Reid Hoffman at Graphing Social

This morning I’m at the Graphing Social conference in San Jose, California. This morning’s keynote is Reid Hoffman. I will be following up with video coverage of the entire event. I will be live blogging Reid’s talk.

9:25 am – Dave McClure is introducing Reid Hoffman

Reid has opted to do a text heavy presentation. Not sure what that mean but it sounds like I’ll be typing a lot.

First theme – what makes social networks platforms? Discussion started in 2003 when Friendster launched. Will be discussing the contrast of LinkedIn with Faebook, MySpace and Ning. Also, going to discuss whether or not there is one graph to rule them all.

Social networking as a feature vs. application vs. platform. As a temporal history Myspace started with the capability to hack in widgets. This was the beginning of an ecosystem in which you could place external content within social networks. Facebook at the F8 event launched the first platform.

The key thing that is one of the reasons Reid has invested in different social networks is that he has always believed that social networks are platforms. Reid invested in Friendster, LinkedIn and Tagged. Most importantly a social network takes patterns that we have in real life and is put on the web in ways that empower relationships. These applications can change peoples’ lives. By combining this data with consumer engagement you get new channels for these applications.

Let’s contrast with some of the social networks. Myspace provides widgets but there is no real access to the relationships within the site. While there is a messaging system on MySpace, MySpace significantly discouraged utilizing the messaging system heavily.

Ning decided to say “program your own social network” and choose the features that you want. Facebook decided to allow developers to acquire customers and this sparked an explosion in interest in the platform. Additionally, you can leverage these key relationships. Reid is continuing to give an overview of the differences but nothing significant.

9:35 am – So is Facebook going to build everything within their network? Let’s look at some different use cases. Contrasting how you search by name on Facebook versus LinkedIn. On Facebook you can see photos and on LinkedIn you can view whatever the individual decides to have displayed professionally.

Reid is comparing searching for “open source expert” on each site. Reid is now covering how LinkedIn has their new photos feature. If you are searching for photos in general, Reid says that Facebook has done this better than linked in. If you would like to see connections within a company, LinkedIn does a better job. (My opinion is that this won’t last for long).

In terms of answers …. In terms of messaging Facebook is “awesome.” On LinkedIn, not so. LinkedIn is not a communications platform. The simple misconceptions is that any communications infrastructure can be used for anything. Where there is some interesting overlap is public profile presence via searches on Google. There is also some interesting things in relation to business on the social graph.

9:40 am – Reid is saying that he reads Lord of the Rings every 3 or 4 years. Is there only one social graph? There are still plenty of social networks that are getting plenty of traffic and growing rapidly. Is there one graph that stores each sort of relationship? Reid’s personal theory is that there will be multiple social graphs. Different graphs for each type of relationship.

What are the semantics of these connections and what applications can you build on top of it? One out of every seven people in Brazil are on Orkut and as such there are different graphs for different geographical locations. The geek/bloggers dream is one graph that includes all of the types of relationships in one perfectly orchestrated univer. Reid claims that this is not going to happen. Yet again that’s where I differ from Reid.

This is not to diminish what Reid believes can be done with Facebook but he believes it is unlikely that there will be one social graph. So what can be done on the Facebook platform? Reid is giving an overview of current applications on Facebook.

9:45 am – Reid is giving an overview of applications that he likes. Reid likes the honesty box and top friends applications and thinks it will be interesting to see where these go. The majority of apps are garbage and a small percentage are great. Perhaps 5 out of 1000 will do something extremely interesting.

9:48 am – What are the limits of the Facebook platform? Is there a limit to how many applications any user will have? Rising above the noise of other apps is going to be extremely challenging. This is why Facebook has switched their metric from number of installs to number of active users. We will continue to see features from Facebook that help engaging applications get more popular.

Apps that haven’t worked so far are business, political and money applications. The other challenge aside from rising above the noise is “the second act.” I came up with a useful app but now what? After capturing a user’s interest, what comes next? How do you build sustainable apps?

9:50 am – Today we have a parallel to the first internet goldrush. Today we have an unsustainable parallel to what happened the first time around with advertising. A few challenges to day are disruptive ads that are simply used to generate income, incented installations and installations financed by future hope. This is not sustainable.

Reid is continuing to give an overview and thinks the most interesting angle is that the platform innovation of self. Both Facebook and developers are going to work on expanding sustainable business models on the Platform.

9:53 am – Conclusion? There will be low cost apps with sufficient sustaining appeal. There will also be apps that fit the Facebook use cases. These key uses cases will continue to evolve. The real question is whether or not there will be new use cases on Facebook. One of the biggest challenges is that if you try to offer a premium service a competitor will come along and offer it for free. Additionally, at least 3 people will copy whatever works. Developer’s competition will be from both individuals and companies.

Key factors: distribute, use, retain. Stickiness is extremely important.

What does this mean for the web? One angle is that there are new patterns of communication; shared communication environments. The emphasis on sharing was brought to Reid’s attention when Mark Zuckerberg and someone from myspace and one from second life. They were asked what celebrity they wanted to be. Zuckerberg was talking about sharing the entire time and the press picked it up as him wanting to be Cher. Crowd chuckles

Reid’s phone is ringing. There is a great communication system built around photos on Flickr. What will be most interesting about Facebook applications are ones that try to replicate the genius of many to many communication taking place on Flickr. So what is the future of discovery on the web?

So in terms of the application platform and one thing connecting everyone, Reid re-emphasizes that he doesn’t think this will happen. Remember when AOL wanted to own the web? This doesn’t work. (I don’t disagree here). There is an interesting new world with multiple graphs.

10:00 am – Summary: many of the new interesting entrepreneurs from college will write first Facebook applications. Eventually there will be an interesting ecosystem between websites and Facebook applications. We have already seen that with iLike and Flixster, other websites will also do this. Economics is going to be a real issue, just like on the general web. For now, keep costs low.

Constant newness will be important for entertainment. Ballmer calls this a fad because entertainment is a fad.

Crowd question: What are the primary reasons linkedin isn’t providing a facbeook app to allow us to merge the different pieces of information?

Reid: We are going to provide some apps on Facebook. We already launched a liteweight one. There is one with a fair amount of traction called “Bumperstickers.” There are 2 million users so far on that app. Our goal is to provide professional Facebook apps to the extent that the audience wants them. Reid is comparing some apps to search bars across the web. There isn’t so much fear about being taken advantage of, but the biggest concern for his company among others is concern about return on investment. Big companies can do only 2 or 3 big things a year. We will do some apps.

Question: You mentioned a few things that hadn’t worked on the platform. Parenthetically you said “thus far.” Do you think these kind of things with social networking in general are going to come? Will there be useful apps?

Reid: Thus far I’m hedging my bets. In theory there is nothing different between theory and practice. I think most of these apps will be in the social realm and there may be some social commerce but that is one or two years off. I very rarely like to be in a place where I say “no chance.” I’m not surprised that communication and wall apps are the most popular. I think there will be more of this rather than business or money apps. My guess is it will be a long time before this happens.

Crowd question: I’m curious in terms of your unique position as an angel investor, how would you recommend that companies that are interested in developing Facebook applications, should they focus on Faebook or other platforms? What is your perspective from an angel position?

Reid: I’m nervous about whether the apps on Facebook will lead to venture investment. Venture investment is typically for a billion dollar company. This is not to say that it could never happen. While there may be some interesting angel investments, I don’t think there will be as many venture investments. There will be venture companies that will gamble but I don’t think this will be mainstream.

10:10 am – Done.