The Samsung Chromebook is not a reasonable substitute to a traditional laptop for the majority of people out there. But it is still a great computer if you already love the cloud and have near-constant Internet access.

If you want a more detailed writeup of this transition from someone who has thought about this issue in greater depth than I have, I encourage you to read Louis Gray’s post. Despite this computer having some shortcomings for the average user, I’ve been pleasantly surprised by how usable it is for everyday uses if you have already moved most of your life to the cloud:

There are two real reasons why I don’t think the Chromebook is a true laptop replacement for the average user today:

1. The Samsung Chromebook requires an Internet connection to have value. While I generally work on my MacBook Air with a reliable Internet connection, I am able to interact with a number of my favorite applications without an Internet connection. The key use cases are working on Word, Powerpoint, or Excel documents when I’m not connected to the Internet, editing or creating notes in Evernote, or working on offline email.

The hardest thing to which to adapt is the fact that I basically cannot use the Chromebook without an Internet connection. It’s basically a browser on top of an OS that boots really quickly. We do not yet live in a world of ubiquitous, always-on (and always available) connectivity. As such, I still need my primary computer to be one that works when I don’t have an Internet connection. The base “free” package of 100MB that comes with this Samsung Chromebook is not large enough for me to use this as my only computer in the absence of Wi-Fi.

2.There are good web-native equivalents to the desktop programs that many users use, but not everyone is ready to make that switch.

The biggest surprise I had in using the Samsung Chromebook was how less dependent I have become on desktop applications than I had realized. I thought about all of the core applications that I use and I realized that there are good web-accessible alternatives that have already become core parts of my life:

-Music: Spotify or Rdio for cloud music vs iTunes client music experience
-Video – Netflix, Hulu, or Amazon for video streaming vs iTunes client experience
-Productivity – Google Docs vs Microsoft Office
-Email – Gmail vs Mac Mail, or Outlook or Sparrow
-Instant Messaging – Meebo or Google Talk vs Skype or other desktop IM client

When I first got the device, I thought the lack of desktop applications would be the biggest thing I missed. To be honest, I never really missed the lack of native desktop applications except for in a few specific situations. For example, the process of trying to mark up an agreement on the Chromebook is hard – Google Docs doesn’t support track changes in the same way that desktop versions of Microsoft Word does. And I have a few other gripes about dealing with spreadsheets. But that’s really it. In the grand scheme of things, that’s a pretty narrow set of complaints.

Ironically, the thing I’m finding most vexing about the device is that it’s hard to work with both Google Apps and a standard Gmail account in the same browser instance. That’s a real need for me and it was kind of frustrating to have to switch back and forth.

You can follow me on Twitter @chudson or leave a comment below.

Like a lot of people, I think the daily deals business is fascinating. But I’ve always wondered when we’d start to see location-based deals for both perishable inventory (empty dinner tables, unsold sports tickets, etc) and more traditional deals inventory that we typically see on the top services. I think it makes a ton of sense for Groupon and Living Social to get into “instant” deals that location-based and / or time sensitive. The business of sending out deals once per day by email or tweet puts a ceiling on growth – opening up the channel to location-based deals allows the deal companies to have much more inventory available at any point in time and to have a more persistent relationship with customers.

There’s one problem with realtime deals, though. In order for them to be effective, you need to have access to or be application that people open several times per day. In my opinion, there are likely very few applications that can clear that hurdle.

Right now there is a short list of applications that I believe are both location-aware and opened several times daily by a meaningful number of users. This is not a complete list (I’d welcome additions), but here are the ones that come to mind:

-Google Maps (no question in my mind this one qualifies)
-Twitter (for those who have location-enabled their tweets)
-Facebook (they report tens of millions of DAU for their smartphone apps)
-foursquare (not on the same scale as the applications above, but I suspect they have a meaningful number of DAU)

There must be others, but I can’t think of them at the moment. Maybe some of the news / content apps are location-aware and get a lot of usage, but I’m not sure that they would be ideal for what I’ll describe below. Ditto on the location-aware photo sharing apps. I think the list of apps that fit this funnel is small but I hope others can point to others that fit the bill.

If you’re a daily deals provider interested in an instant deals experience, you have one core question – how do you get people to open your application several times per day? You could obviously try to make your core application more engaging on a daily basis. And, anecdotally, I hear that people redeem a fair number of daily deal coupons using the mobile applications provided by those vendors. But that is a redemption experience, not an engagement experience. I don’t actually think it’s really easy to create an application that people enjoy so much that they want to open it every day and use it as a way to share their location.

As an aside, the reason the several-times-per day application open rate is necessary is that you need to a) have several opportunities to refresh the user’s location and b) you need to have several times to present location or time sensitive deals. The more opens and location shares per day, the more opportunities you have to reach that customer.

So, for anyone looking to experiment with real-time deals, you need a high activity platform. I can imagine it would be hard to partner with Facebook as they have a deals offering of their own. Ditto on Google with Google offers. Hence the opportunity for foursquare – they have have a good audience and are not working (at least as far as I know) on a daily deals platform of their own. So I think they’ll be successful as a key enabler of real-time deals / offers. And they don’t have to sign up / onboard every single local merchant to make this strategy work as they have the scarce commodity of frequent usage among those who use the application.

Thoughts? Leave a comment below. You can also follow me on Twitter on @chudson.

1. Is this something that has to get done?
2. Do I need to do it myself or would I trust a stranger to do it for me?
3. Would I be willing to pay someone else to do it for me?

The reason I’ve struggled to get my head around TaskRabbit is that I’ve been searching for a task that sits at the intersection of those three circles. I need something that needs to get done, where I would trust a stranger to do it for me, and where I’m willing to pay. I’ve considered a bunch of tasks, all of which have failed in the past. Below are a few examples

1. Pick up the dry cleaning (or other thing) – While this has to be done and I’d be willing to pay a nominal fee to have someone do it for me, I’m not sure I’d want a stranger picking up my dry cleaning even if it’s someone who has been verified by a 3rd party. Maybe that’s just me, but it’s how I feeel.

2. Wash my car – Definitely willing to pay to have the car washed and would be happy to have someone do it for me. But the person would have to come to my place and wash it for me – no way I’m handing over my car keys to a stranger to have them wash it and trust it. Perhaps that irrational – I have had parking attendants park the car for me without a second thought. But in those cases there is some company standing behind the individual who will make me whole if the valet runs off with my car.

3. Water my plants or fold my laundry – I have a class of household tasks I’d like done and would be willing to pay to have done, but they don’t pass the stranger-in-my-house test either.

As you have probably noticed, my big issue with TaskRabbit and similar services has always been my reluctance to trust personal tasks to strangers who are, from my point of view, independent contractors about whom I know very little and who are not backstopped by a trusted brand or service. While I’m happy to trade money for time in some circumstances, I need to know that there is someone standing behind the service who will make me whole if this “trusted stranger” doesn’t do right by me.

Well, I finally had a good task worth doing. I moved into a new place in San Francisco and had some IKEA furniture that required assembly. My guess is that it would have taken me about 5 hours to do it myself. I called the independent contractor that IKEA recommended and got a quote. They gave me a price of X and told me it would take about a week before they could come out to do the work. I posted the task on TaskRabbit and I received a price quote of about 75% of what the IKEA-referred contractor had offered and the gentleman was able to come over the next day. The whole thing was set up in less than an hour after I posted.

When it was time to do the work, they showed up on time (I was late). I let them into my place and just told them to call me when they were done. I got over my trust issue because it was a new place and there really wasn’t anything in the place – just some unassembled furniture. The team assembled my furniture, cleaned up well, and locked the door. And I was able to pay by credit card when the work was done. Overall, it was a really clean and simple experience and it has made me think more broadly about what tasks I could have done by the service.

In the end, I was really impressed with my first experience using TaskRabbit from booking to completion. And it’s clear to me that building a strong brand around the trustworthiness of their independent contractors is going to be key to their growth with customers like me who are slightly cautious. That’s going to take time, but it’s a big prize if they can win it.

I think you need three things to really succeed as an app store, based on what we’ve seen from Apple and Google. And to be clear, success means that you as the app store make money and can drive enough distribution to developers that they too can build a big business on the back of your audience.

Payment-enabled customers + device footprint + well-merchandised store experience = Potential to Win as an App Store

1. Payment-Enabled Customers
One of the (many) things that makes the Apple iOS ecosystem so powerful is that Apple has 200 million hard-won credit cards on file. Having had iTunes prior to the app ecosystem meant that they were able to tap into a large audience of users for whom purchasing apps and in-game items is as simple as a single click.

Perhaps the only company more synonymous with one-click purchase experiences than Apple is Amazon – they did for the web what Apple has done for the iOS ecosystem when it comes to ease of transaction. And Amazon has tens of millions of payment-enabled customers by their own admission. I’m not sure why they haven’t gone through the process of making it easier for freemium game developers to integrate some variant of Amazon Flexible Payments Services as a way to charge for in-app purchases. That seems like a no-brainer way to enable freemium game developers to make real revenue through the Amazon Appstore.

2. Amazon’s Distribution Strategy for the Amazon Appstore
I think Amazon has a pretty clear strategy for how they will get their own Appstore deployed to tens of millions of consumers. This is all my speculation – but I think it makes sense:

Phase I: Give away top-tier games that are usually paid for free in order to get consumers to download and install the Amazon Appstore. This is just a simple quid pro quo. The goal is to give customers something of value (a free or greatly reduced install of a game they covet) in exchange for downloading and using the Amazon Appstore on their Android device. Provided Amazon can continue to find developers who want the exposure for their content, this strategy should help seed things.

Phase 2: Work with carriers to get preload deals so that the Amazon Appstore is on many more devices. Doing preload deals is nothing new. If you have relationships with carriers and can afford the economics required to make those deals interesting to them, that’s one way to get the Amazon Appstore in front of more consumers. This might prove to be trickier than it sounds, given that many carriers and handset makers themselves also have designs of building their own app stores. But this is still a strategy worth pursuing.

Phase 3: Launch an Amazon tablet, powered by Android, with the Amazon Appstore front and center as the primary application discovery method. The last thing Amazon can and should do (and is doing) is to build and sell its own Android tablets. This has less to do with games and more to do with the Kindle business. It’s a good hedge in the whole e-reader vs table debate and should allow Amazon to have a larger footprint for its cloud music and cloud video services. I would fully expect that Amazon will integrate its own Android market front-and-center on that product and will put its considerable marketing muscle behind promoting its table to both Kindle users and people who have yet to have settled on a tablet device.

3. Well-merchandised store
No need to belabor this one. Amazon is one of the world’s premier merchandisers when it comes to selling things online. I’d like to think they could bring some creative muscle to app discovery and recommendation.

It’s clear to me that Amazon is still in the early stages of building out their Amazon Appstore and that to count them out based on their current progress seems premature.

Follow me on Twitter – @chudson

By and large, the teams I’ve met are incredibly smart, clever teams of people who I think will impact the world of mobile applications in positive ways. But after having met with a handful of really great folks working in this space, I’m becoming convinced that application discovery is a bigger problem for those applications looking to get discovered than it is for consumers looking for useful or entertaining applications. Three things I’d like to throw out there for discussion:

1. There is a lot of mobile application discovery that happens face-to-face in the real world and will probably never show up in your application analytics system. If you’ve gone out in a major city lately, I’m sure you’ve seen this happen. Someone pulls out a phone and shows off an application. Someone else at the table says, “Wow, that’s a cool application – I’m going to get it right now.” And that person starts downloading the application. That’s the beauty of the the combination of app stores, smartphones, and reasonably good data connections – if you find a new application you want, you can get it nearly instantly. No more waiting until you get home to have a friend invite you or send you an email. Just grab the app in context and grow. I’m not sure that there’s an opportunity for an app to help facilitate that face-to-face communication.

To most analytics systems, these installs will look largely organic (someone just installed your app and it didn’t come from a trackable link of any sort) even though they aren’t. And, as a developer, it’s kind of hard to know how often this is happening for any given application. It should go without saying, but I’ll say it anyway – lots of people will instantly install applications that their friends are using when this discovery happens face-to-face as your friend can often tell you (in his or her own words) why he or she likes the application and how he or she uses it. That counts for a lot for most people.

2. Most consumers are not actively looking for new applications to download, but will download them in order to get something else or based on the recommendation of a friend. I just don’t think most people sit around thinking about applications to discover. Most people are busy doing other things – reading, playing with the applications they already have, chatting with friends, etc. However, as I mentioned above, I do think that there is value in knowing what applications your social graph is using. For example, if you’re trying to make a decision on installing an app with strong network effects (any social networking or communications application, for example), knowing what your friends use has real value. For example, if most of your friends have standardized on using a particular location-sharing, photo-sharing, social networking, or other social application, knowing that can and probably should influence your choice of application to use.

The other use case is the incentivized install use case. If people are using an application and can get a reward in that application for downloading or installing someone else’s application, it shouldn’t be surprising that they are willing to do so – installing an application doesn’t really cost most users anything (other than the space on the device and the time required to install it) and the act of installing an application is a known behavior.

3. Open question – will consumers fire up an application to help them find other applications? One question I have is around how application discovery is delivered as a product. A number of the products in the space today involve opening or installing an application in order to discover additional applications to use. I am not sure this is the model that consumers want, but it’s still too early to tell.

Despite everything I’ve said above, application discovery is a problem for application developers. It’s really just a subset of the marketing challenge we all face in standing out in a sea of tens of thousands of applications that exist in app stores – being discovered is a good way to grow an application and absolutely essential in the growth plans of many companies.

As always, comments are welcome. And if you like this you can always follow me on Twitter.

Before I jump into the three observations, I think most developers want the same thing from any payment provider. First, you want payment enabled customers – you need to have people who have the capacity and ability to pay. Apple solves that – they have nearly 200 million credit cards on file. Facebook is working to solve that by nudging customers to sign up for Facebook Credits. Mobile providers like Zong, Boku, and BillToMobile solve this by enabling anyone with a mobile phone to use that as a billable identity. PayPal has a ton of payment enabled accounts as well – you get the idea. Second, developers really want to either have a standard, low friction UI (a la iTunes) or the ability to control the payments flow and UI themselves to optimize for conversion. It’s a pretty simple formula – payment enabled customers + low friction UI generally leads to good monetization opportunities.

Now, on to the observations about what happens with platform payments:

1. If you are on a platform provider’s network and they offer a payments, you should assume you will (eventually) have to use their solution. Most payments business require scale to work – it’s generally all about taking a small portion of a large amount of money flowing through the system. And most networks or platforms can only support a small (often) one payments solution at the scale required to make it an interesting business. Whether the payment provider wants to actually be the payment solution or control the payments / wallet experience, it’s generally safe to assume that most platform providers will ultimately want to plug into the money flowing through their platforms.

2. Platforms that let alternative monetization providers on their platform early lose the opportunity to set the rules of the road early. Platforms that attract developers or court them need to have a story on monetization early. In the event that platform providers don’t have a solution, most developers will end up doing something in order to generate revenue. Those publisher / developer chosen solutions might not be in line with what the platform owner would like to see happen. But in the absence of a platform-approved solution, most developers will find some way to make money because they need to do so to stay in business. Convincing (as opposed to requiring) developers to take out things that are making them money can be hard – once those solutions are in they’re sticky.

3. Allowing other payment solutions providers on your platform creates a reference point for developers – this matters when the platform provider’s payment solution comes out. Related to the point above, one of the challenges with launching platform payments after you’ve allowed “rogue” solutions on your platform is that developers already have some sense for how well they are doing with their own solution in terms of total revenue, conversion ratio, and fees paid to their payment provider. This generally changes the nature of the conversation. The conversation inevitably comes down to a conversation about whether the platform’s payment solution will be as good, as cheap, and as effective as what developers are already doing. And that can be an awkward conversation.

At the end of the day, platform owners can do whatever they want with their platforms when it comes to payments. They can mandate or bar usage of certain payment types. They can set their own rates and terms. But I think the cases of Apple and Facebook are interesting as it relates to Google:

Apple – I give Apple a lot of credit for being pretty smart with in-app purchases on iOS. They gave developers a fair warning that they wouldn’t really tolerate alternatives, announced that in-app purchases were coming in 3.x, and then they actually delivered the solution shortly after. That seems pretty fair to me – give developers a working and workable solution on a fairly fast timeline. Having 100-200 million credit cards on file and a super simple UI / UX is a strong offering for developers. That’s part of the reason why it’s working.

Facebook – Facebook took a pretty different approach. They let a lot of other payment options onto the Facebook platform from day one. Gradually they started restricting how developers could monetize with both payments and advertising solutions, culminating in the announcement that Facebook Credits would be mandatory in June 2011. Given the 30% take for Facebook, not all of the developers on the platform are happy about moving to Credits. But for Facebook, it was okay to wait – developers were clearly making money on virtual goods and Facebook had established itself as the only major social network with the scale opportunity of interest to developers interested in building large businesses. So complain as they might, there aren’t a lot of obvious viable alternatives for developers looking to build social games on top of existing graphs. As Facebook Credits roll out and are adopted more broadly by both consumers and developers, reluctant developers might have a change of heart and really both embrace Facebook Credits and see some real benefits from making the switch.

I think it will be really interesting to see how Google progresses. On the one hand, it’s early enough in the life of the Android market that they could move more like Apple and clamp down and stamp out anyone who’s attempting to use anything other than their own in-app billing system. That would be easy to do if there is a good enough UI / UX experience and enough credit cards / payment-enabled users on the Checkout system to make it a seamless experience for the average user. But I’m not sure that’s the current state of the market. Kim-Mai Cutler at Inside Network did have an interesting piece on the current state of affairs – read it here if you haven’t already. At the same time, the risk of waiting and taking the Facebook approach is that the payments ecosystem on Android could get out of hand and it will be hard to get the genie back in the bottle. Unlike Facebook, Google does face a very strong competitor in Apple – if developers are unhappy with Android, developing for iOS is a financially viable alternative.

As always, comments are welcome.

Follow me on Twitter: @chudson

If you stop and think about it, building a mobile game that is heavily reliant on people checking in is a tough challenge. I don’t have access to anyone’s proprietary data, but my hypothesis is that there are millions of people ACTIVELY checking in on a regular basis and tens of millions of people playing games on mobile devices. Games that focus on check-ins as a core activity are up against a core challenge in that there are 10x (roughly) as many people playing games as there are checking in.

I want to be really clear about what I mean by ACTIVELY checking in. People who ACTIVELY check-in are those who do check-ins of their own on at least a monthly basis. The one thing I want to make sure I highlight is that I am certain Facebook Places has many more people who have checked-in than foursquare simply because 1 person on Facebook can check-in multiple people. So it’s entirely possible that there are people who have been checked in on Facebook Places who are not themselves active users of check-in products. So I think you need to apply some discount to the FB Places check-ins if you’re trying to figure out how large the active audience of checking-in people is.

Whenever I look at this stylized image, it’s clear to me that trying to get location-based games to work for a large audience, relying on check-ins won’t work today. There simply aren’t enough people engaging in check-ins today to build a game based solely on that mechanic as you’ll only get the overlap of people who like games and actively check-in.

What will work? I have no idea. There are lots of smart people working on this. But I am a bit skeptical as to whether or not a check-in centric location based game can get really big today. Check-ins are the future, but location based game developers need a solution today.

1. Many social games developers are gradually beginning to embrace deeper integrations of Facebook Credits into their on-Facebook social games. In a number of cases, developers are getting rid of their own intermediate cash currencies and just selling all items in FB Credits denominated prices. I’m not sure this is a smart thing to do, but I know a number of folks who have decided to go down this road. The decision as to whether or not this should be done probably warrants an entire blog post or Quora thread of its own.

2. Many social games developers are beginning to eye mobile and think seriously about how to either port their (or someone else’s) existing social games to mobile platform, namely iOS and Android. I can say confidently that social style games on iOS are monetizing well and I believe the same will be true of Android at some point. The tricky thing, though, is that the iOS payments environment is tightly managed by Apple. Right now, FB credits are not an accepted way to pay for in-app purchases for games or apps in the app store.

How is this all going to work out? As more social games developers continue to integrate more deeply with FB Credits as the sole in-game currency, how will they handle the move to mobile platforms? Obviously, things would be simple if Apple and Facebook were to do a deal whereby users could use FB Credits as a way to pay for in-game items in social mobile games. It’s clear to me that such a deal would be a huge boost to Facebook Connect as a mobile login and payment solution, but I’m not sure it would be a smart deal for Apple. Apple already has 150+ million (and counting) payment-enabled accounts that work for in-app billing. Unless the attach rate for FB Credits is 25% of the 600 million registered Facebook users (and I doubt it is), there’s clearly more for Facebook to gain than there is for Apple.

I’m curious to see how this all plays out. I can see a lot of advantages for developers who want to stick with FB credits as their sole payment solution on all games on all platforms. Problem is I don’t see what’s in it for Apple.

But you know who should seriously consider this? Google. They’re working on a good payment platform for Android, but they don’t have the same installed base of payment-enabled users that Apple has. And while a deep integration with Facebook might hurt Google’s internal efforts at social functionality, I’m sure it would be welcomed by developers looking for more ways to get distribution and accept payments.

As a matter of background, here’s my foursquare usage by the numbers:
-I joined FourSquare on March 14, 2009, or about 607 days ago at the time of this post
-To date, I’ve had 1,766 checkins, or almost 3 per day. My check-ins tend to come in bunches, so that 3 per day average is not really indicative of my usage pattern.
-I’ve unlocked 25 badges and left about 15 tips at places I’ve visited

I would describe myself as an active user of Foursquare and a reasonably enthusiastic one. I don’t know that Facebook was targeting people like me with Places – there are far more people who are on Facebook and not using foursquare to be won than there are people on foursquare for Facebook to steal. That’s the opportunity for both companies – convert the large swath of people who aren’t using either service. Below are a few reasons why I haven’t dropped foursquare for Facebook Places:

1. I use foursquare like I use Twitter – I don’t want to syndicate everything to Facebook. I consider my usage of foursquare and Twitter to be very similar. I’m very chatty on both services and generate a lot of stuff (not all of it interesting). I just don’t believe my friends want to see my every check-in in the same way that I don’t think they want to see every tweet. If I have a check-in that I think is particularly cool or noteworthy, I will syndicate it to Twitter or Facebook. And I have noticed that cool check-ins syndicated to Facebook from foursquare do generate comments, likes, etc. But unleashing the firehose of 3-4 check-ins per day and many more than that when I’m in a new place would probably feel like noise on Facebook.

2. I am more liberal with my Facebook friend requests than I am with my foursquare friend requests. Maybe it’s because I’m in my 30s, but I simply don’t want everyone I know to know where I am at all times. So I’m actually pretty picky with accepting foursquare requests. Everyone in my social graph on foursquare is a real person I actually know – that’s not necessarily the case on Facebook. The people on my foursquare graph are largely people I know well and who also use the service – it’s safe for me to assume that they’re both open to publishing their own location data as well as finding mine interesting. Because my foursquare network is smaller and purpose-selected for sharing location data, I don’t have to worry about check-ins being spammy or noisy – that’s what those people are there to see / hear / generate.

3. I’m not actually looking to “get anything” out of my checkins – I just like it and think it’s cool to both share where I’ve been and keep track of it myself. I’ve seen some compelling articles about how deals, discounts, prizes, or the “give me something for checking in” motivation will be what makes customers actually use a service here. I’m not motivated by that stuff. No check-in product out there can claim to have invented loyalty programs – businesses have been thinking about how to motivate customer loyalty for a long time and check-ins are just one other way to measure visit frequency. And I don’t check in to get free stuff most of the time – I think of it more as a nice reward or bonus. Check-ins are for entertainment for me and most entertainment products don’t save me money, they cost me money. The whole coupons / rewards motivation and why I’m not completely sold on that warrants its own post.

4. Foursquare works fine and I see no reason to switch. This goes in the “duh” category. I just like the product and even a reasonably compelling substitute in Facebook Places isn’t sufficiently compelling to make me switch. It just doesn’t fit my use case or usage patterns.

Anyway, I know I’m probably a “power user” of foursquare by most accounts, so my experience should be viewed through that lens. However, if you used to use foursquare and have switched to Facebook Places, I’d be curious to hear why. Comments are open as always.

Before going further, I’ll summarize why I think building a professional networking product or jobs product on top of Facebook is a big opportunity:

*Jobs, as a category, monetize really well – people are willing to pay to get to the right candidates
*Jobs, as a category, has supported multiple winners on the Internet (HotJobs, Indeed, SimplyHired, CareerBuilder, etc)
*LinkedIn is already a large, interesting, pre-IPO company with a clear value proposition
*Facebook is a daily use application for hundreds of millions of users; LinkedIn is not (although they’re trying to become more daily use with Twitter integration, questions, events, and other features)
*Many of the younger, up-and-comer folks spend more time on Facebook than they do on LinkedIn
*Competing with LinkedIn on the open Internet would be really hard; being on Facebook helps you address the customer acquisition problem.
*There is a growing segment of people want to use Facebook for professional purposes and FB as it stands today simply lacks the necessary functionality to do so.

Despite all of those good reasons to pursue jobs or professional networking on top of Facebook, I think there are some hard problems to solve. Having thought about this for awhile and ultimately decided not to pursue it, I’ll rank my concerns in order of decreasing importance – I think the “Facebook could do it” argument is the least compelling of all. Hat tip to my friend David King (@deekay) for helping me think through that last part earlier today.

Problem #1: Customer Acquisition – Cost and Difficulty
Once upon a time, it was fairly cheap and easy to acquire users on Facebook. There were tons of viral channels (requests, notifications, forced invitations, other forms of unsundry sneakiness, etc) – that era has passed. I would not say that virality on Facebook is dead, but it is much harder to have a fast-growing application that is not supported by advertising spend today than it was 6-12 months ago. And the applications that have seen rapid growth in the current environment tend to be entertainment and games applications. There are lots of people on Facebook who are looking to kill time and are willing to try new, fun things that their friends send their way or that they discover via the newsfeed, an ad, or some other mechanism.

Perhaps I should be a bit more granular and specific to jobs here. Let’s assume that the people who would be the targets of a professional social networking application do not “live” on Facebook (they don’t have it open all day long and are not constantly checking it). Ideally, you would not want to rely on those individuals changing their behavior and becoming more active Facebook users for your business to succeed. What’s the clever hack? You want to be able to communicate with them through other channels (email, in particular) where you can catch them when you have something to tell them. Meet them where they are, which is the email inbox. Given how buried most of the on-platform discovery options are (no more notifications, requests are buired), trying to rely on those mechanisms is unlikely to work. You can do wall posts and what not, but I don’t view that as a long term sustainable strategy.

So, in a world in which customer acquisition is difficult to achieve for free or at low cost, what’s the answer? Well, you can obviously spend money on advertising to acquire installs. So long as you know or believe that the cost of customer acquisition can be funded profitably by future revenue (or CPA < LTV), it could all work out. For example, if you are distributing jobs with $10,000 referral bonuses, you can build a sane business model along the following lines:

* Focus on jobs with referral bonuses greater than a few thousand dollars
* Split the referral bonus between the candidate and/or referring party and keep some margin for yourself
* Invest the margin you capture in customer acquisition to grow the network

For a job with a $5,000 referral bonus (not uncommon in tech), a service that kept 20% of the bonus would have $1,000 to contribute to customer acquisition and customer overhead. If the math works out, the only real risk you have is making sure you have enough money to invest in growing the network before you start to reap the benefits of the captured referrals.

Problem #2: Usage Model – It’s Not Games
By far, the most successful category for Facebook applications has to be games. Just look at the revenue numbers that companies such as Zynga (disclosure – I used to work at a company that Zynga acquired), Playdom, Playfish, Kabam, and others are able to generate. One of the nice things about games companies is that they are the perfect application for people who have lots of time to spend on Facebook. For games, the challenge is not getting people to engage – the challenge is getting your engaged users to monetize.

Let’s think about the kind of people who you’d want for a professional networking application focused on white collar jobs. You want people with strong educational backgrounds, with good past employment, and other indicia of employability. Those might not be people who are spending all day long on Facebook. A lot of busy people I know don’t “live” on Facebook the way many power gamers do. They check in periodically to see what’s up, respond to friend requests, check the occassional baby photo, and they’re gone.

How do you build an application usage model that engages them? Can you do it with a Facebook-only experience? I don’t know. But I do know that there are a lot of busy professional people who are not actively engaged with Facebook – making this service work for them is going to be a challenge.

There are actually two things to consider here. For those who are actively considering new jobs, they will usually go where the jobs are. If there’s a good job board or service on Facebook, they’ll use. But that only applies to active candidates. One of the magical things about a good professional network is that it helps route jobs THROUGH passive candidates (people who are not looking or are otherwise happy in their job(s)) to those who are open to new opportunities. For a service to really work, you need to have a way to engage these passive candidates as participants. Solving that latter problem is a big deal – it would make a service super useful as I’d estimate that there are 7-8 passive folks for every active job seeker.

Problem #3: Is This Core to Facebook?
I can’t answer this one. I don’t work at Facebook and never have. But I think of Facebook as being interested in two big ideas. One big idea is having the world’s best, most complete social graph of all facets of your life (personal and professional). The second is building the world’s largest personalized, contextual advertising business powered by a vast collection of data about you, your preferences, and your friends. On the one hand, having a third party build a professional networking layer on top of the existing social graph threatens the integrity of Facebook’s stranglehold on the social graph. But is that more important than making Places and Pages successful? More important than establishing Credits as a default payment mechanism on their platform? What about distributing Facebook Connect as the default ID / login system across the web? In short, Facebook can’t do everything. No company can. They have to pick the areas where they want to concentrate their firepower. Is jobs an professional networking in the sweet spot? I simply don’t know.

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