I remember when I was a kid someone presented me with this idea: if you could collect 1 penny from everyone in America, you’d be a rich man. At that time, it was probably a little more than 2 million bucks, today it would be a cool 3 million.
The obvious problem is that it would cost you more than 1 cent of effort to collect each of those pennies.
My previous two companies always focused on offering high value (read, “expensive”) products or services and selling them to a relatively small number of people. It’s not until I’ve started to get traction with my Facebook apps that I’m truely appreciating the power of the reverse. My current Facebook application Grow-a-Gift has been used by more than 3 million installs and about 300,000 people use it on a daily. It allows you to send a virtual flower from one user to another with a private message attached.
To most people this application doesn’t offer that much value. In fact, I bet a majority of the users wouldn’t even go through a standard website registration process to accept the flower they have received, I would be asking them to spend 3 cents (of their time) to get 1 cent worth of value. But Facebook makes the customer acquisition process so incredibly efficient, it’s literally a 2 click install, you don’t even have to type your name! Just like that, Facebook has made it efficient for me to collect millions of pennies (read, “users”).
The most common criticism I hear of these new Facebook applications is that poking, free gifts, funny pictures–these things are too un-serious to build a real business around them. But you should never forget, if you collect enough pennies you’ll be a rich man!
In checking out the new Google Open Social, the thing that felt horribly wrong about it was that you have to copy/paste a URL or code into some kind of gadget box to install an application ( according to
http://opensocial.ning.com/ )
That is definitely not going to help make things viral. I cannot imagine 60% of my friends even knowing how to copy/paste, and even if they know how to copy/paste, it is too much work!
I’m going to wait another couple months until Open Social matures and in the meanwhile, keep focusing on Facebook apps.
Keith- Can you share any revenue details about Grow-a-Gift? Are those user “pennies” converting to real pennies? I don’t recall seeing paid gifts so I’m assuming the app is still free. I’m amazed at how well The Lotto app is doing with ad revenue and am curious how it is panning out for gift-type apps. Thanks!
Congrats on your app. It seems like in this space it pays to be early to the table. We met at the Facebook garage and I finally have my app online. The app is called Beaver Books and allows you to sell books and buy book both from friends on Facebook and by using services like Amazon and Half.com. We were inspired by your talk and meeting at the event and worked hard on this app (part time we have other jobs). It would be interesting to get your feedback on this application. The URL is http://apps.facebook.com/beaverbooks/
-Tom
Keith,
My dad told me the story about the penny for years growing up. (Maybe I told it to you??
Joel always talks about how cost of sale is always constant in shrinkwrapped software. What facebook provides is a way of reducing the friction to an install to a (as you point out) amazingly low level. Now with paypal, the friction for a sale is reduced to an equally low level.
Of course, google is the best known example of collecting pennies…. It’s cool that the rest of us can start playing in that arena as well.
Keep on going!
John
Your math is wrong.
There are more people in the US that you seem to realize.