they will be the leader, by far, on any key metric.

    Facebook have not yet fully ramped up their ads in Facebook.com and are playing around with new ad units to try to deliver more value to advertisers. For example, the ad product they unveiled this week – Facebook sponsored stories (http://mashable.com/2011/01/25/facebook-sponsored-stories/) is another interesting attempt, a bit like Twitter’s promoted tweets, that might actually work.


    Mobile, local and the Facebook platform
    Facebook understands the importance of mobile and are heavily investing in it. They already have hundreds of millions of mobile users and coupled with a local strategy they will be a serious force in the mobile ad space.
    On top of that Facebook is pushing hard on other initiatives on their platform, such virtual currency and e-commerce. Their platform partners, such as Zynga, are virtually printing money today and it’s just a matter of time until Facebook figures out the right angle to claim their share of the revenues partners make on the platform. I feel we can expect them to create a steady and decent revenue stream from those initiatives.

    Finally, it seems that Social is an inherit layer in anything that is Web or Mobile, and that Facebook will dominate this space. If Social is everywhere and Facebook is Social, Facebook will be everywhere, just like Google is everywhere today. I would not be blown off my feet if two years from now Facebook and Google will be head-to-head in terms of Market Cap.

    Update (2/27):

    emarketer.com has recently published a forecast of Facebook ad revenues, expecting it to hit ~$4 Billion in 2011.

    Social platform integration – Which platform is right for you?

    Posted in Social Media, Web, Social Networks, marketing on December 20th, 2010 by Itamar Novick – Be the first to comment

    Although I’m a fan of integrating as many social platforms as possible in external sites and application, it’s clear that marketers are sometimes forced to focus their efforts and budgets on one platform or the other.

    Having a clear strategy and goals in place can help make smart choices. For example, if you are planning on integrating social authentication in your site or app you will probably want to consider a wide range of authentication providers, including Google and Yahoo, but if your focus is on sharing user activities and driving traffic, you are probably debating whether you want to integrate Facebook, Twitter or both. In this post, I’ll try to focus on driving traffic to external websites and applications and compare between the two platforms.

    Facebook has 600+ million users, compared to 180 million Twitter users. But is user reach the critical factor in deciding which platform you should integrate more tightly? it really depends.
    A young startup that is trying to maximize traction and word-of-mouth, targeting tech-savvy early adopters with minimal costs, might consider Twitter as your top option, while a mature brand, which targets teens, will probably consider Facebook as a top priority.

    The fact that there are so many Facebook users out there is not always positive. With Facebook you get a larger audience that includes consumers that might not be in your target segments. This requires potentially leveraging targeting technologies to reach the right audience and you might need to put in more effort in outreach to drive clicks.
    On the other hand, Twitter conversations have gaping holes in the middle, often leaving Twitter users hanging with just bits and pieces, and leaving them with quite a bit of questions. This could potentially be a con for the brand conversation you are trying to develop on Twitter. Also, Twitter have had a history of security breaches and uptime issues that are just trouble for services that integrate with them.

    A recent study done by SocialTwist, in which they analyzed more than one million links on both platforms, indicates that Facebook’s shared links average only 3 clicks, while Twitter’s embedded tweets generate 19. There might be a few good explanation for that:

  • The relatively new Twitter interface that includes the split screen and view pane design is good for marketing. Businesses can effectively share updated videos on their Twitter profiles, instead of just repeatedly tweeting messages, and users are potentially better exposed to those messages.
  • Twitter’s audience is more tech-savvy. with third-party applications through and features such as scheduled tweets and searches and with only 140 characters, a lot of tweets leave readers waiting for more. This factors into a desire to click on more links and drives click-through rates per items posted higher.
  • Twitter requires less time for actionable exposure and reaches a more specific audience and consumer base. The amount of distraction on Twitter is also far less than the amount of distraction on Facebook
  • For B2B marketers, Linkedin might offer an interesting opportunity as well. Back in April 2010, the business-oriented social network gave users the ability to follow companies in addition to following users. Even before that, Linkedin added newsfeed activities, such as “like” and “comment”, very similarly to Facebook’s newsfeed, and enabled users to integrate their Twitter accounts into their LinkedIn feed.
    My overall feeling (unfortunately, I don’t have any data to back this, it’s just a hunch) is that all those features have substantially increased user engagement on the platform. LinkedIn, like the other platform has API in place that enables sharing links, and as professionals spend more time engaging with LinkedIn, I wouldn’t be surprised to find that the platform can deliver good results in driving interest for business products.

    To summarize, choosing Facebook because everybody else does it is not always the right answer. One best practice would be to have a clear understanding of your target audience and use publicly available data to figure out in which platform your core audience spends more time in, helping you deliver more bang for the buck.

    Myspace finally surrenders to Facebook

    Posted in Uncategorized on November 18th, 2010 by Itamar Novick – 1 Comment

    Sometimes it’s unbelievable how fast and disruptive things can be in the harsh world of online – http://techcrunch.com/2010/11/18/hell-freezes-over-as-myspace-fully-surrenders-to-facebook/

    Today, Myspace announced that there are basically surrendering what used to be their core business – Social Networking and Social Graph. It’s true that have already announced that they will focus on Media, Music, etc. moving forward, but still, implementing Facebook Connect is just saying: “Okay, we give up on Social”.

    I remember that not a long time ago, Myspace was bigger than Facebook. Two years ago, we used to talk advertisers about Social Media campaigns and Myspace was still all the rage. Advertisers knew they wanted to be on Facebook as well, but Myspace was the focus for many of them. Just a year later, in 2009, everybody was just raving about Facebook and didn’t even want to hear about Myspace anymore.

    What went wrong? it’s hard to tell, but my personal take is that it’s all about the user experience. Facebook just did an awesome job with that (and are still doing a great job) while Myspace failed to further develop their product to have a great user experience. They didn’t experiment enough to learn and develop their product to be better.
    Facebook today is very different from Facebook two years ago, Myspace is pretty much the same. Facebook adapted and learned how to make a better product. Myspace didn’t, and that is why, I think, they reached the spot they are in  today.

    This story should be a classic Harvard case study, which I hope will be written in the future. the lesson is not a new one – if you can’t adopt your business to fit your customer needs, you won’t survive. Customers needed a site they loved and worked for them. Facebook did exactly that.

    Which social media platforms drive most traffic into websites?

    Posted in Social Media, Web, Social Networks, marketing on November 16th, 2010 by Itamar Novick – 4 Comments

    Although I guess this is wide spread knowledge for most Social Media professional, I think it’s worth discussing some of the stats about Social Media related traffic on external web-sites from a different point of view (note: “external websites” in the context of this post are traditional non-social network sites).

    Here is a graph from a recent Technorati post highlighting traffic driven from Social Networks to blogs:
    The data, which is probably focused on the most important goal for marketers and website owners – driving traffic from social networks to their sites, shows that the mass of traffic is driven by Facebook and twitter. It’s very conclusive – Facebook and Twitter are by far the most effective platform to target, but there are two good questions to ask are: to what extent is this true for websites implementing social connectivity strategies? and is this traffic content related?

    Moving forward, I assume that Google, Yahoo and most of the platform above, would do a very good job in prominently showing social activities on their platforms to promote content discovery and outbound clicks. everybody would have a “stream” – This is a must for those platform to survive in a world dominated today by Facebook and Twitter. If that actually happens, some of the marketers might find it more effective to promote user activities on other platforms, as they would offer a lower “price”. Assuming that each item shared by users has some “cost” associated with it (especially if it is an incentives share) an interesting data bit for marketers would be the the cost of a lead gained from sharing activities or advertising in all other platforms.

    Here is some more data from Gigya (disclaimer – this data is not super up-to-date). Unlike the Technorati data, those stats are not blog focused:

    Distribution of shared items
    Facebook: 44%
    Twitter: 29%
    Yahoo:18%
    MySpace:9%

    There are far more companies providing identities with which users can sign-in to 3rd party websites, so that data looks different from sharing data, and also looks different by site type:

    Share of Authentication By Platform:

    News sites:
    Facebook: 31%
    Google: 30%
    Yahoo: 25%
    Twitter: 11%
    AOL: 3%

    This indicates that users actually share and authenticate using diverse Platforms, if they actually are given a chance to do so (depends on whether the website has implemented sharing and authentication to other destinations). The data actually drives right into the heart of Gigya’s value proposition – enable users to choose which destinations they want to connect and share to, and then track and optimize the conversion rate of share to traffic to realize which platforms are effective in driving traffic for your site.

    I’m guessing some websites would experience that the distribution of users authenticating and sharing by platform varies according to the site’s content and target audience. If your website targets an older demographic user segment you may find that Yahoo and Linked-in are actually a favorite connectivity destination for your users, potentially leading to lower costs associated with acquiring leads from those platforms and making them an important part of your social marketing strategy.

    sFund and the challenges of the Social Web

    Posted in Social Media, Web, Social Networks, marketing on October 23rd, 2010 by Itamar Novick – 1 Comment

    Intense discussions about the new era of Social in web and mobile have been all over the place this week. Those discussions are, rightfully, getting tons of media traction.

    It started with the announcement of the new sFund from VC Kleiner Perkins Caulfield & Byers, who joined hands with Facebook, Amazon.com, and Zynga to announce a new $250 million fund for social networking startup (You can read more about that here: http://www.businessinsider.com/live-facebook-to-announce-new-vc-fund-2010-10#ixzz13DmAQGTd).

    The new fund met with some criticism led by Chris Dixon, a leading angel investor, who kept shredding Kleiner Perkins initiative on twitter (you can see his tweets here: http://twitter.com/#!/cdixon). Chris basically suggests that Kleiner’s dedicated social startup fund is late to the party.

    Thinking about Chris Dixon’s response and the opportunities out there I can’t help but wonder that:

    • Nobody has yet to figure out how to successfully use Social Media for e-commerce. It’s clear that this is one of the Holy Grails of Social, yet no disruptive solution or technology has showed up.  Not only have we not seen the first generation of successful Social solutions for e-commerce, we aren’t even seeing beta solutions that deliver solid value.
      Unlike Brand Marketers, online retailers want performance based solutions and are willing to pay handsomely for leads that convert into paying customers.
    • Social Network brand marketing tools have made a huge leap forward in the last year, but there are many optimization challenges ahead. This space is young and growing and we will surely see more disruptive technologies that would grab more advertisers’ dollars.

    Chris surely recognizes that those opportunities are out there. True, Social is not all new and it’s already here, big time, but the industry is still pretty young and will probably see a lot of game changing products in the future.
    Unfortunately, it took a long time for players in the industry to understand where there are headed to and what works best, but now as some of the key concepts are unveiled it’s officially the first round of the new web – the social web. Round 2 and maybe 3 are probably around the corner and it seems that there are many opportunities out there for entrepreneurs and venture capitalists.

    I would bet a small amount of my money on Kleiner Perkins Caulfield & Byers new sFund. Would you do the same?