Facebook thrives on new startups

News and technology information Beijing time March 12, foreign Media wrote today that social media is entering a new stage of development, the prosperity of Facebook spawned a group of new start-ups, they no longer compete directly with Facebook, but around the platform of Facebook to fight each other, The social networking giant's relationship is also a friend.

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Dwarfed

On the wall at the door of Badoo's office, there was a postcard, "No, I'm not on Facebook." "Badoo is a social networking site based in London, with a registered user of 135 million, serving around 180 countries, with an annual revenue of about 150 million dollars. But Badoo is dwarfed by Facebook, both in terms of user numbers and revenue.

According to Facebook's own statistics, the number of active Facebook users reached 845 million by the end of December 2011, and more than 425 million of them logged on to the site every day. Facebook's services, which cover a variety of languages, cultures and groups of people of all ages, make it a typical representative of the trend of Internet development in the 21st century. Facebook is almost ubiquitous because of the sheer size of its users. The chances of a person using Badoo services but not Facebook users are slim.

Facebook's imminent IPO of $ billions of trillion in financing is a major event for the tech venture industry. Facebook has become synonymous with social networking, according to a number of venture capitalists, and even a biography of Facebook founder Mark Zuckerberg undertaking is named after a social network, Facebook's rise also has far-reaching implications for Europe's current group of technology companies.

The challenge for Badoo may be that the services provided by representative companies must be distinctly different from those of Facebook, as well as unique.

Investment income

For investors, the demonstration effects of the latest round of IPOs, which have brought huge returns to early investors, and the data surrounding Facebook's IPO applications indicate the potential costs to those who are willing to bet on emerging technologies. While the industry's risks remain large, they are much less affected by the overall economic downturn in the eurozone than most other developed asset classes.

"Early investors have 10 times to 100 times times the return on capital, so high returns are almost unheard of in real estate or late private equity institutions," said Charles Grimsdale, ventures partner at early Venture Eden Charles Grimsdell. However, the risks to early investors remain very large, and the average return is still low, and of course, the opportunity for a huge return remains. ”

The success of the industry in the recession, and the creation of a large cash-rich technology giants, which set up a billions of-dollar buy-out fund, have created better exit opportunities for venture capitalists. Grimsdell said: "The top ten IT companies hold more cash than ever before, and the technology industry does more than any other industry in the stock market." Where does all this cash flow? ”

Betting on a new generation of potential tech companies is not easy. Badoo a few years ago, abandoning a direct battle with the giants of social networking, instead of focusing on building a network of acquaintances, creating a platform for members to meet new people.

Avoid conflicts

Badoo's office has a traditional internet company vibe: Founder Andre Andrev (Andrey Andreev) is walking around in white T-shirts and jeans, while chief marketing Officer Jessica Bowell (Jessica Powell) uses the words "I love Spreadsheets "The words of the cup tea. However, the Badoo model is relatively rare in the social networking industry: Users pay directly for services provided by the company.

Badoo's mobile version of the service will display the user's personal page of interest, click on each page will show the user's most basic hobbies and photos. In Badoo's more popular countries, people rarely squeeze into the important home page so users have to pay for Badoo to push their position to a more visible "feature bar".

Mr Powell insists that there is a complementarity between Badoo and Facebook: Facebook is a platform for acquaintances, and Badoo is a network of people-built. In fact, Badoo via Facebook's "Connect" system allows users to log on to two sites at the same time through a set of information. Badoo also uses a Facebook app to bring traffic back to its site.

"I think the opportunity for a level social networking site may have gone away," Grimsdell said. There are a number of such sites, and a dominant one, but I think social media still have plenty of opportunities. "Like Badoo, the current generation of Internet startups can only survive in a field that doesn't compete head-on with Facebook," he said.

Revenue mode

For investors, Grimsdell says, this may mean they should look for new investment goals, such as companies that let others better understand the social environment: "Everyone is trying to find ways to capitalize on the sheer size of Facebook, Twitter and the entire social media industry." There is a whole field around social media analysis. How do companies track their comments on the web? How can companies use social media more effectively to communicate with customers? ”

Grimsdell added: "Will these social networking sites change the way people find or buy products?" Can it become the main way for a company to contact users? "Eden Ventures has invested in a number of" vertical "social networking sites, such as doccom and Lookk, a network that connects British doctors, who build a platform for designers and sellers.

In addition, Eden Ventures has invested in start-up companies, such as huddle, which directly provide social media services to businesses. "Today, a generation of people are totally obsessed with Facebook and other social networking sites, vertical sites ... and even corporate social networking sites, we think this trend is really interesting," Grimsdell said. ”

While technology giants like Facebook tend to be the focus of the industry, European venture capitalists are targeting companies that have generated stable cash flows and clear revenue patterns, rather than those seeking the most attention. Since 21st century, the financing of European venture capital institutions has surged before 2005, but has declined significantly since 2005.

Rallied

Although the tech giants are mostly concentrated in North America, Europe is starting to build its own global brand. For example, Finnish game developer Rovio, the company's popular game, "Angry Birds," nearly as many platforms as Facebook, the company's IPO last year attracted a lot of attention.

Rovio was invested in Atomico Ventures, the venture capital company of Skype founder Niclas Zengstrom (Niklas zennstrom). Although "Angry Birds" first appeared on the iphone, Rovio has extended the game to Android, desktop platforms and Facebook.

Ljungman, Atomico Ventures partner Matias Yanman (Mattias Rovio), is a typical example of the opportunities that Facebook and other distribution channels create for consumer-level businesses. Atomico Ventures has recently invested in start-up Wrapp, a company that allows social networking users to send gifts to each other, which can be converted into merchant coupons and coupons.

A business model that relies almost entirely on Facebook has already implemented an IPO, a popular game developer such as "Farmville" Zynga. Zynga landed on Nasdaq in DECEMBER 2011 with a valuation of around $7 billion trillion. While this is a far cry from its first 20 billion dollar valuation, the result is not disappointing for a company that relies so much on Facebook.

Youngman points out that Facebook's listing does not mean the end of an era, but another milestone in the shift in the digital economy to a deeper level. In the new digital economy, the socialization of technology will enable companies to transfer almost all of their activities online, not only reducing their operating costs but also making contact with global users. "I think we are still in the early stages of using these distribution channels," Youngman said. ”