Facebook has 'thrown the entire startup world for a loop'
FROM A FACEBOOK PLATFORM DEVELOPER — I work for a startup in the Valley and have nothing natural against Facebook at all - in fact my team and I have spent every hour of every day for the past four weeks developing our Facebook app because we thought it was a great opportunity for exposure. Our dreams were inflated by how viral the initial set of applications were, despite their weak design. However, over the past week we've begun to realize that the whole thing has been much more hype than reality, and has thrown the entire startup world for a loop.
The numbers speak for themselves. There are a total of 1,131 apps. Of the last 500 to be approved, only 5 have over 100,000 members, and none have over 200,000.

And it's not as if there are a lot of apps close to 100,000 - in fact there are only 5 apps within the last 500 to have between 10,000 - 100,000 members. That means fully 489 of the last 500 apps to be approved by Facebook have fewer than 10,000 members.

Put in other terms, the largest application (Top Friends by Slide, which has 7 million members) has several times more members than the than the last 500 apps combined. (You can see all these numbers yourself by going to the Facebook applications page and clicking on the "Newest" tab and then paging through the results.)

This is an incredible drop-off rate, and shows the enormous hype of Facebook, with everyone focusing on the handful of early applications that were able to take off virally but ignoring the unique situation that gave these apps tremendous advantage.

There are two reasons for this dramatic drop-off. The first, most clearly, is a natural saturation point where people stop inviting their friends and trying out every new triviality. To the extent that this is the case, people should have forseen it and Facebook can't be held to blame for the hype.

But the other reason for this dramatic decline, and this is what pisses me and a lot of other developers in the Valley off, is that Facebook just recently unceremoniously undercut the very thing that was driving the virality of most the initial applications , which is the ability of people to invite all their friends to an application. This was the primary means of distribution for the initial viral apps, where every few people who added it would invite literally all their friends, many of whom themselves would invite all their friends, etc - exponentially increasing adoption. Facebook did add a little friction to this process by requiring users to invite friends in batches of 10, but that didn't seem to deter many people from inviting everyone they knew.

However, just this week Facebook made a small tweak in this process that has had dramatic effects in stunting the potential viral growth of apps - they started preventing users from inviting more than 10 friends to the app in any given day. This seems like a small deal, but it is enormous in its impact. Most people on Facebook have over 100 friends, and were inviting all of these to the service. Now, with the restriction of inviting 10 friends, the barrier to going viral on Facebook is exponentially higher (particularly because in general only 10% of people join a service when invited, meaning that exponential growth of the sort seen by the first few dozen apps on Facebook is nearly impossible).

In a related minor but hugely impactful move, Facebook also recently started asking users if they want each application to appear in their news feed, on their profile, or on their side toolbar when they add an application, causing a lot of people to opt-out of this (and therefore reducing the effectiveness another supposed viral way to grow on Facebook, through the news feed). In contrast, all the initial applications had the benefit of automatically having their information published through the news feed and on each user's profile and will continue to benefit from this until users pro-actively remove it (which, as you know, is much less likely than people opting out to begin with if prompted).

The reason this pisses me and many other people I've been talking with over the past day or so off is because dozens if not hundreds of startups in the Valley who made a strategic decision to divert valuable resources over the past month to develop a Facebook app did so with the understanding that we would have access to the same viral tools that all the initial applications had access to. But we do not, and Facebook has taken these tools from under our feet without any announcement or recourse. We all realize that we have no natural right to Facebook's users, but what we do want is an equal playing field and transparency, and a lot of us feel deceived into thinking that Facebook would continue to allow for the sort of virality they now have taken away.

The natural next question is, did Facebook know that the viral growth was unsustainable and purposely increase the chances of initial applications would go viral to get press and the interest of startups across the world, while knowing that they would have to take away some of these viral tools soon? I'm not sure, but it sure has worked to their advantage that the initial hype that they helped create has gotten hundreds of developers to start working on building applications for them under more or less false pretense. It is also of course a bit unseemly that many of the apps to have benefited most from the artificial virality of the initial apps are from companies with intimate ties to Facebook - such as Slide, which is led by Max Levchin, friend and former co-founder of PayPal with Peter Thiel, Board Member and initial investor of Facebook.

In any case, I thought this is the sort of juicy, needs-to-be-told story that you would be great for. It would also be a great public service for you to tell it, so that companies don't throw millions of dollars of developer resources into a field that is not nearly as fertile as most have been made to believe.