Facebook app install ads were the star of Facebook’s earnings call today. Sheryl Sandberg said 3800 developers used the ads to drive over 25 million installs. 40% of the top 100 iOS and Android app developers bought these ads in the last week of Q1 alone. Mark Zuckerberg meanwhile said, “We’re starting to see real revenue from selling mobile app installs.”
As I detailed yesterday, the app stores are becoming increasingly overloaded as every type of business goes mobile. Developers need a way to get their apps discovered, creating a massive opportunity of for Facebook’s app install ads which launched in October. These lets developers promote their apps in the mobile news feed with a large image, description, and “install now” button that opens the app’s page in appropriate app store. By combining Facebook’s massive mobile user base with its app install ads, Facebook is becoming the paid gateway to app traction.
Zuckerberg noted that with the rise of iOS and Android which it doesn’t own, it wasn’t clear how Facebook would add value to developers. But now Facebook has settled into helping developers build and growth their apps.
In terms of building apps Facebook already offers free SDKs that make it easier for developers to build in Facebook login and sharing options. Then just last week, Facebook acquired mobile app backend platform Parse, which handles servers, data storage, and more for developers so they can focus on creating enjoyable mobile app user experiences. While a relatively small business now, Parse subscription fees could contribute a few million dollars per quarter to Facebook in the future.
Where Facebook really stands to earn money is app discovery. Sandberg said “We’re uniquely positioned to offer developers massive reach”, alluding to its 751 million monthly users. Regarding app install ads, Zuckerberg explained that “Even if every recommendation isn’t one you take….we think [app discovery] is good for the community.”
Facebook’s CEO went on to note that the ads work well because they’re mobile by design. “Most ads make you visit website”, said Zuckerberg, while app install ads just open the app stores which users are already used to visiting. And since people already have their payment info loaded into these stores, the commerce experience is quick and easy.
App install ads also a good bang for developers’ buck, as Sandberg said “Our costs per install are highly competitive.” Meanwhile, CFO David Ebersman said this ad format is”early in its development but really doing quite well. We’re pleased with the experience we’re providing and the revenue we’ve seen.” They’re getting new businesses hooked on Facebook too, as Ebersman detailed, “A lot of the mobile app ads purchasers are new advertisers.”
Zuckerberg sees the app ecosystem continuing to get larger and more competitive, which will make Facebook’s app install ads increasingly more crucial. They helped Facebook boost its mobile ad revenue to $375 million, or 30% of its total ad revenue, up from 23% last quarter. Zuckerberg concluded that “this market is already big and I expect it to grow quickly.”
The only issue is that others see this too. Twitter just launched app install cards, which show big visual app previews and links to the app stores when people tweet about the download pages of apps. Meanwhile, some including Hunter Walk suggest that Apple might start offering its own native app install ads within the App Store.
Apps are proliferating, and developers need a way to rise above the crowd. Considering the amount they stand to make off of downloads, they could growing increasingly willing to put dollars directly into the pockets of Facebook and others if it gets them discovered.
If you aren’t at Disrupt NY or watchin’ the livestream back at home, you just missed something … pretty special.
Our own Josh Constine took the stage with the co-founders of Rap Genius, the text annotation service that recently raised $15M from Andreessen Horowitz, for a conversation that quickly went from talk of metrics and browser extensions to talks of adderall, an impromptu beatboxing session, and a founder’s apology for telling Mark Zuckerberg to fellate him.
Rap Genius started out as a site meant to allow hiphop fans to annotate rap lyrics to explain their meanings. Over time, it’s expanded to other, non-lyrical texts; just this morning, they disclosed plans to break into annotating breaking news.
The company’s three founders — Mahbod Moghadam, Tom Lehman, and Ilan Zechory — are nothing if not controversial. Today alone, I’ve heard them referred to as “lunatics”, “bonkers”, and “completely insane”… and yet, their panel seems to be all anyone here is talking about. Say what you will about these guys (they probably won’t care anyway), but they know exactly what they’re doing.
I’ve pulled a few choice quotes out of the interview for the sake of everyone at work — but really, you should probably just watch the video.
On Why Rap Genius Works:
“Rap Genius is not just crowdsourced. It started with us and like, six of our homies. It was homiesourced. We opened it up to the masses so it became crowd sourced. Then we decided we wanted it to ‘ballersourced’, [so we got a bunch of these huge stars verified on the site]“
“The secret ingredient of Rap Genius is love. We often tell people that Rap Genius was built on Love on Rails”
On Working With Marc Andreessen and Ben Horowitz, who funded their entire $15M Series A:
“We said we wanted such and such millions of dollars. [Marc] asked what we’d do with it; I said something really stupid, like we’d buy a bunch of companies. He just totally lost it, tapping his leg all over the place. I thought we’d totally tanked the meeting, but that’s just his way of showing love.”
“Ben is a real rap fan. He’s like the rap genius god father. We consider him a bro… What people don’t know is that he’s a marketing genius. He came up with the idea to call users ‘Scholars’, and ‘TopScholars’. He came up with NewsGenius. Ben, we love you dawg.”
On Rumors That The Team Used Drugs To Focus:
“Yeah, we would do naked adderall. This was before Y-Combinator. We’d do naked adderall [when we needed to turn out something] because that way we couldn’t leave the house [and would work on the site all day].”
On The Time When Co-Founder Mahbod Moghadam told The New York Times Warren Buffet and Mark Zuckerberg Could “Suck [His] Dick”:
“I’ll say it: to the Oracle of Omaha [Warren Buffet], to the Oracle of… wherever Mark Zuckerberg is from — I’m Sorry Zuck, I love you dawg.”
On What Factors In Life Lead To Them “Not Giving A Fuck”:
“Er, the series A? I dunno. We could sell this shit, we could go be alcoholics on some island. [But we're building something here.]“
On Their Notorious Personalities:
“I just met up with my old boss at Google. I wanted to convince him to come work at Rap Genius, and he was like ‘If I went to Rap Genius, the first thing I’d do is get rid of that Jean-Ralphio lookin’ guy.’ I was like: ‘uhh, which one? We’ve got two!’”
“A lot of people think we need to change. I… dont think that’s going to happen.”
“Yeah. If you want to ball major, you gotta drink the kool-aid. You gotta be more loose, but you gotta live the life 24/7. I don’t feel free. I gotta be the Rap Genius guy.”
Here is the original post: Rap Genius’ Co-Founder Apologizes To Zuck (Then Says They’ll Be Bigger Than Facebook)
Facebook founder Mark Zuckerberg made headlines today on the announcement of his new technology lobby, FWD.us, that he formed with his powerful Silicon Valley friends. But, behind the starstruck stories of DC’s new power players, it should be noted that the technology industry already has a litany of lobbies, comprised of the same board members as FWD.us, who have been active in politics for years. Before everyone gets carried away, it’s worth understanding what tech money has gotten Silicon Valley already and what FWD.us will need to do to distinguish itself.
The technology industry is handsomely represented in the halls of Congress. According to OpenSecrets, the industry’s lobbying coffers shoveled out $202 million in 2012, almost twice as much as in 2004 ($105M). Facebook even has its own Political Action Committee to fund specific candidates. And, to be sure, most major tech corporations have swanky DC diggs, where they throw elaborate champagne parties on rooftop decks (I have enjoyed their expensive appetizers many times).
In addition in-house teams, there are a number of similar independent lobby groups, including the Internet Association, Engine Advocacy, TechNet, The Consumer Electronics Association, and The Silicon Valley Leadership Group–to name a few. Yahoo CEO Marrissa Mayer, a member of Zuckberg’s FWD.us, also sits on the board of Technet.
Like the tech companies themselves, the varying lobbies disagree on thorny issues such as the Internet sales tax, which pits pro-taxation eBay against its digital rival, Amazon. But, there’s far more agreement than disagreement, especially on immigration reform.
FWD.us’s topic du jour is high-skilled immigration reform, which the entirety of the tech industry has been pushing for, for decades. As Zuckerberg echoed in his Washington Post OpEd, “To lead the world in this new economy, our workforce needs the most talented and hardest-working people. We need to train and attract the best.”
Yet, despite a full court press by the most of the industry, and (an arguably more powerful) ally in New York City Mayor, Michael Bloomberg, proponents of high-skilled immigration reform have yet to be successful. Last Winter, a bill, which aimed to expand high-skilled visas to more foreign-born science and engineering graduates of American universities, died largely because all the money in the world couldn’t get Democrats and Republicans to agree.
We held a debate between high-skilled immigration reform expert, Vivek Wadhwa and Congressman Gutierrez, for those readers who want to learn more about the disagreement over whether to prioritize high-skilled immigrants over their low-skilled counterparts.
Principled differences aside, the Latino-American population is now powerful enough to swing Presidential elections, so politicians want to take their concerns seriously (which President Obama pretty much admitted, in recorded off-the-record remarks).
As a result, this year, the 85,000 visa quota for high-skilled immigrants was maxed out in just 5 days. Evidently, tech, and its DC money, has limits.
Despite what may seem like a unified front, the 30 all-stars have their own agenda. Most FWD.us members, like Google Chairman Eric Schmidt, are reliable Obama backers. According to OpenSecrets, the communications and electronics industry gave nearly twice as much to Democrats ($93M) as they did to Republicans ($55) in 2012.
As we’ve written about before, technologists’ aversion to conservatives is largely principled, and no amount of money or peer-pressure will convince them to back Republicans.
Other board members simply have their hands’ full with their own issues. Zynga’s CEO, Mark Pincus, will likely be lobbying for online gambling and can’t expend too much political capital on anything else.
The bright folks at FWD.us are no tourists of the political landscape. But, to distinguish themselves, they’ll need at least one of a few proof-points
FWD.us could be a power player. But, the mere presence of fancy board members hasn’t proved they’re anything unique yet. We’ll keep you posted.
Editor’s note: Taylor Buley is a senior developer at Conde Nast’s PARADE. He’s a former staff writer at Forbes and graduated from University of Pennsylvania and Stanford. Follow him on Twitter @taylorbuley.
On Thursday Lars Rasmussen, Google Maps co-inventor turned Facebook Graph Search guru, took to Reddit for an “ask me anything” open thread. The Australian native avoided questions about the competitive landscape for Graph Search but spilled a near complete history of its development inside Facebook.
The Facebook engineer had a good time doing it, too, judging by the 18 smiley faces he riddled throughout.
Graph Search is Facebook’s foray into the search market. Instead of matching pages to search terms like “San Francisco + sushi restaurant,” Graph Search instead takes natural-language sentences like “my friends who like sushi” and finds results expressed through your social network. Facebook is betting that by using personalized data, they can provide more relevant search results than can mechanisms such as Yelp reviews or Google Page Rank.
Rasmussen writes that he was interviewed by Facebook in late 2010, around the same time Google announced the shutdown of Google Wave, a product launched by Lars and brother Jens. But it wasn’t until a half-year later that he was pulled onto the Graph Search project.
“Zuck asked me to work on search in the late spring of 2011,” he writes, recounting the first of three walks with Mark Zuckerberg. The Facebook founder “had a very strong vision for what he wanted and how compelling a structured search product over the content people have shared on Facebook could be.”
In another answer regarding the timing of releases, he explained how his team “showed the original prototype of what we much later named Graph Search in the early summer of 2011.” This prototype only took a few weeks to build, he said, but the project did source code from “previous prototypes of structured search products that were not based on natural language.”
Thus we know Facebook had played with the idea of a non-natural-language search product at least some point before the summer of 2011. This lends credence to rumors that circulated in 2010 of a search project built atop the freely indexable Open Graph tags standard it launched in summer of 2010.
What held up Graph Search development between the early prototypes and the January 2013 launch? Too many smart people at Facebook, perhaps. In a question regarding the “best and worst” of working at Facebook, Rasmussen discusses the pitfalls of having a company “chock full of passionate, brilliant, opinionated people.” The problem? “Sometimes it takes longer than I’d like to arrive at an answer.
“I think it is fair to say the project took longer to get to the beta stage than I predicted when we started,” the engineer candidly confessed. “Pretty much all projects I have ever worked on have had this property Time flies when you are behind schedule!”
But perhaps the delay was for the better. A vanilla search engine built atop Open Graph tags would have done little to innovate in the search space. Instead, in January Facebook rolled out a novel breed of search powered by natural-language queries and social data at a scale not available to, or indexable by, any competitor.
So what about Graph Search’s competitors? Members of the press have fingered Yelp and Google, among others, as possible competitors against Zuckerberg’s search vision. But when asked which companies Rasmussen and his team view as direct competitors, the engineer held back and merely proffered a smiley face.
Facebook Graph Search has yet to roll out to all users, and Rasmussen writes that part of the reason for the partial rollout so far was to allow live A/B testing on real users — a process that circumvents the possibility of endless internal discussions. “Without live usage we’d just be arguing all day,” he writes.
The company is apparently now discussing the future of Graph Search. According to Rasmussen, his third and latest walk with Zuckerberg came just last week and its purpose was to discuss the future of the search product.
The rest is here: The History Behind Facebook’s Graph Search
In President Obama’s inaugural Fireside Hangout on Google+, he faced the public and answered a bevy of questions along a wide range of topics, including immigration, gun violence, and even technology.
One of the five Americans selected to speak with the President happened to be Limor Fried, an entrepreneur and CEO of Adafruit, an electronics manufacturing and education company in New York City. What was interesting was the topic of her questions, specifically relating to entrepreneurship, patent reform, and computer programming in schools.
Fried’s first question to President Obama centered around patents. As high-tech startups are an important “engine” of the American economy, she’s concerned that when companies become successful, the so-called software patent trolls will appear — that is, firms that collect patents for the sole purpose of litigation against companies that can’t afford patent defense because it’s too expensive. Fried asked Obama about his stance on software patent abuse and whether he would support limiting patents to a term of 5 years.
Obama agreed and said that a couple of years ago, his administration helped make some patent reforms by working with Congress to pass legislation, known as the Leahy-Smith America Invents Act. He believes that the patent trolls are those who aren’t producing anything themselves and are just hijacking what others have for profit. He says that patents should be long enough that it protects intellectual properties, but should be balanced that it doesn’t stifle innovation.
However, Obama thinks patent reform has only gone half of the way to where it needs to go and that additional stakeholders are needed in order to build consensus and create smarter patent laws.
The President says that technology is changing so fast and it’s important to keep up with the trends. He stated that the government is interested in protecting people’s privacy, civil liberties, and also ensuring the Internet stays open — a point he emphasized. He closed out his response by saying that from an intellectual property standpoint, he’s always thinking about how his administration deals with copyrights, patents, and piracy issues.
In another go around, Fried brought up the subject of technology in education. Analogous to her time in high school where she was required to take a foreign language course, she asked President Obama if it’s possible to make it a national effort to promote computer programming as a requirement. The President agreed and said that he’s making sure he’s working with high schools around the country to make sure the experience is relevant for students, even for those that may not be pursuing a advanced degree.
President Obama said that the concept of vocational education has received a bad rap at some point because some think that “we’re tracking people into certain jobs”. However, all those categories have seemed to have eroded. To that end, Obama referenced a conversation he had with Facebook CEO Mark Zuckerberg during dinner one evening where Zuckerberg told Obama he taught himself programming because he was interested in games.
Obama believes that there are those in high school who, if they found out that they can build games if they know math and science, would be interested in pursuing that career path, or if they were presented with what a career in graphic design looked like. The point he was trying to make was that if these skills were presented to the students before they went to a vocational or a four-year institution, students might be more engaged and think it’s better than just sitting in a classroom listening to a “boring lecture”.
In the end, the President said he wants to help students produce stuff, not just consume stuff.
Photo credit: Alex Wong/Getty Images