Facebook's Growth with 7 Observations

With one of our companies ReverbNation launching their music player on Facebook, I decided to create an account and check it out.

Assuming you are already caught up on how Facebook works, here are some observations from using it over the last 2 weeks:

1) I'm jealous of the growth Facebook is experiencing. Seems like a pretty smart decision for Facebook to open to the general public. Leading up to that move, the site was limited to college students and traffic on the site had leveled off.

But now, Facebook has hit 30 million users and just under 60 days ago that number was 24 million. And looking at other interesting stats, I found that users that are 35 years old and older doubled over the last year - now past 10 million. The biggest growth is with 25-34 year olds, up almost 200% year over year.

2) I was amazed how many people I know are in Facebook. Pretty quickly I have connected with 85 people that I know... and that was without trying too hard... most of these are work connections and many are LinkedIn duplications (which is a whole different topic btw). So, besides college students (where Facebook absolutely dominates) who is in Facebook? 1) A lot of younger, web savvy entrepeneurs. 2) A ton of VCs. Here is a quick sample of VCs that are members:

• Mike Feinstein, former GP, Venrock
• Brad Feld, Mobius Venture Capital
• Elliot Katzman, Commonwealth Capital Ventures
• Simeon Simeonov, Polaris Venture Partners
• Mike Hirshland, Polaris Venture Partners
• Paul Kedrosky, Ventures West
• John Kim, HIG Ventures
• Nathaniel McNamara, HIG Ventures
• Lucy McQuilken, Intel Capital
• David Aronoff, IDG Ventures
• Chip Hazard, IDG Ventures
• Jeff Bussgang, IDG Ventures
• Jack Biddle, Novak Biddle Venture Partners
• Phil Bronner, Novak Biddle Venture Partners

3) People (I hope the ones I am connected to are not in this category) spend an average of over 3 hours/day on Facebook. 3 hours/day!! With some college students that I have talked with, it seems to have replaced or at least greatly minimized having a Yahoo or Gmail account for your email. They use Facebook to communicate with their friends because they are all on the same platform.

Some features I like is that it is really easy to track what applications people are adding to their profile, see recent pictures they have added (some have 150+ pics), see upcoming birthdays and track events all over. 

4) It is really easy to start a new group on Facebook and keep it open or hide it. After I quickly found out who was on Facebook, I noticed there are a lot of groups popping up. I joined some groups I was most interested in: Web 2.0, eCommerce Strategies, Venture Capital 3.0. A couple of the groups I joined have over 1,000 members and growing fast. Some are more active than others with valuable content where members in that group offer valuable tips. I think I am a member of 15 groups right now.

Then to better understand groups, I launched Southeast VC on Facebook. I started the group on Facebook for entrepeneurs in the Southeast to compare notes, ask questions. 40+ people have joined so far. Of course, anyone is welcome.

5) Facebook seems a lot better organized and has a cleaner appearance than MySpace. I really don't understand MySpace. I set up an account there a while back to test drive it. I may go there once/month max. One of my college roommates reached out to me there. Funny.

6) The number of new applications on Facebook has exploded. Less than 60 days ago, Facebook started allowing third party companies to build applications for Facebook users to add to their profiles. Over 1,500 companies have built applications and these are mostly web companies targeting Facebook's 30 million user base. According to Facebook, some of the more popular applications have gone from zero to 850,000 users in just 3 days. Those kind of numbers seem to be more of the exception. Half of the Facebook users have installed at least one application. What kind of companies are noticing and building apps for Facebook? Well, eBay launched one that allows users to search for items and shop while still on Facebook. And I mentioned earlier that ReverbNation launched an application as well.

It remains to be seen how many of those companies make money on this.

7) $6 billion is a lot. Microsoft is rumored to buy Facebook for that? Can that be real? Facebook is supposed to do $100 million in revenue this year. 60x 2007 revenue? I'd sell.

Comments

[Azam Khan]

I don't think facebook's sale to microsoft would be a bad idea. Facebook will continue to grow and generate much revenue however one must stop and understand how trends in technology change. Since facebook is a platform on a platform (the web), it has dimensions which prevent it from being totally open (the brand of facebook). However if facebook does open its doors, and in ways it has and will, then the brand facebook will diminish to a great length. It's issues like this that we can only speculate on. Microsoft's plan of becoming an advertising giant would do nicely with facebook. It's funny because facebook is experimenting with its own "ad generation" concept, and this is pissing off Microsoft because they had their own plans for facebook. It'll be interesting to see how things turn out, but in the meanwhile businesses are reccomended to take advantage of facebook in a strategic manner.

[art]

Hi Jason,

Nice stats and interesting comments. However, your last comment seems a bit too strictly finance and not enough technology. The reason that Facebook is receiving high praise is that, as you point out, it is becoming a rich media platform that competes with search for the way people look at information. The company's clean look and technology drive is also attracting the top engineers of the market. If Facebook stands the chance of competing with Google and Yahoo in the public market, would it make sense to sell it early to a company like Microsoft which is desperate to catch up to web 2.0 and could potentially ruin its reputation?

This game is not strictly about multiples...

[Jordan Glasner]

I actually stumbled across this post through your group on Facebook, and I just have an account for testing purposes.

That's an amazing testament to their reach.

However, I still agree that they're ridiculously over valued at the moment due to the hype. Once everyone sees through the faux-openess that F8 has created and realizes they're only gaining users for Facebook, the tides will turn.

The successor will be an open social graph, that any business can incorporate into their site. Web 3.0 perhaps?

[Cindy Campbell]

I have a MySpace and it is confusing. I don't use it much, just my blog. I enjoyed your article and you have me convinced that Facebook is the way to go. My children have mentioned Facebook but I've just never taken the time to research it.

[Ed Holloway]

Jason - good stats, I had not seen these before. I was especially shocked by the 3hrs/day. Wow!

As fodder for a future post, I'd love to get your take (as a VC) on the evolving ecosystem here.

-Ed

[Jason Caplain]

Hi Nancy,

Nice watercolors on your site! Anyway, Facebook has a very easy sign up process. Go to Facebook.com and click the green register button. Good luck!

Jason

[Nancy Standlee]

Well, you certainly wrote a convincing article. Where do I sign up? Thanks for the info. ns