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A big chunk of the 'Facebook economy' doesn't belong to Facebook: it belongs to individuals and companies who have built Facebook applications.

By some accounts, the revenue generated from these apps will surpass Facebook's own revenue this year. So it's no surprise that Facebook is looking to do more to take direct advantage of the ecosystem it's built.

One of the ways it's going about that: an investment fund.

Its fbFund program, started in partnership with VC firms Accel Partners and Founders Fund, provides financing to entrepreneurs and startups building interesting applications for Facebook. According to the fbFund website, the program has $10m to invest and is putting $25,000 to $100,000 into each investment.

The winners of the latest round of fbFund were recently announced and this time around, each one of them is getting the opportunity to spend the summer in Palo Alto as part of an incubator initiative called fbFund REV.

Sounds good right?

Thanks to a tip from an astute associate of mine, it looks like Facebook and its VC partners should have screened fbFund applicants a little more closely. One of the winners, a company called Life360, posted an ad on Craigslist shortly after it learned it had won. The ad states:

Our company, Life360, was recently named as one of this year’s Facebook Fund winners. Facebook is currently a bit of a side focus for us right now, so we are looking for someone to become our lead Facebook developer and drive this forward.

As our lead Facebook Developer, you would attend all FbFund incubator meetings and sessions for us, and would get the full benefits of being a FbFund finalist, including any publicity that comes from our future Facebook efforts.

We need someone to start ASAP, and commit to working with us full time at least through the summer (hopefully longer if things work out). Pay will keep you alive, the equity comp will be great, and the opportunity we think is awesome—probably the only way to get into the 09 FbFund incubator at this point. We are based in Berkeley, and may be moving to SF in the near future. You would mainly be working from Facebook's incubator.

Nothing inherently wrong with this, but why would Facebook invest money (and incubator resources) in a company that considers Facebook a "side focus", even after winning funding and the ability to participate in fbFund REV? Is Facebook just handing out money and incubator spots without doing any due diligence and thoughtful consideration? When you consider that Accel Partners and Founders Fund in particular have limited partners to answer to, it's doesn't look good that some of the money they've put into fbFund is apparently going to startups that really aren't all that into fbFund. Even though we're talking small amounts here waste is waste.

I'm sure there are plenty of other entrepreneurs and companies that would jump at the opportunity to receive a little bit of funding and participate in Facebook's incubator program. I think Facebook might want to do a better job making sure it's providing its most passionate and eager fbFund applicants these opportunities.

Photo credit: daveynin via Flickr.

Patricio Robles

Published 1 June, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2401 more posts from this author

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Dave McClure

hi Patricio -

not sure the angle you're taking here is accurate, but you're entitled to your opinion...

for the record: Life360 is a pretty super-smart group.  they won a $250K award from Google last year for being one of the top Android developers, and have a team of top geeks from Berkeley. they've also spent time working on iPhone apps and other mobile communications.

re: Facebook development, when told of the fbFund incubator opportunity, they jammed all night for several days in a row to get a prototype together based on a just-recently released feature from Facebook (based on the Activity Streams API), which was something even very few top Facebook developers could have pulled off.  

all of the internal fbFund judges were impressed by their technical expertise, not to mention the opportunity to get a team that was familiar with both Android and iPhone platforms to spend time working with the fbFund REV incubator on Facebok-related development.  we see both platforms as complementary to Facebook mobile app development.

furthermore, their commitment to double-down on Facebook skillsets by hiring a new lead developer seems to be a pretty solid example of their committment.  perhaps what the listing may have meant to say was that it had *previously* been a side focus up until recently, but regardless i don't think there is any doubt from us at fbFund that we think they plan to make it a big emphasis going forward.

while we're open to feedback on our selection process, i don't doubt that Life360 is both passionate and eager to participate.  at the same time, i can't think of a group of more talented engineers we want involved in the incubator program.  sometimes some of the most talented geeks on the planet don't wear their passions on their sleeves... they just put it in their code. 

in any case, we're happy to be judged by the results of our incubator and our startups at the end of the summer.  ultimately, their success will be based on subsequent investors writing checks (or not), and based on customer usage, distribution, and monetization.

rock on,

- dave mcclure, fbFund REV 2009 program coordinator / investment manager

over 7 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

Dave,

I don't doubt that the people at Life360 may be super talented and I don't doubt their technical expertise.

But there are plenty of entrepreneurs out there who I think would love to obtain some funding and participate in your program in a fully-committed manner. Giving money to a startup that can't devote itself 110% to your incubator program just doesn't make a whole lot of sense to me and seems to be doing a disservice to those who would probably clean toilets at Facebook headquarters to be a part of your program.

From my perspective, it simply looks bad when an investment is given to a group of entrepreneurs who turn around and post a public classified looking for somebody to assume responsibility for executing against it because they're too busy with other things.

At this point, your investment primarily rests on the capabilities of the person your entrepreneurs hire, not the entrepreneurs themselves, even though it was the latter who knocked your socks off. Even though the fbFund investments are small, from a pure investment philosophy standpoint, I'd feel uncomfortable knowing that I invested money in a group of entrepreneurs who are in turn relying on somebody they might find on Craigslist. But that's just me.

I wish Life360 the best of luck and look forward to seeing the results of the incubator program.

over 7 years ago

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Chris Hulls

Hi Patricio,

I wrote the Life360 craigslist post and I think you may have misunderstood my intentions.  Dave beat me to the punch with his reply (thanks for the defense Dave) but I’d like to make a few points:

1)      Yes, we aren’t primarily a Facebook company.  We did, however, see some amazing potential to use the platform so we applied to the FbFund.  Now that we are one of the winners we want to make it a core focus and would like to find someone who eats, breaths, and sleeps Facebook so this can happen—hence the post.

2)      A lot of the companies selected this year were in the Facebook Connect category.  The FbFund is not just about building businesses that rely strictly on dedicated Facebook Apps to succeed.  I think you’ll see some really exciting stuff come from the Stream API…

3)      You are implying that we are a bad investment because we aren’t building our company as 100% Facebook focused.  I don’t see the logic here.   I’m obviously biased, but I think it maximizes the fund’s economic potential to invest in companies with a wide range of products, business models and customer acquisition strategies.

Perhaps the job posting gave a bit of the wrong impression, but please keep it in context.  We were hoping to make a developer excited about the fact that they could join our core team and have the huge responsibility of leading our Facebook efforts, which will become an integral part of our company’s future success.  I wanted to make it very clear that whoever we end up working with will be a leader versus someone just endlessly doing QA and bug fixes—which I think is what was misinterpreted as us not taking our position in the program seriously, which is definitely not the case.

Patricio, I saw your follow up comment as I was writing the end of this note.  I’d like to reiterate we aren’t outsourcing this job and we are 100% committed to our spot in the Facebook program.  Heck, I only live an hour away but I’ve been looking at moving down to the South Bay for the summer just so I can be closer!   We already have a team of awesome developers who will be involved with this, but as Dave mentioned in his comment, we are doubling down by putting limited resources towards finding someone who will *only* do Facebook work.    

In hindsight I clearly could have done a better job writing the job post, but remember what it was: a job post.  I whipped up a quick few sentences to see if advertising the opportunity of being a lead Facebook developer for an FbFund company would get people to click.  My time is limited and I like to put it where it will have the most impact for the company, and until now I haven’t spent much time thinking about the PR impact of a job listing!

And we are still looking for our awesome Facebook developer, so if you have any leads for top notch coders please send them my way!

over 7 years ago

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Mountain Bike Holiday

Good article

over 7 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

Chris,

Thanks for your comment.

To the contrary, I was not suggesting that you are a bad investment because you are not 100% focused on Facebook. Quite frankly, I don't think any good company would rely 100% on Facebook or any other service.

That said the truth of the matter is that you are looking for a new hire to join your team and double down on Facebook. The Craigslist posting hints that you don't have any internal leads and have thus been put in a situation where you are scrambling to find someone, after you learned that you made the cut of course.

Nothing inherently wrong with this (I'm sure you'll find plenty of qualified applicants) but from an investment standpoint, I see it as a flaw in Facebook's investment evaluation process. That's all this post is about.

over 7 years ago

Ashley Friedlein

Ashley Friedlein, Founder, Econsultancy & President, Centaur Marketing at Econsultancy, Centaur MarketingStaff

Sounds to me a little like the ad wording might not have been quite 'optimal' but it's good to hear from Dave and Chris so thanks for commenting.

Perhaps strangely I find the fact that Life360 got the Facebook funding *and yet* it is only a "side focus" makes me think more highly of Life360: I'm now intrigued and want to know more about what else that's more important they are up to...

As for the Facebook investment, I guess time will tell, but investing in smart people is always a good start in my view.

over 7 years ago

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