The Facebook Application Market, by Tim Oreilly

1. The Facebook Application Market Tim O’Reilly O’Reilly Media, Inc. www.oreilly.com Graphing Social Networks October 9, 2007

2. We’re best known as a book publisher 2

3. What We Really Do At O'Reilly Change the world by spreading the knowledge of innovators 3

4. How we do it • Find interesting technologies and people innovating from the edge • Amplify their effectiveness by spreading the information needed for others to follow them. • Books 4

5. How we do it • Find interesting technologies and people innovating from the edge • Amplify their effectiveness by spreading the information needed for others to follow them. • Books, Conferences 5

6. How we do it • Find interesting technologies and people innovating from the edge • Amplify their effectiveness by spreading the information needed for others to follow them. • Books, Conferences, Online 6

7. Watch the Alpha Geeks • New technologies first exploited by hackers, then entrepreneurs, then platform players • Three examples – Wireless community networks predict universal Wi-Fi – Screen scraping predicts web services and the internet as platform – “The pedal powered internet” predicts new focus on energy Rob Flickenger and his potato chip can antenna 7

8. Facebook is the new frontier What is it telling us? 8

9. Data from O’Reilly Research • http://radar.oreilly.com/ research/reports/ facebook.html • Prepared by Tim O’Reilly, Roger Magoulas, Ben Lorica, Jimmy Guterman, with contributions from Dave McClure, Niall Kennedy, Max Levchin, and Ali Partovi 9

10. Methodology • Spidered Facebook stats weekly from 7/29 to 9/2 • On 9/4, Facebook started reporting engagement. Switched spidering to daily. • After 9/4, total installs per app is inferred from percentage • Total installs used for historical and rate of change data, active user data for application ranking 10

11. 11 Millions 10 15 20 25 0 5 9/4 /07 9/5 /07 9/6 /07 9/7 /07 9/8 /07 (on average) 9/9 Facebook Daily Active Users /07 9/1 0/0 7 9/1 1/0 7 9/1 2/0 7 9/1 3/0 7 9/1 4/0 7 9/1 5/0 7 9/1 6/0 7 9/1 7/0 7 9/1 8/0 7 9/1 9/0 7 Facebook growing by 1.14% per day 9/2 0/0 7 9/2 1/0 7

12. Applications Growing Even Faster - 1.9% per day 4,500 Facebook Application Count (by week) 3,000 1,500 0 7/29/07 8/5/07 8/12/07 8/19/07 8/26/07 9/2/07 9/9/07 9/16/07 12

13. 87% of Usage Goes to 2% of Apps 13

14. The Top 50 Developers by Usage 14

15. - no header version Here’s the graph against all 5000+ apps 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 0 1,000 2,000 3,000 4,000 5,000 6,000 15

16. Safari Views vs. Bookscan Unit Sales Additional demand from the long tail effect

17. A Power Law Distribution 17

18. R-squared is a measure of how well a line ﬁts the data that ranges from 0 to 1. The higher the R-squared value, the better the line ﬁts the data. F a power law distribution, an R-squared of .85 or better is expected. The Facebook app distribution with R-squared = .658 doesn’t show a Power Law distribution. The distribution isn’t linear. Facebook Application Usage log (active users) 12 Active Users / True Rank (loglog) w/ linear regression 10 8 y = -3.2924x + 11.33 6 R2 = 0.658 4 2 0 0 1 2 3 4 log (true rank) 18

19. Many Applications Competing for the Average Application Adoption Same User 1% Application Adoption and Application Counts by Category (9/21/2007) Dating Messaging Chat Video Just for Fun Alerts Gaming Photo Utility 0% 0 400 800 1200 1600 2000 Application Count by Category 19

20. Categories with the most active users per application (average) Sports Gaming Chat Fashion Just for Fun Photo Travel Dating Food and Drink Messaging Music Mobile Events Video Utility File Sharing Alerts Education Business Politics Money Classified Avg % Active Users by Category All 0% 5% 10% 15% 20

21. Most Active Categories, by Number of Applications > 100,000 users Just for Fun Messaging Gaming Video Dating Chat Alerts Photo Utility Travel Education Politics Music Mobile Food and Drink Fashion Events Sports Money File Sharing Classified Applications by Category > 100K Active Users Business All 0 10 20 30 40 50 21

22. Most Active Categories, Percentage of Applications > 100,000 users Messaging Dating Gaming Video Just for Fun Chat Alerts Travel Photo Mobile Fashion Food and Drink Education Politics Events Music Utility Sports Money File Sharing Classified Business Proportion of Application w/ >100K Active Users All 0% 2% 4% 6% 22

23. Most Active Categories, by Number of Applications > 25,000 users Just for Fun Gaming Messaging Dating Photo Chat Alerts Video Utility Food and Drink Events Travel Mobile Education Music File Sharing Fashion Politics Money Business Sports Applications by Category > 25K Active Users Classified All 0 10 20 30 40 50 60 70 80 90 100 110 23

24. Most Active Categories, Percentage of Applications > 25,000 users Messaging Dating Gaming Just for Fun Food and Drink Photo Mobile Chat File Sharing Events Alerts Travel Fashion Video Education Music Money Utility Politics Business Sports Classified All Proportion of Application w/ >25K Active Users 0% 2% 4% 6% 8% 24

25. The Top 40 - Week Ending October 5 Application Vendor Review Count % Active Installs Active Users Active Last WoW ROC 1 Top Friends Slide 2,708 16% 18,187,625 2,746,678 2,673,050 3% 2 FunWall Slide 682 22% 8,998,329 1,911,298 1,383,276 38% 3 Super Wall RockYou! 1,155 11% 10,183,200 1,083,079 820,878 32% 4 SuperPoke! Slide 3,601 10% 10,143,845 950,640 879,749 8% 5 Video Facebook 1,584 9% 10,771,730 936,327 905,353 3% 6 X Me RockYou! 2,263 10% 8,918,763 814,035 550,285 48% 7 iLike iLike 3,791 8% 9,396,575 730,953 736,549 -1% 8 Movies Flixster 1,520 7% 9,158,657 580,201 705,972 -18% 9 Graffiti Mark Kantor;;Tim Suzman;;Ted Suzman 5,469 7% 8,028,517 514,692 528,802 -3% 10 Likeness RockYou! 1,339 6% 9,418,350 499,705 429,721 16% 11 My Questions Slide 1,105 5% 9,783,925 417,009 441,958 -6% 12 Quizzes Eric Diep;;Joe Winterhalter 1,459 9% 4,402,856 363,478 286,168 27% 13 Mobile Facebook 755 16% 2,268,627 345,282 349,442 -1% 14 Free Gifts Zachary Allia 5,132 5% 7,342,580 338,662 373,674 -9% 15 Booze Mail Renkoo 1,840 8% 4,257,171 330,494 352,483 -6% 16 Compare People Ivko Maksimovic 7,252 4% 7,939,500 319,212 383,516 -17% 17 Honesty Box Dan Peguine;;Erik Giberti 4,402 9% 3,445,614 279,311 285,829 -2% 18 (fluff)Friends Mike Sego 22,938 13% 2,221,192 278,794 266,123 5% 19 Vampires Blake Commagere;;AJ Olson 2,013 8% 3,535,325 274,808 293,658 -6% 20 Scrabulous Rajat Agarwalla;;Jayant Agarwalla 3,363 33% 869,706 270,175 237,862 14% 21 Moods Drew Lustro;;Amit Matani 871 5% 5,825,860 265,452 272,839 -3% 22 Causes Tam Vo;;Blake Commagere 1,302 5% 5,426,880 251,224 251,402 0% 23 Superlatives Jamal Ashraf;;Suleman Ali 511 5% 5,511,900 249,760 261,705 -5% 24 My Aquarium Greg Thomson 3,072 6% 3,771,780 219,672 216,450 1% 25 Grow-a-Gift Mike Mangino;;Keith Schacht 1,616 9% 2,316,100 207,010 181,518 14% 26 Naughty Gifts Going 1,498 6% 3,633,500 200,999 255,536 -21% 27 Hatching Eggs Mike Mangino;;Keith Schacht 596 13% 1,691,536 200,470 170,227 18% 28 Zombies Blake Commagere;;AJ Olson 2,500 5% 4,259,220 197,133 220,217 -10% 29 Sticky Notes J-Squared Media 1,175 5% 4,055,860 195,330 211,012 -7% 30 Entourage Chris Osburne;;Vito Nonni 61 10% 2,117,190 194,763 199,172 -2% 31 Nicknames Adam Gries;;Wayne Mak 171 7% 3,091,120 184,524 202,380 -9% 32 Are YOU Interested? eTwine Holdings 442 10% 1,891,900 172,649 155,868 11% 33 Fortune Cookie Slide 1,293 3% 5,869,067 162,215 169,517 -4% 34 Texas HoldEm Poker Eric Schiermeyer;;Mark Pincus 2,262 6% 2,915,200 150,093 154,107 -3% 35 WereWolves Blake Commagere;;AJ Olson 968 8% 1,873,263 147,828 156,196 -5% 36 Bumper Sticker Harris Tsim;;Samuel Adams 595 11% 1,323,182 135,241 114,634 18% 37 Fight Club Wayne Ellis 471 32% 493,188 133,017 103,231 29% 38 Advanced Wall Phil Gibbons 152 4% 3,671,233 131,657 110,102 20% 39 PacMan thewurld 804 12% 1,219,564 129,955 120,910 7% 40 Favorite Peeps! Slide 2,511 5% 2,755,620 126,193 135,339 -7% 25

26. A Web 2.0 Refresher Tim O’Reilly O’Reilly Media, Inc. www.oreilly.com Graphing Social Networks October 9, 2007

27. User Generated Sharing Openness Content Blogs Social Networks Wikis 27

28. User Generated Sharing Openness Content Blogs Social Networks Wikis Love Peace 28

29. 29

30. What Really Distinguishes Web 2.0 Systems that harness network effects to get better the more people use them. 30

31. Building a Collective Database • Building on top of open source, Yahoo! pays people to build its directory • Learning from open source, Wikipedia uses volunteers • P2P file sharing users build song swapping network as a byproduct of their own self-interest • (Google works this way, and so does Facebook) 31

32. Harnessing Collective Intelligence Every true Web 2.0 company is building a database whose value grows in proportion to the number of participants -- that is, a network-effect-driven data lock-in -- with accelerating returns to the winners. 32

33. “Red Shift” 33

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36. The opportunity was in finding new meaning in user-generated data, and turning that meaning into real- time user-facing services 36

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42. Why Should I Have To Confirm? • geni.com already knows that Sean is my brother • My company directory already knows who works at O’Reilly • Google knows that I worked with Danese Cooper on open source Java and that she has spoken at many of my conferences • Amazon knows who’s written books for me 42

43. How Ridiculous Is This? • Dialed calls (last 10) • Received calls (last 10) • Missed calls (last 10) My phone and my email already know who my friends are? Social Networking has a long way to go till it’s the Web 2.0 address book 43

44. How Ridiculous Is This? • “Are you my friend?” (Anyone with a communications network - email, phone, or IM - already knows who my friends are!) Where is the Web 2.0 address book? 44

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46. The Internet Operating System The subsystems will be data subsystems – Location – Identity – Time – Products – Media types – Relationships – Price – Tags – ??? 46

47. A Platform Beats an Application Every Time •Lotus 1-2-3 •WordPerfect •Netscape Navigator 47

48. A Platform Beats an Application Every Time •Lotus 1-2-3 Microsoft Excel •WordPerfect Microsoft Word •Netscape Internet Explorer Microsoft Navigator 47

49. A Platform Beats an Application Every Time Microsoft Excel Microsoft Word Microsoft Internet Explorer 47

50. Two Types of Platform • One Ring to Rule Them All • Small Pieces Loosely Joined 48

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54. Questions You Should Be Asking • Am I doing everything I can to build applications that learn from my users? • Does my application get better with more users, or just more busy and more crowded? • If “Data is the Intel Inside” of Web 2.0, what data do I own? • What user-facing services can I build against it? • Does my platform give me and my users control, or take it away from us? 52

55. What I Want From the Social Graph Tim O’Reilly O’Reilly Media, Inc. www.oreilly.com Graphing Social Networks October 9, 2007

56. Some Things I Want From Social Networking • I want it to reflect my REAL social relationships (mine my phone and email) • I want it to help me manage those contacts (how to reach them, updated status) • I want to manage groups of people • I want it to recognize asymmetry in relationships • I want fine grained control over what I see and what I ignore • I want to discover interesting people 54

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65. Doesn’t Fit My Relationships... 63

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70. Smart Presence on the Phone 68

71. “I’m an inventor. I became interested in long term trends because an invention has to make sense in the world in which it is finished, not the world in which it is started.” -Ray Kurzweil 69

72. For More Information • What is Web 2.0? http://www.oreillynet.com/go/web2 • http://tim.oreilly.com • http://radar.oreilly.com • http://labs.oreilly.com 70

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