From FOXNews.com:

First came the dot-com gold miners. For those who stayed on after the bust, there was still some silver to be found. But for latecomers and recent graduates seeking to cash in on the latest Silicon Valley craze, it’s mostly decent paid salary work that’s left.

The going rate for a hit new product from a talented programmer on social networking sensation Facebook is tens of thousands of dollars, a plane ticket to California, and a job.

Facebook, which allows users to share their online activities with a circle of friends, is seeing some of the first successful products snapped up by venture capital backers or in outright acquisition deals.

Yet it’s a far cry from the tens of millions of dollars venture capitalists dished out nearly a decade ago in the dot-com start-up craze, or the hundreds of thousands in seed money with which Web entrepreneurs have had to learn to build businesses since then.

Instead, companies looking to cash in on the excitement over Facebook — where successful programs can attract millions of users in a matter of days — are acting more like aggressive college job recruiters handing out generous signing bonuses.

“There’s this giant competition for brilliant young developers,” said Max Levchin, founder and chief executive of San Francisco software developer Slide Inc. “Facebook is this instant leader board of who’s best at user engagement and technical ability.”

In May, Facebook began allowing independent software makers to build applications in the site, a move that has led to the creation of more than 1,700 new applications in less than two months and sparked a surge in usage among Facebook members.

Applications range from those that share your favorite music videos, albums and television shows with friends to one that sends text messages to mobile phones through Facebook.

Slide (http://www.slide.com) said on Tuesday it had acquired SuperPoke, one of the 10-most-popular programs on Facebook, and hired the three-student team behind it.

Also this week, Menlo Park, California-based Bay Partners said it had created AppFactory, a program to fund “tens” of different Facebook application projects using a fast-track approval process and grants ranging from $25,000 to $250,000.

“Bay wants to find the killer apps, whatever they may be,” said Salil Deshpande, a partner in the early-stage venture capital firm.

SMALL, FAST, CHEAP

Bay said it was betting on individuals or small teams and their concepts, and moving fast to capitalize on demand — rather than the classic venture capital approach of building companies with stable track records over many years.

In late June, Slide hired the creator of “Favorite Peeps,” a simple program with 1.6 million users already that lets Facebook members show off pictures of their closest friends.

“That really opened us up to the caliber of people you could meet through this filter of watching who was building successful Facebook applications,” CEO Levchin said. Levchin co-founded online payments leader PayPal Inc. in 1998 and sold it to online auctioneer eBay Inc. (EBAY) in 2002.

Terms for Favorite Peeps were undisclosed but Spongewire, a review site that tracks new Facebook programs, reported that Slide paid $60,000 and hired its creator, Dennis Rakhamimov, a Columbia University graduate now working in San Francisco.

Slide, a 50-employee company, is the leading creator of mini-programs known as “widgets” — simple software used by members of social networks like MySpace and Facebook to express themselves or add features to their personal Web pages.

Slide’s acquisition, SuperPoke, is a humorous software application that allows users to define their current standing with friends on Facebook. The application has signed up 3.8 million users.

SuperPoke encourages users to virtually “slap, bite, chest bump, dropkick … or headbutt” friends. It was created by two Stanford University graduates — William Liu, 26, and Jonathan Hsu, 28 — who collaborated with a recent University of California, San Diego undergraduate, Nik Gandhy, who is 24.

Myspace.com is owned by News Corp., the parent company of FOX News.

Tags: AppFactory

Ken Schachter of Red Herring writes:

Sensing opportunity on the social media frontier, Bay Partners is planning to formally launch an “AppFactory” Wednesday to fund software coders who can push out programs that ride on the back of the newly open Facebook platform.

The venture capital firm, based in Menlo Park, California, has cobbled together a business plan that calls for “tens” of investments in the $25,000 to $250,000 range—far lower than the typical early stage venture round, which typically starts at several million dollars.

Though other venture programs like HitForge, backed by VC and entrepreneur Navil Ravikant, have moved toward a studio model by making small investments to jumpstart web 2.0 companies, AppFactory is unusual in that it focuses explicitly on the Facebook platform.

“Last month Facebook opened up its application programming interface so anybody could write applications,” said Salil Deshpande, a partner at Bay Partners. “This makes Facebook more than a social networking site, but it becomes a platform.”

Though News Corp.’s MySpace, the No. 1 social networking site, also has announced plans to open its site to outside programmers, it has offered no timetable. Facebook not only has invited software coders to build programs—sometimes called widgets–for users, but also is allowing developers to make money from them.

Mr. Deshpande said that while Facebook has embraced its new role as a “platform” on which other programs can reside and make money, MySpace has yet to demonstrate the same commitment. For instance, shortly before acquiring Photobucket in May, MySpace abruptly, but briefly, blocked the photo-sharing company’s access.

“MySpace hadn’t made the mental and emotional decision that they were a platform,” he said.

Facebook’s traffic has soared in recent months, with 26.6 million unique visitors in the United States coming to the site in May, an 89 percent increase over the year-ago period, according to comScore. Contributing to the increase was Facebook’s move in September that eliminated rules largely restricting registration to college students.

Facebook could offer more profit opportunities as its audience widens. Angela Strange, senior associate partner at Bay Partners, business networks already are cropping up on the site.

Mr. Deshpande said early efforts to create simple widgets have gained traction on Facebook, but that more sophisticated programs are on the horizon.

“There are a number of applications spreading virally very fast,” he said. “A lot of them aren’t monetizable, at least not yet. Going forward, the applications will not be the fun, simple applications people are using now. They will be monetizable in the same way web 2.0 sites are monetizable. Some are just toys. Others are very highly monetizable.”

Partnering with Bay Partners on AppFactory is the development community Ajaxian, recently acquired by publicly traded TechTarget. Funding requirements for budding software companies like those backed by AppFactory typically are modest, with one or two programmers working to pump out a program that will be marketed virally by users.

Though Bay Partners, whose investment include Riya and Microsoft spinoff Wallop, may be the first to fund programmers as they seek Facebook riches, Mr. Deshpande said it won’t be the last.

“We expect others to do so,” he said. “We think it’s so logical.”

Tags: AppFactory

Katherine Noyes at E-Commerce Times writes:

In what could be a blow to rival social networking sites, venture capital firm Bay Partners on Wednesday launched a program to fund developers who write applications specifically for Facebook.

Dubbed the “AppFactory,” the program will grant awards of US$25,000 to $250,000 to Facebook developers using a fast-track approval process. The company hopes to make up to 50 such awards, Salil Deshpande, a partner at Bay Partners, told the E-Commerce Times.

“We don’t know how it will go,” Deshpande added. “The only constraint will be our bandwidth in terms of the time and effort it takes to evaluate, manage and nurture these projects.”

Facebook Platform

In May, Facebook opened up its application programming interface (API) to developers, allowing for the creation of what are often called “widgets” — mini-applications, such as slide shows — designed to run on the site.

In so doing, “Facebook went from being a social networking site to a real platform,” Deshpande explained. “That’s a pretty big step, and a mental and emotional shift.

“Bay wants to find the killer apps, whatever they may be, for this new social OS,” he said. “With the AppFactory, we will help entrepreneurs discover, build and monetize them.”

Since the AppFactory program was first announced Tuesday, Bay Partners has already received more than 30 applications, he said.

Freedom to Monetize

Currently, developers can write widgets for social networking site MySpace , which competes with Facebook, but they are not allowed to monetize them, Angela Strange, senior associate partner at Bay Partners, told the E-Commerce Times.

Following Facebook’s release of its Facebook Platform interface in May, MySpace and LinkedIn announced that they would be making similar moves. LinkedIn’s interface will be ready in about nine months, the company said; MySpace offered no timetable.

“It seems Facebook will have a very large lead and, for a while, will be the de facto standard,” Deshpande added. For that reason, “other social networks, when they open up their APIs, may be forced to design their APIs to be at least compatible — if not identical — to Facebook’s.”

Opportunity Knocking

The result is an opportunity for developers, Bay Partners’ Strange said.

“Internet startups have traditionally had to not only build a service, but also to find a way to attract millions of users and to make it possible for them to interact in meaningful ways,” she explained.

“Facebook Platform provides an alternative to the destination-site approach that may be more viable and attractive for certain types of applications,” she said. “By building on top of Facebook Platform, distribution can be dramatically expedited by leveraging an active user base of 29 million and growing.”

MySpace currently has a membership approaching 70 million users.

Broad Support

“We’re already starting to see developers use Amazon Web Services to build applications for the Facebook platform,” said Steve Rabuchin, director of developer relations for Amazon Web Services. “This is happening because software developers know that their applications could become overnight successes and therefore may need to scale quickly and reliably.”

In addition to funds, Bay is committing technical and business resources and a community of “factory entrepreneurs” to help ensure the success of the funded applications.

It chose to make many relatively small investments rather than a few large ones, because most developers don’t need a lot of money to start testing the success of their applications in the community, Deshpande explained. In addition, “Facebook’s API is well-architected enough that new application builders can just leverage the facilities built into the platform,” he added.

Furthering the SaaS Concept

“This is pretty big,” Rob Enderle, president and principal analyst with Enderle Group, told the E-Commerce Times. “It really furthers the overall concept of Software as a Service (SaaS) for the consumer market,” he said.

“Facebook is a rocket right now,” added Paul Gillin, author of The New Influencers.

Founded in 2004 as a site for college students, Facebook just recently opened up its membership to the public at large.

“It’s a really good, robust community, and has become the MySpace for grown-ups,” Gillin told the E-Commerce Times. “What they’re finding is that the kinds of applications adults want to share are much more attractive to businesses than what teenagers want to share. Advertisers and software developers are rushing in.”

Coming Soon

What kind of applications could result? Ultimately, only time will tell.

“If you asked somebody in 1994, when the browser and HTML and HTTP were being standardized, what types of applications they could envision, any answer they could have come up with would have been too narrow,” Deshpande said. “All we know is that it will exceed imagination.”

Tags: AppFactory

Brian Caulfield at Forbes.com writes:

It looks like your college kid’s social network has grown up fast. First the social-networking site opened up its system to outside developers. Now a Silicon Valley venture capital firm is promising to cut checks to entrepreneurs interested in jumping on the fad.

Menlo Park, Calif.-based venture capital firm Bay Partners says it will begin investing in entrepreneurs developing applications for Facebook, the social-networking service. The program, dubbed AppFactory, will provide money and expertise to entrepreneurs building Facebook applications. Bay said it plans to make investments of between $25,000 and $250,000.

Making tiny investments in early-stage firms has become something of a fad in Silicon Valley. And rival firms, such as Charles River Ventures, have launched programs aimed at a broader swath of entrepreneurs, reports Venture Capital Journal. Bay’s Salil Deshpande argues that betting small amounts on a basket of companies is the right way to play the trend, for now. “You may not know who the winners are up front,” says Deshpande.

Meanwhile, the move gives added credibility to Facebook’s push to open up its system to outside developers–and claw past larger rival MySpace. While outside developers have long created mini-applications that complement the offerings of the two social networks, they’ve often had an ambivalent relationship with their hosts. Facebook, however, moved to embrace the widget developers in May, when it announced it will give access to some of its systems to outside developers looking to set up shop.

So next time you catch your kid spending too much time on Facebook, don’t feel so bad. Maybe one day he’ll create an application of his own. If it takes off, the proceeds may even help cover that huge student loan.

Tags: AppFactory

Eric Auchard at Reuters writes:

SAN FRANCISCO (Reuters) - First came the dot-com gold miners. For those who stayed on after the bust, there was still some silver to be found. But for latecomers and recent graduates seeking to cash in on the latest Silicon Valley craze, it’s mostly decent paid salary work that’s left.

The going rate for a hit new product from a talented programmer on social networking sensation Facebook is tens of thousands of dollars, a plane ticket to California, and a job.

Facebook, which allows users to share their online activities with a circle of friends, is seeing some of the first successful products snapped up by venture capital backers or in outright acquisition deals.

Yet it’s a far cry from the tens of millions of dollars venture capitalists dished out nearly a decade ago in the dot-com start-up craze, or the hundreds of thousands in seed money with which Web entrepreneurs have had to learn to build businesses since then.

Instead, companies looking to cash in on the excitement over Facebook — where successful programs can attract millions of users in a matter of days — are acting more like aggressive college job recruiters handing out generous signing bonuses.

“There’s this giant competition for brilliant young developers,” said Max Levchin, founder and chief executive of San Francisco software developer Slide Inc. “Facebook is this instant leader board of who’s best at user engagement and technical ability.”

In May, Facebook began allowing independent software makers to build applications in the site, a move that has led to the creation of more than 1,700 new applications in less than two months and sparked a surge in usage among Facebook members.

Applications range from those that share your favorite music videos, albums and television shows with friends to one that sends text messages to mobile phones through Facebook.

Slide (http://www.slide.com) said on Tuesday it had acquired SuperPoke, one of the 10-most-popular programs on Facebook, and hired the three-student team behind it.

Also this week, Menlo Park, California-based Bay Partners said it had created AppFactory, a program to fund “tens” of different Facebook application projects using a fast-track approval process and grants ranging from $25,000 to $250,000.

“Bay wants to find the killer apps, whatever they may be,” said Salil Deshpande, a partner in the early-stage venture capital firm.

SMALL, FAST, CHEAP

Bay said it was betting on individuals or small teams and their concepts, and moving fast to capitalize on demand — rather than the classic venture capital approach of building companies with stable track records over many years.

In late June, Slide hired the creator of “Favorite Peeps,” a simple program with 1.6 million users already that lets Facebook members show off pictures of their closest friends.

“That really opened us up to the caliber of people you could meet through this filter of watching who was building successful Facebook applications,” CEO Levchin said. Levchin co-founded online payments leader PayPal Inc. in 1998 and sold it to online auctioneer eBay Inc. in 2002.

Terms for Favorite Peeps were undisclosed but Spongewire, a review site that tracks new Facebook programs, reported that Slide paid $60,000 and hired its creator, Dennis Rakhamimov, a Columbia University graduate now working in San Francisco.

Slide, a 50-employee company, is the leading creator of mini-programs known as “widgets” — simple software used by members of social networks like MySpace and Facebook to express themselves or add features to their personal Web pages.

Slide’s acquisition, SuperPoke, is a humorous software application that allows users to define their current standing with friends on Facebook. The application has signed up 3.8 million users.

SuperPoke encourages users to virtually “slap, bite, chest bump, dropkick … or headbutt” friends. It was created by two Stanford University graduates — William Liu, 26, and Jonathan Hsu, 28 — who collaborated with a recent University of California, San Diego undergraduate, Nik Gandhy, who is 24.

This Reuters story was also featured in:

Tags: AppFactory

There’s lots of skepticism out there about stodgy venture-capital fund Bay Partners creating a special investment vehicle for Facebook apps, called AppFactory. Om’s post is entitled “Bonkers By The Bay,” which pretty much sums up his point of view on the idea — that it’s a dumb move by a VC firm that has been swept up in the Facebook hysteria, and that it’s dumb in part because it means building a business on a proprietary platform.

Others are similarly skeptical — Ashkan Karbasfrooshan of HipMojo, for example, can barely contain his derision for the idea. And the biggest criticism centers around whether Facebook apps are monetizable at all, something that venture capitalist Andrew Chen talked about in very skeptical terms in a recent interview with Inside Facebook. But Mike Arrington, who has no small amount of experience in the startup game himself, seems to think that building apps based on the Facebook platform isn’t such a bad idea at all, since it allows a startup to build and test something relatively quickly and cheaply (the guy behind the Bay venture, Salil Deshpande, responds multiple times in Mike’s comments).

For what it’s worth, I think Bay Partners is making a smart move. We’re talking about a relative pipsqueak of a fund in dollar terms — up to fifty investments worth $25,000 to $250,000 (but most likely far less). That’s pretty close to a rounding error in VC terms. Will any of them work out? Who knows. But it’s possible that one or two could become something real, using Facebook as a springboard, and that seems like a small chance worth taking, along the lines of what Google Ventures and Y Combinator are doing.

AppFactory Backing Facebook Platform Builders

Silicon Valley venture capital firm Bay Partners has opened its AppFactory program to provide fast-track funding to developers working on Facebook Platform. Developers, Bay Partners wants to help if you have an application to build on Facebook Platform. Their newly opened AppFactory program will deliver funding from $25,000 to $250,000 to promising entrepreneurs.

By providing the AppFactory service, Bay feels it can get promising projects onto a fast track toward developing a finished product. A well-crafted application that gains traction with Facebook users could be the core of a new business.

“The creation of an operating system, or a platform, has always led to a new economy which includes a marketplace of applications that are optimally designed for that platform and its user base,” said Bay partner Salil Deshpande in a statement. “Bay wants to find the killer apps.”

If they do find those applications, the return on one that becomes widely-adopted will look very promising. Facebook has a userbase that Bay pegs in the range of 29 million. If someone could grab one-tenth of one percent of those users, that’s a nice base of some 29,000 people upon which to build.

Tags: AppFactory

George White at TheDeal.com writes:

Facebook Inc.’s decision to open up its application programming interface, or API, spurred an avalanche of new programs for the social-networking giant and created enough buzz for Bay Partners to start a fast-track approval process, dubbed AppFactory, for startups developing programs for the platform.

The Silicon Valley early-stage venture capital firm plans to make “tens of investments” ranging from $25,000 to $250,000 in startups creating Facebook programs. Salil Deshpande, a partner at Bay Partners, describes AppFactory as a “seed program on steroids.”

Bay Partners’ decision to set up the program was prompted by the notion that F8 turns Facebook into the first social-networking operating system. The hope is that F8 will, like Windows and Unix, become a development platform for all kinds of lucrative third-party applications. “Historically, the creation of an operating system, or a platform, has always led to a new economy of applications designed for that platform and its user base,” explains Deshpande.

Because Facebook holds the first-mover’s advantage, Deshpande thinks that when other social-networking sites open up their APIs — and MySpace.com and LinkedIn Corp. have already announced they will — the market will necessitate that theirs work with F8’s. —George White

See Bay Partners press release

Tags: AppFactory

Rafe Needleman @ CNet News.com writes:

This morning, venture capital firm Bay Partners announced that it is kicking off AppFactory, a special funding program for Facebook developers.

Bay is a typical Silicon Valley venture firm, operating three large funds. AppFactory will draw resources from the latest, a $300 million pile of cash and commitments that Bay will funnel, in chunks as small as $25,000, to promising Facebook developers.

Unlike its larger and more traditional technology investments, Bay will not run its AppFactory candidates through weeks or months of due diligence. At the funding levels it’s thinking about, it’s not worth the effort. In part, “we’ll rely on instinct,” Bay’s Salil Deshpande told me.

AppFactory will also offer Facebook developers easy access to people its connected with at supporting companies like Amazon, whose Amazon Web Services server farm can be employed to run Facebook apps. Bay also hopes its Appfactory developers will form a community and help each other out.

Bay’s move is smart. There’s no question that Facebook is a very important Web platform. While it’s not like the Web itself, which is open to all comers and not controlled by any one company, one could compare the Facebook platform to eBay. It’s a platform that’s easy to build businesses on.

The exposure, of course, is that Facebook will not be run as a platform. “A lot of companies get it wrong,” Desphande told me. “Facebook is just getting started. They are going to have to make the investment and behave properly.” However, if Facebook gets it right–and indications are, so far, that it will–apps on the platform can take easy advantage of the built-in, interconnected user base.

If you’re got a killer idea for a Facebook app, and skills to begin development on it, check out baypartners.com/appfactory and apply.

Tags: AppFactory

The Deal.com writes:

After a few months in the shadows, Bay Partners has decided to publicize its seed fund investment activities and focus its sub-$250,000 investments on companies that have developed applications for Facebook’s platform. This means any startup that has integrated its own web service or a related service into the Facebook web site in order to make it available to Facebook’s 27 millions users.

It’s a smart marketing ploy by Bay. Taking a page from Charles River Ventures’ QuickStart program, Bay Partners had already made a handful of seed investments designed to boost its deal flow of Web 2.0 startups. But, its announcement today that it will only fund startups that have developed Facebook applications differentiates the firm from CRV and gives it a fresher look.

In reality though, the two seed programs will look at very similar startups since most consumer Internet companies would benefit from the attention that could be garnered from creating a popular Facebook application.

Tags: AppFactory

Jessica Guynn of The San Francisco Chronicle writes:

To paraphrase pop artist Prince, everyone is gathering to celebrate this thing called Facebook.

In the latest sign of the social network’s rising star, Silicon Valley venture capital fund Bay Partners has earmarked millions of dollars for investments in startups creating applications for Facebook.

The new program, called AppFactory, launched today to give entrepreneurs the opportunity to raise small amounts of capital in a short span of time, as little as a few days. The investment would be to develop new features for Facebook.

Facebook created a stir in May when it opened its online platform to anyone who wants to build applications for it. Tens of thousands are jumping at the chance to do just that, eager to get even a small piece of the Facebook action. AppFactory will be making up to 50 investments ranging from $25,000 to $250,000. In addition to the money, Bay Partners will offer entrepreneurs technical and business resources.

The reason for the excitement: Facebook could become the hottest initial public offering since Google. Its CEO Mark Zuckerberg has said the “social graph,” the web of personal connections that drives Facebook, is the next big Web evolution.

Salil Deshpande, the man at Bay Partners who will run the program along with senior associate Angela Strange, calls it the “social operating system.”

Bay Partners

Salil Deshpande of Bay Partners is the venture capitalist heading up a new program to invest money in startups creating applications for Facebook

Is there money to be made on Facebook? Time will tell. It could be a very intriguing play for some entrepreneurs to build a business on Facebook which has 29 million users and growing.

“We will help entrepreneurs discover, build, and monetize them,” Deshpande said in a statement.

Interested? E-mail appfactory@baypartners.com.

As for one of our favorite Facebook applications, check out Booze Mail from the folks at Renkoo. The idea is simple. Everyone loves a tasty beverage, whether it’s soda, juice or mixed drinks. And we all love to share them with our friends. Now you can send your friends a drink or a round of drinks.

The cool thing about is that Booze Mail makes the connection between the online world and the offline world. Renkoo cofounder Adam Rifkin is fond of quoting Tim Berners-Lee who likes to quote Robert Cailliau in declaring that there’s: “No such thing as a virtual beer.”

Meaning, Rifkin says, that people build more meaningful (and certainly more spirited) relationships while consuming libations in the presence of others. To do so on a regular basis just deepens the bond of friendship. (You can drink heavily in the solitude and privacy of your own home, but there’s another word for that).

But what if you could have a virtual beer that doubled as an offer to get together and have a real beer? That was the idea Rifkin dreamed up with Renkoo cofounder Joyce Park.

Adam Rifkin

Renkoo cofounder Adam Rifkin getting his drink on

“We asked ourselves, ‘What do the Facebook users really care about?’ Great books? Saving the world? Curing cancer? Or booze? And let’s face it, helping people get their drink on is Renkoo’s mission statement or at least a big part of it,” Rifkin said. “So then we decided to focus on the drinks that had really cute, recognizable glasses and came up with a great name and thus Booze Mail was born.”

This wasn’t a far-fetched idea for Renkoo, which got its start two years ago. After all, Renkoo is a service which helps groups of people get together and, in Park’s words, get their drink on. “Coffee,” “drinks,” and “meeting” quickly became three of the most popular get-togethers that friends were using Renkoo to coordinate.

We think Booze Mail is worth toasting, as is the Renkoo motto: “We truly believe that what separates people from computers are the services that help separate people from their computers.” Apparently we are not alone. Booze Mail is catching on faster than a Charles Bukowski buzz.

Update: Something for the Renkoo folks to toast: Booze Mail just hit 180k installations and 2 million drinks served.

Tags: AppFactory