Facebook applications: the insanity is over, long live the interactivity

The $3M sale of ‘Where I’ve been’ application to the Expedia owned Tripadvisor on August attracted plenty of attention to the potential of Facebook applications in general, and travel applications in particular.
The last weeks have seen promises of other social networks such as Myspace and Linkedin that will begin allowing external applications addition to their websites, with Google already planning a 2-way applications infrastructures to be used in its own products.
These developments can assure more hype around social networks and Facebook, but is the reality that promising for application developers?

1. Were there other big apps sales? None as far as we know. Two applications were recently sold on Ebay, The Logbook for $2.550 and the ‘Am I hungry’ application for $20.100, which are both hefty amounts (as comparison, products beta invitations website inviteshare.com was sold to Techcrunch for $25.000 on July) but they make Mashable headline from the ‘Where I’ve been’ sale: ‘Insanity: Facebook app sells to TripAdvisor for $3m’ closer to reality than the going notion in the media at the time of sale.

2. How do you value these apps? While ‘Where I’ve been’ was valued at $1.30 per user (with a fast growing community 2.3M users at the time of purchase), ‘Am I hungry’ had seen a modest valuation of just $0.08 per user, 16 times lower than the ‘Where I’ve been’ user price tag. Since revenues generated by the applications are not yet known, the recent purchase estimations are the best guess around.

Back to the travel focus, when looking at the offering we count 199 travel applications on Facebook travel category, very few are attracting the attention of more than a thousand active daily users. Just 9 applications do that if to be accurate.

3. Successful apps: interactive or useful? Definitely not useful. Kayak, the largest travel search engine, has an application that allows users to see what would a flight to their friend’s location cost, and pursue the reservation link directly from Facebook. Nearly 4.000 users are using this application. On the other hand, the Traveler IQ app, an application that allows friends to compete in trivia questions about worldwide destinations, has nearly 1M users. The case for PetrolHead app with approximately 700k users is similar.

Bottom line(s): 1. Users in Facebook prefer interaction and self expression while the usefulness is left beyond the social network doors. 2. Facebook apps might be easy to create and spread, but they might not be the runway to heaven for most developers, though they can certainly be a great way to attract attention, either to the developer skills or the company behind it.

P.S. Mark Hendrickson at TechCrunch writes a story from the Stanford class for Facebook application developers that adds some new insights. It turns out that companies are chasing application developers, while the Stanford class has already managed to build an application reaching 100,000 users  (kiss me application).  This segment would surely grow larger with Google’s Open Social introduction, stay tuned .

Tripit review

After some period of stealth we are back  with some strategic analysis  posts, the first one being a review of the recently launched – Tripit.

Who’s on Tripit board? Gregg Brockway, Former founder of Hotwire and Scott Hintz, a former junior vice president at the firm are holding the president/vice president positions and form an impressive managerial lineup.
How liquid? – The company raised $1M from AlphaTech Ventures.

What they do? – Tripit is a travel organizing system that works on a simple principle that allows any user to forward its trip itineraries to plans@tripit.com which organizes all the itineraries together in a convenient and sense making method. This information can later on be updated with trip changes and reviewed by family and colleagues.

How will they create revenues? As accustomed these days with web 2.0 companies, Tripit shows no direct signs of revenue generation, so we’ll just have to guess: 1. By selling the subscription to corporate customers. 2. By adding location based specific ads/product sales. 3. By storing this information to create data on customers preferences and actual travel links (for instance: a business class traveler to Beijing is likely to stay at the Raffles, while a first class traveler is more likely to book the Presidential Plaza, information that would be interesting for resellers in the segment).

What the future tells? Tripit might not have a great value as a stand alone business, but they could become a great complimentary tool to any travel search engine. If they realize that on time, they could create several partnerships with the leading bunch and source their traffic from these. If not. A travel search engine might end up purchasing them for for an amount in the range of $5M-$10M, or even worse (for Tripit): copy the exact model and add it to its services.
That is the weak point of this (sweet) product. It is not likely to be defensible, and not adding enough value to survive as a stand alone operator. But, Brockway and Hintz have probably thought it over too, future will tell if they managed to answer these weaknesses.