[Editor's Note: The following article presents analysis and data excerpts from Inside Facebook Gold, our research and data membership service tracking Facebook's traffic growth and demographic landscape in global markets.]
When it comes to web payments, Facebook is unique, giving games and other apps a massive international reach of over 500 million people — and yet, only a single-digit percentage ever make any payment. While conversion rates in the low single digits are standard, and certainly still interesting at volume, dozens of startups have dedicated themselves to making the barriers to payment as low as possible and in doing so hope to get more people spending more money. Payment options now include credit cards, mobile phones, promotional offers, promissory notes and others, while Facebook is working to gain user recognition with its virtual currency, Facebook Credits.
What do users think of these many choices? We recently ran a survey as part of Inside Facebook Gold, our research and data service covering Facebook’s growing global audience, in order to better understand real users’ attitudes and behaviors toward payments. The survey included 384 Facebook users, nearly all of whom were active social game users, and was conducted throughout the month of September 2010.
Today, we’re looking at the first of the survey’s three sections, dealing with user perception of a dozen payment methods.
The first and most important element of perception is whether users recognize the brand at all. We offered a dozen choices based on payment options visible to users in the platform’s top social games. We asked survey takers to select all the services that they recognized:
It’s important to note that some of the payment methods listed above are made available to users at different stages of the payment selection process — Facebook Credits, for instance, is a virtual currency, while Visa is a payment method. A user might opt to top up on Facebook Credits to redeem in their favorite game, and then pay for the Credits with a Visa credit card.
Users are likely unaware of this distinction, however — the important question is which names they associate with making payments. Over 80 percent of respondents recognized the major credits cards, while almost 70 percent knew about PayPal. Following those two major payment methods, the recognition rates drop dramatically. It’s interesting to note that Amazon’s brand recognition is almost equal to Facebook’s — although it’s not clear whether survey respondents thought of it as a payment method, or simply recognized the name.
The most interesting data is on the smaller payment methods listed. Three — PayByCash, Ultimate Game Card and PayMo — were recognizable to over five percent of respondents. Note that PayByCash and Ultimate Game Card are in fact owned by the same company, PlaySpan, which has done a good job so far of creating an international brand.
Even Social Gold, which was used by dozens of Facebook games at its peak and is now owned by Google, was recognized by only 2.7 percent of our survey takers. This shows just how difficult building up brand recognition is for payment companies, and suggests that Google may do well to leverage its own brand recognition and rename the service or incorporate it into Google Checkout, if they continue to use it.
Our next chart helps illustrate just how important brand recognition is for payment options. Survey respondents chose which single option they would prefer to use if they planned to buy virtual currency:
User familiarity gave credit cards and Paypal a huge edge, with about 60 percent of the vote combined.
Very few users preferred a method other than these two (except for users who preferred not to pay at all, by using promotional offers). Facebook itself was a popular choice, although again, this will likely result in use of either a credit card or PayPal. PayByCash, Ultimate Game Card and Rixty all picked up small minorities — which, considering that all three are cash and gift card options, may mean that the users who picked them don’t have credit cards or a PayPal account.
Overall, the results of our survey don’t suggest that smaller options are failing — some are doing quite well — but they do have very low levels of brand recognition, especially when compared to competing options that have been on the market for decades. Over time, the success of the newer brands will depend on how far they can establish themselves as household names.
This survey was conducted as part of our Inside Facebook Gold research and data service that also provides regular data on Facebook’s growth and demographics around the world. Full survey results from all three sections of the survey are available at Inside Facebook Gold.
Today Y Combinator is holding its sixth Startup School, where a roster of Silicon Valley’s most experienced and successful founders and investors come together to lecture hundreds of eager entrepreneurs. The event is always extremely popular, and today is no exception — the lecture hall on Stanford’s campus is packed to the brim.
Today’s event will feature eleven talks, including lectures from the likes of Paul Graham, Mark Zuckerberg, and Ron Conway. The first session — which featured Andy Bechtolsheim, Paul Graham, and Andrew Mason — just ended. You can find my notes from each talk below, and we’ll be posting more later today on each cluster of speakers. You can also watch a live stream of the event right here.
Andy Bechtolsheim
Sun founder Andy Bechtolsheim’s talk revolved around innovation. He kicked off with a brief history of the incredible changes we’ve seen in the computer industry in a brief period of time, with the number of transistors on a chip increasing a million fold since 1970 and networking technology seeing similarly impressive gains.
Bechtolsheim says that there are a few key lessons from what’s gone on in terms of web innovation: first, the time from innovation to adoption can be remarkably short (see Google’s rapid adoption, for example). And the key to success isn’t to be first (after all, there were many search engines available before Google came out). Instead, it’s important to be the first to solve the right problem.
So why is there so much focus on web companies? Bechtolsheim says that it’s primarily because starting one is so cheap, relatively speaking. You no longer need to have your own infrastructure — with AWS, you can get up and running for cheap. It’s also cheaper than ever to raise awareness due to the proliferation of blogs, Twitter, etc.
Paul Graham
YC founder Paul Graham’s talk focused on one of the all-important problems facing budding startups: raising money. And he had good news, at least as far as entrepreneurs are concerned.
There’s an increasing tension between so-called Super Angels and Venture Capitalists (which manifested itself in AngelGate). Unlike traditional angel investors, Super Angels are investing other people’s money, which makes them similar to the VC camp. But, unlike VCs which have historically invested large sums of money (usually $1M+), Super Angels are happy to make many, much smaller investments.
This gives entrepreneurs more control — they can raise exactly how much they want instead of having to take a giant Series A round. It’s also led to larger VCs making small (~$100K) investments to compete more directly with the Super Angels.
This has another consequence: because VCs are mostly price-insensitive at this point (they view these seed investments as options to invest larger sums down the road), they don’t mind if the startup valuation grows higher than it would have. Which is great for the entrepreneur, but is bad for Super Angels who do care about the startup’s valuation. This, Graham says, could lead to what looks like another bubble with skyrocketing valuations, but hopefully without the pop at the end.
In the long term, this probably isn’t sustainable — Graham says that VCs and Super Angels will increasingly become one and the same, as the top VCs who add value are weeded out from the rest. But he thinks that process will take time, since the VC industry moves at a “glacially slow” pace. Until then, we’ll keep seeing those sky-high valuations for companies that appeal to both VCs (who think the company has a chance to IPO) and Super Angels (who think the company has a chance at an early, lucrative exit).
For more on this topic, see our post on The $4 Million Line. Graham will also be publishing an essay covering his talk, which we’ll post a link to as soon as it goes live.
Andrew Mason
Groupon founder Andrew Mason decided to take a different approach with his talk: he gave an old pitch for his original startup The Point, which eventually evolved into the wildly successful Groupon. The Point was a collective action platform that would let users take action together — for example, to raise money to build a dome around Chicago to block out the city’s frigid winter weather (yes, this was an actual initiative on the site).
But Mason’s (old) pitch wasn’t a good one, and The Point never really gained traction. So what went wrong? Mason pointed out some of the original company’s main flaws: it was about a vision more than making a tool that was actually useful. Mason was thinking of what the Point could become five, ten years down the road, without figuring out how to get people to actually use it.
Another problem: you need to recognize and embrace your constraints, and figure out what’s practical. You also need to realize that you’ll probably fail. Many people who are thinking of launching startups are very smart — they’ve succeeded in the past and the notion of failure isn’t really conceivable to them (Mason fell into this camp when he was working on The Point). Now, at Groupon, he constantly reminds himself of ways he could fail — the company has a bunch of magazine covers hanging on the wall near the entrance featuring companies that have gone downhill after massive success, like MySpace and AOL.
Image by Robert Scoble/Scobleizer on Flickr
Arrowheadlines: Chiefs <b>News</b> 10/26 - Arrowhead Pride
Good morning! We have a full day of Kansas City Chiefs news. O-line love and praise for the running game and a shout out to DJ are ahead. There are also a few articles on the Buffalo offense and how productive they've been recently.
Nevada Voters Complain Of Problems At Polls - Las Vegas <b>News</b> Story <b>...</b>
LAS VEGAS -- Some voters in Boulder City complained on Monday that their ballot had been cast before they went to the polls, raising questions about Clark County's electronic voting machines. Tuesday, October 26, 2010.
Google donates $5 million for <b>news</b> innovation to Knight Foundation <b>...</b>
Google and news organizations have had a rocky time of it. To overdramatize the situation only slightly: Google insists that it cares about journalism as a.
bench craft company complaints
bench craft company complaints
Arrowheadlines: Chiefs <b>News</b> 10/26 - Arrowhead Pride
Good morning! We have a full day of Kansas City Chiefs news. O-line love and praise for the running game and a shout out to DJ are ahead. There are also a few articles on the Buffalo offense and how productive they've been recently.
Nevada Voters Complain Of Problems At Polls - Las Vegas <b>News</b> Story <b>...</b>
LAS VEGAS -- Some voters in Boulder City complained on Monday that their ballot had been cast before they went to the polls, raising questions about Clark County's electronic voting machines. Tuesday, October 26, 2010.
Google donates $5 million for <b>news</b> innovation to Knight Foundation <b>...</b>
Google and news organizations have had a rocky time of it. To overdramatize the situation only slightly: Google insists that it cares about journalism as a.
bench craft company complaints bench craft company complaints
[Editor's Note: The following article presents analysis and data excerpts from Inside Facebook Gold, our research and data membership service tracking Facebook's traffic growth and demographic landscape in global markets.]
When it comes to web payments, Facebook is unique, giving games and other apps a massive international reach of over 500 million people — and yet, only a single-digit percentage ever make any payment. While conversion rates in the low single digits are standard, and certainly still interesting at volume, dozens of startups have dedicated themselves to making the barriers to payment as low as possible and in doing so hope to get more people spending more money. Payment options now include credit cards, mobile phones, promotional offers, promissory notes and others, while Facebook is working to gain user recognition with its virtual currency, Facebook Credits.
What do users think of these many choices? We recently ran a survey as part of Inside Facebook Gold, our research and data service covering Facebook’s growing global audience, in order to better understand real users’ attitudes and behaviors toward payments. The survey included 384 Facebook users, nearly all of whom were active social game users, and was conducted throughout the month of September 2010.
Today, we’re looking at the first of the survey’s three sections, dealing with user perception of a dozen payment methods.
The first and most important element of perception is whether users recognize the brand at all. We offered a dozen choices based on payment options visible to users in the platform’s top social games. We asked survey takers to select all the services that they recognized:
It’s important to note that some of the payment methods listed above are made available to users at different stages of the payment selection process — Facebook Credits, for instance, is a virtual currency, while Visa is a payment method. A user might opt to top up on Facebook Credits to redeem in their favorite game, and then pay for the Credits with a Visa credit card.
Users are likely unaware of this distinction, however — the important question is which names they associate with making payments. Over 80 percent of respondents recognized the major credits cards, while almost 70 percent knew about PayPal. Following those two major payment methods, the recognition rates drop dramatically. It’s interesting to note that Amazon’s brand recognition is almost equal to Facebook’s — although it’s not clear whether survey respondents thought of it as a payment method, or simply recognized the name.
The most interesting data is on the smaller payment methods listed. Three — PayByCash, Ultimate Game Card and PayMo — were recognizable to over five percent of respondents. Note that PayByCash and Ultimate Game Card are in fact owned by the same company, PlaySpan, which has done a good job so far of creating an international brand.
Even Social Gold, which was used by dozens of Facebook games at its peak and is now owned by Google, was recognized by only 2.7 percent of our survey takers. This shows just how difficult building up brand recognition is for payment companies, and suggests that Google may do well to leverage its own brand recognition and rename the service or incorporate it into Google Checkout, if they continue to use it.
Our next chart helps illustrate just how important brand recognition is for payment options. Survey respondents chose which single option they would prefer to use if they planned to buy virtual currency:
User familiarity gave credit cards and Paypal a huge edge, with about 60 percent of the vote combined.
Very few users preferred a method other than these two (except for users who preferred not to pay at all, by using promotional offers). Facebook itself was a popular choice, although again, this will likely result in use of either a credit card or PayPal. PayByCash, Ultimate Game Card and Rixty all picked up small minorities — which, considering that all three are cash and gift card options, may mean that the users who picked them don’t have credit cards or a PayPal account.
Overall, the results of our survey don’t suggest that smaller options are failing — some are doing quite well — but they do have very low levels of brand recognition, especially when compared to competing options that have been on the market for decades. Over time, the success of the newer brands will depend on how far they can establish themselves as household names.
This survey was conducted as part of our Inside Facebook Gold research and data service that also provides regular data on Facebook’s growth and demographics around the world. Full survey results from all three sections of the survey are available at Inside Facebook Gold.
Today Y Combinator is holding its sixth Startup School, where a roster of Silicon Valley’s most experienced and successful founders and investors come together to lecture hundreds of eager entrepreneurs. The event is always extremely popular, and today is no exception — the lecture hall on Stanford’s campus is packed to the brim.
Today’s event will feature eleven talks, including lectures from the likes of Paul Graham, Mark Zuckerberg, and Ron Conway. The first session — which featured Andy Bechtolsheim, Paul Graham, and Andrew Mason — just ended. You can find my notes from each talk below, and we’ll be posting more later today on each cluster of speakers. You can also watch a live stream of the event right here.
Andy Bechtolsheim
Sun founder Andy Bechtolsheim’s talk revolved around innovation. He kicked off with a brief history of the incredible changes we’ve seen in the computer industry in a brief period of time, with the number of transistors on a chip increasing a million fold since 1970 and networking technology seeing similarly impressive gains.
Bechtolsheim says that there are a few key lessons from what’s gone on in terms of web innovation: first, the time from innovation to adoption can be remarkably short (see Google’s rapid adoption, for example). And the key to success isn’t to be first (after all, there were many search engines available before Google came out). Instead, it’s important to be the first to solve the right problem.
So why is there so much focus on web companies? Bechtolsheim says that it’s primarily because starting one is so cheap, relatively speaking. You no longer need to have your own infrastructure — with AWS, you can get up and running for cheap. It’s also cheaper than ever to raise awareness due to the proliferation of blogs, Twitter, etc.
Paul Graham
YC founder Paul Graham’s talk focused on one of the all-important problems facing budding startups: raising money. And he had good news, at least as far as entrepreneurs are concerned.
There’s an increasing tension between so-called Super Angels and Venture Capitalists (which manifested itself in AngelGate). Unlike traditional angel investors, Super Angels are investing other people’s money, which makes them similar to the VC camp. But, unlike VCs which have historically invested large sums of money (usually $1M+), Super Angels are happy to make many, much smaller investments.
This gives entrepreneurs more control — they can raise exactly how much they want instead of having to take a giant Series A round. It’s also led to larger VCs making small (~$100K) investments to compete more directly with the Super Angels.
This has another consequence: because VCs are mostly price-insensitive at this point (they view these seed investments as options to invest larger sums down the road), they don’t mind if the startup valuation grows higher than it would have. Which is great for the entrepreneur, but is bad for Super Angels who do care about the startup’s valuation. This, Graham says, could lead to what looks like another bubble with skyrocketing valuations, but hopefully without the pop at the end.
In the long term, this probably isn’t sustainable — Graham says that VCs and Super Angels will increasingly become one and the same, as the top VCs who add value are weeded out from the rest. But he thinks that process will take time, since the VC industry moves at a “glacially slow” pace. Until then, we’ll keep seeing those sky-high valuations for companies that appeal to both VCs (who think the company has a chance to IPO) and Super Angels (who think the company has a chance at an early, lucrative exit).
For more on this topic, see our post on The $4 Million Line. Graham will also be publishing an essay covering his talk, which we’ll post a link to as soon as it goes live.
Andrew Mason
Groupon founder Andrew Mason decided to take a different approach with his talk: he gave an old pitch for his original startup The Point, which eventually evolved into the wildly successful Groupon. The Point was a collective action platform that would let users take action together — for example, to raise money to build a dome around Chicago to block out the city’s frigid winter weather (yes, this was an actual initiative on the site).
But Mason’s (old) pitch wasn’t a good one, and The Point never really gained traction. So what went wrong? Mason pointed out some of the original company’s main flaws: it was about a vision more than making a tool that was actually useful. Mason was thinking of what the Point could become five, ten years down the road, without figuring out how to get people to actually use it.
Another problem: you need to recognize and embrace your constraints, and figure out what’s practical. You also need to realize that you’ll probably fail. Many people who are thinking of launching startups are very smart — they’ve succeeded in the past and the notion of failure isn’t really conceivable to them (Mason fell into this camp when he was working on The Point). Now, at Groupon, he constantly reminds himself of ways he could fail — the company has a bunch of magazine covers hanging on the wall near the entrance featuring companies that have gone downhill after massive success, like MySpace and AOL.
Image by Robert Scoble/Scobleizer on Flickr
bench craft company complaints
Arrowheadlines: Chiefs <b>News</b> 10/26 - Arrowhead Pride
Good morning! We have a full day of Kansas City Chiefs news. O-line love and praise for the running game and a shout out to DJ are ahead. There are also a few articles on the Buffalo offense and how productive they've been recently.
Nevada Voters Complain Of Problems At Polls - Las Vegas <b>News</b> Story <b>...</b>
LAS VEGAS -- Some voters in Boulder City complained on Monday that their ballot had been cast before they went to the polls, raising questions about Clark County's electronic voting machines. Tuesday, October 26, 2010.
Google donates $5 million for <b>news</b> innovation to Knight Foundation <b>...</b>
Google and news organizations have had a rocky time of it. To overdramatize the situation only slightly: Google insists that it cares about journalism as a.
bench craft company complaints bench craft company complaints
Arrowheadlines: Chiefs <b>News</b> 10/26 - Arrowhead Pride
Good morning! We have a full day of Kansas City Chiefs news. O-line love and praise for the running game and a shout out to DJ are ahead. There are also a few articles on the Buffalo offense and how productive they've been recently.
Nevada Voters Complain Of Problems At Polls - Las Vegas <b>News</b> Story <b>...</b>
LAS VEGAS -- Some voters in Boulder City complained on Monday that their ballot had been cast before they went to the polls, raising questions about Clark County's electronic voting machines. Tuesday, October 26, 2010.
Google donates $5 million for <b>news</b> innovation to Knight Foundation <b>...</b>
Google and news organizations have had a rocky time of it. To overdramatize the situation only slightly: Google insists that it cares about journalism as a.
bench craft company complaints bench craft company complaints
Arrowheadlines: Chiefs <b>News</b> 10/26 - Arrowhead Pride
Good morning! We have a full day of Kansas City Chiefs news. O-line love and praise for the running game and a shout out to DJ are ahead. There are also a few articles on the Buffalo offense and how productive they've been recently.
Nevada Voters Complain Of Problems At Polls - Las Vegas <b>News</b> Story <b>...</b>
LAS VEGAS -- Some voters in Boulder City complained on Monday that their ballot had been cast before they went to the polls, raising questions about Clark County's electronic voting machines. Tuesday, October 26, 2010.
Google donates $5 million for <b>news</b> innovation to Knight Foundation <b>...</b>
Google and news organizations have had a rocky time of it. To overdramatize the situation only slightly: Google insists that it cares about journalism as a.
bench craft company complaints bench craft company complaints
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