Facebook Investment from DST: A new Potsdam?

[Update 2: So it's true, Facebook has just formally announced that DST will invest $200M on a $10B valuation and make available up to $100M to buy employee options. No mention of any side deals around Vkontakte]

Over the weekend, the WSJ reported that Digital Sky Techologies would invest up to $200 million on a $10 Billion valuation plus the rumored $150 million to buy out internal shareholders at a $6.5 Billion valuation.

I will put aside the valuations or the benefits of insiders cashing out part of their options and focus instead on what I think are some social network geo-politics at play.

DST has an impressive portfolio of Russian internet properties including Mail.ru and, more importantly VKontakte, the leading social network in Russia. Valleywag had called VKontakte a Facebook clone and yet if you look at a map of the global social network world, a whole swath of it is covered in the light blue of Vkontakte.ru.

A post last March on Window on the Media had argued that russian users were switching to Facebook at a greater rate and that if it continued, Facebook would surpass VKontakte by November, 2009.

So this is where my Potsdam theory comes in [Using the WWII conference at Potsdam - where the allies defined "Spheres of Influence" and the post-war world - as an analogy]. I have to wonder whether, in an effort to both defend, and perhaps even exit their investment in Vkontakte.ru, DST has not done some sort of deal through which the investment in Facebook also comes with some provisions around defending Vkontakte's control in Russia.

This could come in the form of a commercial agreement or a JV between Facebook and DST properties in Russia. With the Russian President formally calling the Internet space a "strategic" area and warning against foreign investments, one might wonder whether Facebook just saved itself a battle, gained market share and won itself some cash for both itself and its employees.

Looking forward to further details of the DST-Facebook deal. Keep an eye out for any announcements of a Facebook-VKontakte deal in parallel...

[Update: It seems TechCrunch posted a similar theory last night also specifying DST's requirement for a Board seat along with the investment]

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Evan Williams of Twitter on Charlie Rose

Interesting vision of the "human need" for communication driving Twitter and, 5 years from now "normal people" using Twitter like "normal people" use Facebook and MySpace.

Looking at "normal people" around me (wife, father, non-techie friends) I accept the notion of a need for communication and a general acceptance of social networks as a way of sharing more than we would have been comfortable with 5 years ago... The evolution from a phone call to an email to a text message to a facebook wall post to a tweet does sound natural. The question is whether the platform for that outreach will be Twitter or not.

Eric Schmidt seems to believe that GMail could take that place.

The Economist, Facebook and the Dunbar number

The Economist has an article this week entitled "Primates on Facebook" which talks about the size of the average network on Facebook (120 "friends") and the connection to the often quoted (mis-quoted perhaps?) Dunbar's number in which British Anthropologist Robert Dunbar claimed that the human brain (more specifically the size of the neocortex) could only keep track of 148 connections in its network.

The question raised by the article is whether mediation of these networks by a computer makes the "cost" to keep each relationship alive lower. I might be dating myself, but in my early teenage years, I still wrote real actual letters to my friends across the world. My group of "friends" therefore was lept fairly small due to the cost of staying in touch.

Email lists allowed me to employ one-way communication and share my life with a much broader group (some were avid readers, others considered it spam). Now with Facebook, I feel that I have two networks: My friends (those that would have been on the one way email blast) who now have a 2 way dialogue thanks to wall updates, pictures, and social apps, and my "other" contacts, people that I would never add to my email but whom I am OK having on the periphery of my social network (they can consume but it is unlikely to be two way).

So, yes the article is correct that "people who are members of online social networks are not so much “networking” as they are 'broadcasting their lives to an outer tier of acquaintances who aren’t necessarily inside the Dunbar circle,'" but I still disagree with the notion of a static number... and believe that social networks, twitter and the like do allow us to have less costly (and thus more frequent) interactions with a greater number of people.

A great book on some of the science behind social networks, made consumable for the common man, is Duncan Watts Six Degrees. Duncan had joined Yahoo! Research...I wonder whether he is still there.

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Panel on mobile at Davos: Facebook mobile, LBS, video uploads

Some interesting folks, Chad Hurley of YouTube, Zuckerberg, Craig Mundie, Shananu Narayen of Adobe, Hamid Akhvan VP at T-Mobile and my former professor at Wharton Eric Clemons got together to discuss mobile at Davos.



Techcrunch's Arrington moderated the panel and followed up with a post.

During the discussion Zuck mentioned 25M users of the apps (does not include browsing to x.facebook.com or facebook.com) a month... and Allfacebook posted that it was close to 4M a day with 1.6M from iPhone alone.

Obama's speech

Amazing technology coverage of the inauguration between CNN and Facebook, Google Earth, Twitter etc.

Since I was most inspired by his speech, however, I wanted to share the word cloud of Obama's first inaugural speech and point you to the word clouds for Clinton, Bush, Reagan and Lincoln.

Screenshots of Obama CNN livecast

Some screenshots I took from the Obama livecast with the Facebook integration. Unlike others, I had zero problems watching it from London on a home broadband connection.

The new browser wars: FacebookConnect vs FriendConnect

It's a year ending in 8... there are two technology titans standing in opposite corners of what is to become the stuff of tech legends... At stake is the underlying communications platform that will define the next evolution of the internet... It's not Netscape versus Microsoft... It's Facebook vs Google, Facebook Connect versus Friend Connect and the fight for the platform that will power the social graph and interconnectivity across sites, people and content.

CNET tips the current round to Facebook while the guys at AlFacebook keep tabs on the Facebook Connect implementations.

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Top mobile searches

AOL and Yahoo released information on the top mobile searches of the year and as I've stated publicly before, many of them are "directional" queries using a search box to reach a destination...in these cases social networks as a destination.

Moconews summarized the news and highlighted AOL's top queries as being MySpace, AIM, iPhone, MocoSpace and Facebook.

Yahoo's top queries were MySpace, Facebook, Craigslist, "movies" and "weather."

What does this teach us?
1) That mobile users want to find not browse
2) That people want to get their pokes, PMs and winks from their social graphs on their phone (see success of new 3 phone with facebook)
3) That I spend way too much time reading news about mobile....

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SGN ifun app - links mobile/social apps

I am in tech geekdom heaven... I just installed and played with SGN's new application for the iPhone (iFun Golf). To the consumer, this simple iphone app allows you to use your iPhone much like a Wii controller to swing a golf club. The difference is that you are using your iphone to control a game on your PC screen.

On the backend, it's social network apps (SGN's) meets social paltforms (Facebook Connect) meets iPhone apps. Throw in a few ads (powered by Admob) and an ability to buy games and new courses (via Paypal from the device) and it's a VC's social network monetization dream!

Zynga just launched a phone version of its Live Poker game also connecting the iPhone user to players using the app via social networks.

Geekdom, web 2.0ish heaven indeed!

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New facebook UI's impact on Apps

Everyone, not least of all the Facebook app developers and the VCs that invest insane amounts of money into them, has been wondering the impact of the Facebook redesign on applications. Obviously finding and accessing apps has become a lot harder (in my view) but it seems facebook's core intent to increase usage, has been met. Stats by App from Developer Analytics below:

Facebook redesign impact on apps

View SlideShare presentation or Upload your own. (tags: platform developer)

Mobile destinations

Last May Opera has put out some data on where people are browsing to on their mobile phones. I came across it recently and feel the stats are still applicable and relevant as we think about what people are doing on their mobile phones. Opera publishes this State of the Mobile Web report on a monthly basis and its a quick read of what people are doing in different countries.

They state that 63% of US traffic is to social network sites... and that is evidenced from the list of the Top 10 sites below:

Top 10 sites in the U.S.

1. www.myspace.com
2. www.google.com
3. www.mocospace.com
4. www.yahoo.com
5. www.facebook.com
6. www.live.com
7. www.hi5.com
8. www.wikipedia.org
9. www.itsmy.com
10. www.ebay.com

Social media marketing examples

In his blog, Peter Kim (ex Forrester analyst , ex Razorfish marketer) posts a great (and growing) list of how brands are usig online media (blogs, Facebook, Twitter) to extend their reach. Some of the examples were great for both the simplicity of the communication channel and the ability for community engagement.

Some of my favorite:

AMC's Mad Men. Microblogging: Fake Twitter accounts. [CHG: extend the life of your characters! brilliant]
BMW. Social networks: Facebook 1-Series Road Trip application. Rampenfest fan page.
Heinz. Online video: YouTube contest.
Motorola. Wikis: MOTO Q Wiki with how-tos on using the phone [CHG: because its so darn hard to use?]
United States House of Representatives. Microblogging: Twitter account. [CHG: really?]
Securities and Exchange Commission. Microblogging: Twitter account. [CHG: highly practical for hedge fund bankers to be alerter for upcoming regulation]
Virgin America. Microblogging: Twitter accounts for information and sales. [CHG: question is...any sales come out of this?]

Impact of new Facebook design on app usage

There is enough emotional sentiment out there against the new Facebook UI with thousands signing petitions against it. From the business side of it, with Facebook app developers like SGN, Zynga, Playfish and others receiving millions from VCs, there has been some concern that the new UI will lower adoption and use of the apps (and eventual/possible/hypothetical monetization).

The guys at All Facebook have gone out and crunched numbers to determine the impact. Their full analysis posted here. The most alarming metric: "The average monthly active users for the top 1500 applications has dropped 15.6 percent from its peak toward the end of September."


At FOWA London, Mark Zuckerber, addressed the platform, the new UI and the impact on the apps ecosystem. His general comment was that applications that relied on long term engagement and sharing have grown while the ones that relied on a box in the profile will have seen a drop. (Also interesting comments on monetization and mobile and location).

Social networks global reach

Oxyweb has a graph and post on social networks and reach. MySpace still leads in the US and local players (Skyrock in France, VKontakte in Russia, Orkut in Brazil and India :) their local positions.

Social times also had a post on this.

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