Lightspeed Funding Turns Facebook Application Into “Serious Business”
Nick Gonzalez
56 comments »
Less than a year ago Alex Le and Siqi Chen were working at one of the web’s most ambitious startups, semantic search engine PowerSet (Due out soon). But last December they made the tough choice to quit it all and go full time for their own side project, a quickly growing little Facebook application called “Friends For Sale”. That project has grown into a full blown venture backed startup ironically named “Serious Business“, which just raised $4 million from Lightspeed Venture Partners (double digit pre) and currently draws over 600,000 daily active users on Facebook. Steve Newcomb, formerly of PowerSet, will be taking a seat on their board.
True to its name, “Friends for Sale” is an application that lets you virtually buy and sell your friends. The game is an ego driven form of “poking” (virtual nudges) that makes it abundantly clear who the most desirable players are, by listing a leader board of your most expensive friends. Every one of your friends, whether they have the app or not, can be purchased as a “pet”. Everyone starts at a base price that rises with every resale. You get more cash when you log in, are sold, or have one of your pets bought away from you. Users can spend that cash on kicking their pets, give them funny tag lines, or even virtual gifts.
That one game has also been supporting the growing company’s resources (20 Ruby on Rails servers and growing) through a mix of banner advertisements and sponsorships. While the company declined to state their earnings, they estimated the company could grow to 12 engineers without raising any financing. The financing allows the company to significantly ramp up their expansion plans.
But Lightspeed didn’t invest in Serious Business just for a single game. Founder Alex Le cites “Friends for Sale” as the first in a series of of games built directly around your relationships with friends. The idea is to create games for all social networks (Facebook, OpenSocial) that rely on leveraging social skills to win, instead of your twitch reflex or poker proficiency. While they’ll have some games to announce in the next 30 days, the founders briefly threw out the example of a battle game where your friends are the soldiers and success depended on your social skills.
Serious Business is not without competition. Zynga and SGN are well funded social gaming startups. However, Serious Business has a much larger hit than either, so far. “Friends for Sale” has also already been cloned as “Owned”, which draws about the same level of traffic some days. “Friends for Sale” itself is a variation on an earlier game “Human Gifts”. These startups are also in competition with the cycle that most applications follow on Facebook, amongst other potential difficulties. Applications tend to explode for a brief period (if at all) before settling at a lower activity level or completely dying.
Serious business indeed.
I can’t believe how much garbage gets invested in.
What is that sound I hear. Pop!
I don’t see much value created by the current popular facebook apps to warrant them being VC funded companies. What a waste of money and talent!
My first thought was…what a dumb “business”. But hey….if people are dumb enough to pay for this….more power to them.
Good app, for girls 8 to 10 years old…
Let’s see, a $4 MM investment at a $10 MM minimum pre-money. What does Lightspeed get out of this? Not too much.
Besides that, I don’t think it’s cool that you can show up in this whether or not you install the app. That defeats the point of Facebook’s privacy features. Why on earth would anyone who has the brains not to install something this pointless want to be a part of it?
Who wants to advertise to the idiots that actually use such a lame app? These are people with:
(a) Lots of time
(b) No job or underemployed
(c) Not much money to spend (see a and b)
Yeh this is absurd. Great investment guys!
Oh, and these guys are hiring too
http://snaptalent.com/ads/126/
BUBBLE.
They’re making money now, at least according to the article. I’d say that means they’re on to something.
It also means they’re going to be very well positioned once OpenSocial takes off, and they can get their games on all the social networks.
I can see the web 2.0 bubble coming, soon, very soon, right around the corner.
@ 9 Jeffryes
“Making money now” doesn’t mean “even close to a profit”. Let’s be real. Anyone can sell ad inventory at like $0.25 per CPM. You can “make money” and not have a business. I’m sure that’s pretty much what every Facebook app with the exception of Scrabulous (sp?) is doing. RockYou and Slide aren’t real businesses. They are ponzi schemes.
what a joke…seriously, this is what (otherwise smart?) people are programming
why not creating something that matters…
This is a pretty fun app with some serious advertising funds flowing in. There is a large group of people at my company using this for online team building. Yes there may be a bubble burst, but people will get rich on the way. Without innovations like Friends for Sale the Internet would not be nearly as interesting or inviting. Give the guys some credit.
Yes, I am sure this type of app will help FB compete with LinkedIn. What is the exit strategy here? IPO? ROFL. So, acquisition? Maybe a dating site or ad network.
This is stupid. I’ve seen some lame startups but this one gets first prize.
Doesn’t this sound like stupid?
This app is very addictive and has seen tremendous growth. Investors will look at this as an entertainment segment and a way to build engaging products for the 16-28 year old demographic.
It’s a lot easier to bag on someone else’s company than to actually build one, show success and get funding yourself.
Siqi Chen, the CEO, used to work for us at Veoh, and I can tell you that he is a superstar! While there are lots of issues to solve in making this a business, there is real opportunity. So give them a little runway, and watch. If anyone could make a good run at this, it is Siqi!
Good luck bud
D
As the developer of a “serious” facebook app that’s not nearly as popular, I’m jealous.
Please remember, all Facebook developers / companies have the same opportunity in front of them so don’t be surprised by this as there are no clear leaders in the gaming space with proven models, solid revenues or profits for that matter for most (some are profitable).
Build engaging apps and if your strategy is to get funding then you’ll get it if you have something with the potential to be big. There has to be winners are the end of it all so WILL IT BE YOU? …. Actions speak louder than words….
floks,
1. These guys are brilliant
2. Their app is one the most successful on FB
3. The infra and the architecture they are running is exceptional
4. Their RoR story is to be studied.
5. Their understanding of the social graph, and developing a relevant enjoyable and profitable app is 2 steps before other 21,000 app
Now, for all of you skeptics:
You remind me those that in the 60s and 70s could not envision one step ahead, saying “their is no need for more than 4 or 5 PC’s on the planet”.
You are going to eat your hat. What a shame for you to understand it too late.
and oh yeah, didn’t skeptics like you said three years ago that Google can never make money ?
eh eh…..
Siqi is awesome. I met him a year ago at a couple mixers in SF. He’s got brains and is super agile with the stuff he develops. He built Mafia for facebook and it grew exponentially because he was able to implement changes as fast as they were requested. I’m not surprised that a Lightspeed has invested in Siqi.
Rock on guys! Congrats. I can’t wait to see what else you make.
It is easy to see why highly regarded fund like Lightspeed (by idiots) is investing in crap like this. Benchmark or Founders would never have invested.
800M to zero. Good return for LP’s.
I wonder who did this deal on the team.
The best thing about this whole story is the blog Michael mentions in the picture called cpashare.com. Thought I’d take a look at it out of curiosity, and it’s not that bad..
Guys, remember that the article said that the founders could have supported up to 12 additional employees with their current revenues.
These guys, whom I know personally, would not have quit their jobs at Powerset unless they really saw a future in doing this. (Thus I can confirm the first statement. It’s kind of crazy, I agree.)
And yes, FFS does NOT appeal to most TechCrunch readers. But it doesn’t have to, because you’re not the target audience. I don’t use FFS a whole lot, but my girlfriend loves it and so do her friends… So perhaps my tastes do not dictate a product’s success - TC commenters take note.
It’s a combination popularity contest and a way for people to hit on members of the opposite sex. That’s not exactly revolutionary, but if it’s making a lot of money already there’s no reason not to pursue the opportunity.
Looks like another web app VC’s are hoping to flip to a bigger fool.
[a] The readers here are just that - readers. They aren’t busy changing the world. Instead, they’re just reading. (I know. I know. Me too. But I’m okay admitting it.)
[b] It goes to show how LITTLE readers understand the evolution of the online “space” and what ticks and clicks. It might be crappy but 600K daily active users (read: eyeballs in the same direction) is a powerful statement. Meanwhile, struggling startups with the Next Big Thing are struggling to get 10 eyeballs in their direction at any given time.
Folks, grow up and evolve. Hats off to Siqi Chen and his team for diving into this headfirst and showing these guys, me, and others that this is where it’s at.
Siqi, who I finally was able to sit down with in person back in February, has been with Lookery just about as long as Lookery has been in existence. Very helpful publisher when he was doing Mafia, and has been with us through the good and lean times.
@21’s point was - there are only a handful of apps on facebook that are turning a profit daily. Why? Ask Siqi, maybe you’ll learn something. And also to reference @21 - yup, I remember the days when people use to laugh at the PC for the household.
Rex
Seriously, it sounded like its seriously fun to work at SeriousBusiness
I know how much these guys make, or were making earlier this year. $200,000 a month before cost. Losers.
The fact that an application like this could become popular goes to show how pathetic the youth of our society have become.
The question now arises, will the Friends For Sale clone, Owned! get funded as well, considering it’s gameplay is nearly identical and the size of the userbase is also nearly the same. My thoughts:
http://www.bretterrill.com/200.....rs-of.html
Michael is only worth 300K ? That’s quite cheap for some one very influential…
Wow, there are a lot of jaded people reading this…it sounds like what our parents used to say about the “crazy kids these days and how nothing is as good as it was when they were our age”. The fact is, it’s popular…that doesn’t necessarily mean it will stay that way, and it’s undeniable that a bubble will cause some shakeout. However, you have to give them kudos for riding the wave, and being able to monetize it–albeit even a little.
I agree with Garth…think how many serious business-minded apps and websites have been developed, but no one sees them. Marketing 101–give the people what they want.
And then buyer beware.
Friends for sale is the kind of addictive social game/apps that makes the most sense on the Facebook platform. It actually adds value and runs on the social underpinnings unique to Facebook. I wouldn’t be surprised if to see another game/app like this get similar funding.
Friends for Sale is a really cool app. I’m happy for the Alex, Siqi and the rest of the Serious Business crew.
TechCrunch what’s your price.
Friends For Sale is really a harbinger of the next generation of apps on Facebook. The first generation apps just focused on viral growth that grew fast and sputtered out very quickly. Friends For Sale is a game that leverages the social graph and has a sustainable game play that has users coming back over and over again.
I think most of the users might be knowing about this apps but hardly they’re actively using it however it look good method to earn money and have fun!
Friends For Sale makes tens of thousands of dollars a day through CPA offers. They’ll have more than $4 million by the end of the year from that app alone.
Aw, how cute, an online popularity contest. Just like junior high school…
my $0.02….
you guys are in my opinion, a little short sighted on were this might go…
i can easily imagine a path where these guys could mash/merge/add some things that others are doing, and have a potentiall truly unique/compelling/interesting apps for marketing for companies who want to get their msg out to the public….
peace…
sam..
#1, you and me both.
Making a clunky app for FadBook nets you Millions?
1) why?
2) what the hell are you going to do with that money? outsourced “engineers?”
I’ve got an idea. I’ll open a can of soda. When I drink it, the can will be empty. Pay me for that idea. It is just as useful as this is.
seriously…
next we’ll be hearing how the “SuperPoops” facebook app has gotten its first round of funding for $10 million…
this isn’t sustainable, oh sweet jesus will i be laughing at the suckers who invested in this shit when it tanks…
there’s nothing innovative or valuable in any way to what they’re doing…
and sam, wake the fuck up mate, you’re swallowing the jargon everyone else is babbling.
at the end of the day, all that is being produced is fluff and trash.
glad i work at a company where we still make actual product, and have consistent, growing revenue not based on ad eyeballs and/or fads.
#44..
hey james.. as an older cynical/skeptical guy.. there’s no koolaid being drunk here…
but if done correctly, and combined with other technology/approaches.. these guys could have a seriously interesting app for allowing companies to build/implement/deploy focused marketing campaigns for a relatively low cost…
and no… i’m not referring to simply having ppc ads that users click on…
peace
btw, when you talk of ads as being fluff, and that you’re glad you work for a real company… i’d be willing to bet that your comapny would love to have the revs from that company called google, which gets 99.99% of it’s revs from ads!!
peace again…
don’t you guys see how web is changing ? a really dumb app can attract such a huge traffic!! or may be average people are so dumb..
Didn’t we learn anything from Web 1.0? Getting eyeballs is nothing if you can’t sell to them. Facebook users aren’t looking to buy. Once advertisers realise that they’ll pull their ads and apps like this will die a death.
Folks, try the game before you judge. Buy a friend or two, then see what you think. I thought it was silly until I tried it, read the funny nicknames people get, and I get it. (No insider here, honest opinion.)