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The Business of Facebook: Social Graphs, Applications, & The Future of the Web

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LinkedIn Founder/Chairman Reid Hoffman's keynote presentation at Graphing Social Patterns 2007

LinkedIn Founder/Chairman Reid Hoffman's keynote presentation at Graphing Social Patterns 2007

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    • 1. The Business of Facebook Applications: Social Graphs, Applications, and the Future of the Web Graphing Social Patterns Reid Hoffman, 9 Oct 2007
    • 2. Observations and Themes
      • Social Networks and Platforms
        • The discussion in 2003; the discussion now
        • Contrast: Facebook, MySpace, Ning
      • Social Networks and Professional Networks
        • Differences in use cases
      • One graph to rule them all?
      • Facebook Platform: some of the opportunities enabled
      • What does the social platform mean for the evolution of the web?
    • 3. Social Networks and Platforms
      • In 2003 -- the debate around Web 2.0, social networks: what was new?
        • Feature vs. Application vs. Platform
      • Temporal History
        • MySpace: ability to hack in “widgets”
        • Ning: the platform for building any type of social network
        • Facebook: the first platform on a broad social graph
      • Why are Social Networks platforms?
        • Social network embodies key data for applications useful in the real world
        • Early example: Friendster as a Dating Application
        • This data + consumer engagement = channel for these apps
      • Key Elements of Facebook’s platform
        • Extend functions of profiles, communications, newsfeed
        • Integrate general web applications with data, relationships, and communications
    • 4. Social Networks and Platforms
      • Facebook and MySpace
        • MySpace: integrate “includes” of widgets
        • MySpace has something like a social graph of linkages,
          • But no access to a real set of relationships
          • And no access to key data (user, profile)
          • And no platform access
        • No access to communications or newsfeeds
      • Facebook and Ning
        • Ning: program your own social network
          • Control of policy, set-up, feature set
        • Facebook: build upon massive social graph
          • Acquire customers
          • Leverage key relationships
          • Leverage existing communication scheme
      • Facebook: platform leverages a communications architecture and a newsfeed “sharing” space
    • 5. Social and Professional
      • Facebook and Linkedin: Different use cases
        • Search
          • Contrast: search by name
          • Contrast: search for “open source expert”
          • Contrast: search for pictures
          • Contrast: search for company connections
        • Answers
          • Contrast: answers application(s) vs. Linkedin Answers
        • Messaging
          • Contrast: messaging environments (brokerage vs. general sharing)
        • Services + Jobs
      • Simple misconception: any communications infrastructure can be used for anything.
      • Where is there interesting overlap?
        • Public profile presence
        • Potential business applications upon the social graph
    • 6. One graph to rule them all?
      • Will there be one social graph platform?
        • First: is there only one social graph? (Where do Friendster, Tagged, Hi5, Bebo, etc. fit in with this)
        • Second: is there one graph which contains each different sort of relationship (friend, family, acquaintance, professional, etc.)?
      • My theory: there will be multiple “graphs”
        • There may be multiple social graphs: semantics of the connection
          • N.B.: the odd population of graphs, such as Orkut and Brazil
        • One graph that includes all of the types of relationship in one perfectly orchestrated universe: not!
          • This is the geek, blogger dream.
        • It may be important to have different baseline rules on different brands and different networks.
      • Fortunately: a massive valuable platform does not require the truth of there being only one big social graph.
        • A wide platform is sufficient for an interesting ecosystem
    • 7. Facebook Platform: possibilities
      • Studying current applications
        • Communications: walls, poking, gifts, mail
        • Games: the obvious but also
          • Comparing people
        • Music and Media
          • Movies
      • Future possibilities (likely)
        • Iterations off major use cases today
        • Interesting to see what happens with “friending” applications, like Top Friends
        • Honesty box
      • What’s new?
        • The theory of platforms is to enable tons of creativity
        • What other apps would be in a 1-1, 1-many, many-many communications environment with your friends?
    • 8. Facebook Platform: limits
      • Is there a limit to how many applications any user will have?
        • Rising above the noise
        • Why the metric that Facebook reflects shifted to focus on number of active users
      • The areas that have not worked (thus far):
        • Business
        • Politics
        • Money
      • The challenge of the “second act”
        • Just like the web: the discovery of interest is hard
        • But: the key thing is the “second act”
      • Role of creativity
    • 9. Facebook Platform: economics
      • Today: parallel to the internet gold rush
        • CPI Installs
        • Run of site ad inventory
        • Ad network aggregation
      • Challenges Today:
        • Applications inserting interruptive ads as ways to generate income
        • Incented installations
        • Installations financed by future hope (not sustainable)
      • Future possibilities
        • Targeted ads
        • Virtual or real currency
      • Platform innovation?
        • Developers
        • Facebook
    • 10. Platform: economic analysis
      • What will be certainly the case:
        • Low cost apps with sufficient sustaining appeal
        • Applications that fit the Facebook use cases
        • Evolution of key use cases
      • What is still up in the air:
        • Establishment of substantially new use cases
        • Major applications
      • Massive competition a la the web:
        • Someone else will try to give away anything you charge for
        • At least three people will try to copy anything that works
        • Competition from companies and from individuals
        • People will experiment, but stickiness will matter
      • Key factors: distribute, use, retain -- plus economics
    • 11. Facebook and the Web
      • One angle: new patterns of eMail and communication
        • Sharing
        • New cycle of communication: the genius of Facebook photosharing
        • Look forward to applications the replicate that genius
      • Future of discovery of the web?
        • Discover through friends and sharing: certainly a piece
        • Certainly discovery of people’s social lives
      • Applications and the platform:
        • Can one website be everything?
        • Social graph -- applications
      • What does the microcosm mean?
        • Not one graph to bind them all, but an interesting new world
    • 12. Summary
      • Many of the new interesting entrepreneurs from college will first write Facebook applications
      • There will be an interesting ecosystem between websites and Facebook applications
        • iLike (music) and Flixter (movies)
        • Websites establishing their position (contract, acquisition)
      • Economics will be a real issue (just like the web)
        • General recommendation: keep costs low
      • Constant newness will be important for entertainment
        • Facebook accomplishes this through the platform
        • Applications will need to keep this going
    • 13. Questions