Facebook's application platform has been getting a lot of attention lately. But, it was the social utility company's virtual goods strategy --or lack thereof-- that took center stage at the Virtual Goods Summit today at Stanford University, just down the street from Facebook's Palo Alto headquarters.
Jia Shen, co-founder of widget maker RockYou, suggested that Facebook has to think harder about its virtual goods strategy. Facebook's virtual goods are the little items such as a piece of sushi and a can of whoop ass that can be given to other users. On Facebook, the first gift is free but each one given thereafter costs $1. There are currently 199 different gifts in its gift shop. Shen said, "I don’t think people appreciate the concept of scarcity within Facebook," adding that if they launched a gift that cost $100, people would buy it.
Kevin Efrusy, a general partner at Accel Partners, the venture capital firm that provided Facebook with its first institutional investment, admitted that Facebook's use of virtual goods is still experimental. "I think what they’re doing now is rudimentary compared to what they can be doing and what others are doing."
Efrusy added, though, that the virtual good sales provide an amount of revenue that is not relevant to Facebook's overall revenue number, but is of a significant enough size that it would make him very happy if it were being recorded by almost any other other portfolio company.
After moderator Susan Wu noted that Senator Barack Obama is the number one recipient of virtual goods on Facebook, Efrusy said that despite his "lame" profile page, he has received a few gifts. Only one was from an anonymous admirer. His gifts are pictured below:
Tags: vgsummit2007, vgsummit, accel, rockyou, facebook, vc, venture capital
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