Congrats on the investment, Fred and thanks for sharing the rationale. Sounds like your original reaction about Facebook replacing the WWW is correct as services like Zynga will grow far beyond the walls of Facebook.
Yaniv
· 1 year ago
Can you reveal the $15bn question - what is their business model?
Puzzled
· 1 year ago
Ah, another example of a VC investing in the startup of a friend. I wonder if the term VC should be renamed to "Friends and Family Funds" only. I have heard of similar issues with seed funds like Founders Fund. I went to an entrepreneurs meeting recently and this subject was brought up by someone who have met with quite a few angel investors (as well as a couple early stage VCs), and the general consensus is that without user adoption (or some super proprietary technology), it's going to be very difficult for a web start-up to raise a seed round unless you have a prior working relationship with the VC already established.
So my question is this, is it getting harder to get funding for Web startups now as compared to last couple of years or is it that only friends of VCs get funding?
Andrew
· 1 year ago
I wonder if the term VC should be renamed to "Friends and Family Funds"
If so, it's yet more evidence of the power of social networking... and hence in support of deals like this one.
whitneymcn
· 1 year ago
@Puzzled -- it seems like you've answered your own question: "consensus is that without user adoption (or some super proprietary technology), it's going to be very difficult for a web start-up to raise a seed round unless you have a prior working relationship with the VC already established"
So, yes...if you don't have an existing product with real users or a really compelling new technology to demonstrate, venture capitalists will probably not be interested in funding your idea unless they already know and trust you. (I think that there were a couple of funds back in the late '90s that just handed out baskets of cash to everyone who walked in the door, but that didn't actually work out too well for anyone.)
And probably more significant: this is actually a situation where the entrepreneur is someone that the VC knows and trusts who also already has a real product with real users. My strong suspicion is that the latter part of that sentence was the real key here.
fred wilson
· 1 year ago
i got a comment like these on my personal blog and i'll repost my reply here:
it's a good point you raise. the way i became friends with mark was by investing in his first startup in 1995 (freeloader which he did with Sunil Paul)
since then i have backed each of them (mark on several occasions)
so this is more a matter of following successful entrepreneurs again and again than backing friends.
often times, they become one in the same.
fred
and:
we have made a number of investments in unproven entrepreneurs including Rob Kalin/Etsy, David Karp/Tumblr, Jack Dorsey/Twitter, and several others. i wrote a post about this about a year ago that explains how we think about this
And do "friends" have a better chance at success? I mean, just because they're YOUR friends, doesn't mean the World could care less who they are. Does anyone on Facebook play Texas Hold 'Em because of Fred Wilson? I realize you have backed some you weren't previously acquainted with, but that doesn't answer this question.
In fact, I have in mind one particular investment you have going right now, that is in a very troubling position, and I wonder if it began this way.
Don't misunderstand me, I'm not questioning anyone else's experience and insight, just what might be commonly left on the table JUST BECAUSE they're not friends. I read a lot of other VC commentary, and recently heard someone from Granite say that plans submitted electronically have ZERO chance. I took that to mean that even if someone reads them, they're treated like Sunday comics.
It's your money, not mine. Do what you want. I couldn't care less about playing games on Facebook, for crying out loud. I come here to, possibly, gain some insight into others' experiences on startup successes. Perhaps, what began well and went bad, or vice versa.
Thanks for allowing me to comment.
Charlie
· 1 year ago
People who make friends with Fred probably do have a better chance of success... because Fred's got incredible intellectual ability (this is what my girlfriend said after meeting him once at dinner) and to see strategic problems with great insight. This is the kind of person that an entrepreneur in the trenches needs around... so if you were a good entrepreneur in the spaces he looks at, you'd be an idiot not to try and become friends with Fred.... and given his personable manner, if you wind up working with him on one deal, you will inevitably become friends with him.
Any kind of sale, even of investment securities, is about relationships. If you're not smart enough to realize that relationships matter, then you're unlikely to be a successful entrepreneur.
Mark's network is huge. It's not just knowing Fred that makes him a good guy to back... it's that he can walk into almost anywhere tomorrow and strike distribution deals, attract talent to work for him, and get the advice of other smart, successful people.
A guy with an idea who has no friends can't do this.
fred wilson
· 1 year ago
s:
if you can be specific about the "one particular investment you have going right now, that is in a very troubling position", maybe I can respond with a thoughtful reply.
thanks
Fred
Andrew Holz
· 1 year ago
My little company had built some multiplayer games for cell phones a few years ago along the same lines. You can find and play against friends in real time.
They all worked well but the social "find my friends" was definitely the problem. It was there but never got critical mass.
Since people are obviously already linking up on FB with friends, that problem basically comes pre-solved.
I wonder though. Perhaps there is a way to link cell phone versions of those games into the app as well so that I can access those friends and game opponents on my cell when I am mobile.
The games are simple and mobile devices are now certainly better than they were...
A nice IPhone/Touch version could be quite attractive as well...
May help to have a presence somewhat outside of FB but connected the platform in pursuit of revenue sources as well.
Andrew
Dean Collins
· 1 year ago
My question is simple;
When was the last time you clicked on a banner advertisement while playing a game?
Whilst it might be a great business model for making 'hits' eventually advertisers (you know that revenue source that pays the bills) is going to want to see 'clicks'.
Of course you can build branded (eg burger king and others) games as a business model but I'm not seeing enough of these out there.
There are advertising opportunities in casual games although the core gamer would probably pay north of $40 per game with no ads. I previously worked at a startup that delivered video ads in casual games and its quite a good model. I am a big facebook fan but there is a huge world of casual gamers outside of facebook. I would venture to say that a majority of casual gamers play a game by themselves - pacman, tetris, bejeweled and thousands of flash games. Multiplayer is great, but probably multiplayer games that don't require people to be there online at the same time would be a better model on facebook - like scrabulous on facebook ?
We just launched a search engine and community site for gamers - gameseekr.com. For sure the gaming business is big with more than just advertising as a business model. We are hoping to bring gamers together to find, play, buy and exchange games.
Max Niederhofer
· 1 year ago
I know a few casual games site, e.g. WildTangent, that are generating serious advertising revenues on a advertising or micro- model. We're talking CPMs north of what major news portals do, both for loading screens or post-game rolls.
Anonymous
· 1 year ago
I just had a fraudulent charge posted to my credit card originating with Zynga. Today is the first day I had ever heard of this company. Apparently it is associated with facebook...for which I have no account. I am not sure how they obtained my credit card info. The charging company (the go-between) says they have recently received a large number of complaints about fraudulent charges originating from this company Zynga.
I didn't know venture companies invested in thieves.
caleb
· 1 year ago
I just recieved a fraud charge and I have all the information I need to file charges. I am not sure where my CC# came from, but I will find out.
Dawn
· 1 year ago
i think the on the game apps you have on my space if you attack someone you can't attack them again just because of it fact that money was dropped it should be set up to where you can only attack them once not over and over again i am so sick of the same person attacking me 6 or 7 times on super heros you can only attack someone once in a peroid of time cause it is fair to all players cause most of your games are screwed up with the whole attack system but whatever you would think you would have considered this in the program of the game but as i have seen in other games the programmers really don't care about players they just want a pay check for something half done and not well thought out
All Comments
Congrats on the investment, Fred and thanks for sharing the rationale. Sounds like your original reaction about Facebook replacing the WWW is correct as services like Zynga will grow far beyond the walls of Facebook.
Can you reveal the $15bn question - what is their business model?
Ah, another example of a VC investing in the startup of a friend. I wonder if the term VC should be renamed to "Friends and Family Funds" only. I have heard of similar issues with seed funds like Founders Fund. I went to an entrepreneurs meeting recently and this subject was brought up by someone who have met with quite a few angel investors (as well as a couple early stage VCs), and the general consensus is that without user adoption (or some super proprietary technology), it's going to be very difficult for a web start-up to raise a seed round unless you have a prior working relationship with the VC already established.
So my question is this, is it getting harder to get funding for Web startups now as compared to last couple of years or is it that only friends of VCs get funding?
I wonder if the term VC should be renamed to "Friends and Family Funds"
If so, it's yet more evidence of the power of social networking... and hence in support of deals like this one.
@Puzzled -- it seems like you've answered your own question: "consensus is that without user adoption (or some super proprietary technology), it's going to be very difficult for a web start-up to raise a seed round unless you have a prior working relationship with the VC already established"
So, yes...if you don't have an existing product with real users or a really compelling new technology to demonstrate, venture capitalists will probably not be interested in funding your idea unless they already know and trust you. (I think that there were a couple of funds back in the late '90s that just handed out baskets of cash to everyone who walked in the door, but that didn't actually work out too well for anyone.)
And probably more significant: this is actually a situation where the entrepreneur is someone that the VC knows and trusts who also already has a real product with real users. My strong suspicion is that the latter part of that sentence was the real key here.
i got a comment like these on my personal blog and i'll repost my reply here:
it's a good point you raise. the way i became friends with mark was by investing in his first startup in 1995 (freeloader which he did with Sunil Paul)
since then i have backed each of them (mark on several occasions)
so this is more a matter of following successful entrepreneurs again and again than backing friends.
often times, they become one in the same.
fred
and:
we have made a number of investments in unproven entrepreneurs including Rob Kalin/Etsy, David Karp/Tumblr, Jack Dorsey/Twitter, and several others. i wrote a post about this about a year ago that explains how we think about this
http://www.unionsquareventures.com/2007/01/foun...
i hope that helps
fred
And do "friends" have a better chance at success? I mean, just because they're YOUR friends, doesn't mean the World could care less who they are. Does anyone on Facebook play Texas Hold 'Em because of Fred Wilson? I realize you have backed some you weren't previously acquainted with, but that doesn't answer this question.
In fact, I have in mind one particular investment you have going right now, that is in a very troubling position, and I wonder if it began this way.
Don't misunderstand me, I'm not questioning anyone else's experience and insight, just what might be commonly left on the table JUST BECAUSE they're not friends. I read a lot of other VC commentary, and recently heard someone from Granite say that plans submitted electronically have ZERO chance. I took that to mean that even if someone reads them, they're treated like Sunday comics.
It's your money, not mine. Do what you want. I couldn't care less about playing games on Facebook, for crying out loud. I come here to, possibly, gain some insight into others' experiences on startup successes. Perhaps, what began well and went bad, or vice versa.
Thanks for allowing me to comment.
People who make friends with Fred probably do have a better chance of success... because Fred's got incredible intellectual ability (this is what my girlfriend said after meeting him once at dinner) and to see strategic problems with great insight. This is the kind of person that an entrepreneur in the trenches needs around... so if you were a good entrepreneur in the spaces he looks at, you'd be an idiot not to try and become friends with Fred.... and given his personable manner, if you wind up working with him on one deal, you will inevitably become friends with him.
Any kind of sale, even of investment securities, is about relationships. If you're not smart enough to realize that relationships matter, then you're unlikely to be a successful entrepreneur.
Mark's network is huge. It's not just knowing Fred that makes him a good guy to back... it's that he can walk into almost anywhere tomorrow and strike distribution deals, attract talent to work for him, and get the advice of other smart, successful people.
A guy with an idea who has no friends can't do this.
s:
if you can be specific about the "one particular investment you have going right now, that is in a very troubling position", maybe I can respond with a thoughtful reply.
thanks
Fred
My little company had built some multiplayer games for cell phones a few years ago along the same lines. You can find and play against friends in real time.
They all worked well but the social "find my friends" was definitely the problem. It was there but never got critical mass.
Since people are obviously already linking up on FB with friends, that problem basically comes pre-solved.
I wonder though. Perhaps there is a way to link cell phone versions of those games into the app as well so that I can access those friends and game opponents on my cell when I am mobile.
The games are simple and mobile devices are now certainly better than they were...
A nice IPhone/Touch version could be quite attractive as well...
May help to have a presence somewhat outside of FB but connected the platform in pursuit of revenue sources as well.
Andrew
My question is simple;
When was the last time you clicked on a banner advertisement while playing a game?
Whilst it might be a great business model for making 'hits' eventually advertisers (you know that revenue source that pays the bills) is going to want to see 'clicks'.
Of course you can build branded (eg burger king and others) games as a business model but I'm not seeing enough of these out there.
Cheers,
Dean Collins
www.Cognation.net</p>
There are advertising opportunities in casual games although the core gamer would probably pay north of $40 per game with no ads. I previously worked at a startup that delivered video ads in casual games and its quite a good model. I am a big facebook fan but there is a huge world of casual gamers outside of facebook. I would venture to say that a majority of casual gamers play a game by themselves - pacman, tetris, bejeweled and thousands of flash games. Multiplayer is great, but probably multiplayer games that don't require people to be there online at the same time would be a better model on facebook - like scrabulous on facebook ?
We just launched a search engine and community site for gamers - gameseekr.com. For sure the gaming business is big with more than just advertising as a business model. We are hoping to bring gamers together to find, play, buy and exchange games.
I know a few casual games site, e.g. WildTangent, that are generating serious advertising revenues on a advertising or micro- model. We're talking CPMs north of what major news portals do, both for loading screens or post-game rolls.
I just had a fraudulent charge posted to my credit card originating with Zynga. Today is the first day I had ever heard of this company. Apparently it is associated with facebook...for which I have no account. I am not sure how they obtained my credit card info. The charging company (the go-between) says they have recently received a large number of complaints about fraudulent charges originating from this company Zynga.
I didn't know venture companies invested in thieves.
I just recieved a fraud charge and I have all the information I need to file charges. I am not sure where my CC# came from, but I will find out.
i think the on the game apps you have on my space if you attack someone you can't attack them again just because of it fact that money was dropped it should be set up to where you can only attack them once not over and over again i am so sick of the same person attacking me 6 or 7 times on super heros you can only attack someone once in a peroid of time cause it is fair to all players cause most of your games are screwed up with the whole attack system but whatever you would think you would have considered this in the program of the game but as i have seen in other games the programmers really don't care about players they just want a pay check for something half done and not well thought out