▶ How a Project on Apps Led to Lean Start-Ups
CLASS, HERE’S YOUR homework assignment: Devise an app. Get people to use it. Repeat.
That was the task for some Stanford University students in the fall of 2007, in what became known here as the “Facebook Class.”
No one expected what happened next.
The students ended up getting millions of users for free apps that they designed to run on Facebook. And, as advertising rolled in, some of those students started making far more money than their professors.
The Facebook Class fired up the careers and fortunes of more than two dozen students and teachers here. It also helped to pioneer a new model of entrepreneurship that has upturned the tech establishment: the lean start-up.
“Everything was happening so fast,” recalls Joachim De Lombaert, now 23. His team’s app netted $3,000 a day and morphed into a company that later sold for a six-figure sum.
Back then, Facebook apps were a novelty. The iPhone had just arrived, and the first Android phone was a year off.
But by teaching students to build no-frills apps, distribute them quickly and perfect them later, the Facebook Class stumbled upon what has become standard operating procedure for a new generation of entrepreneurs and investors . For many, the trek from idea to product to company has turned into a sprint.
Start-ups once required a lot of money, time and people. But over the past decade, free, open-source software and “cloud” services have brought costs down, while ad networks help bring in revenue quickly. The app phenomenon has accentuated the trend and helped unleash what some call a new wave of technology innovation - and what others call a bubble.
Early on, the Facebook Class became a microcosm of Silicon Valley. Working in teams of three, the 75 students created apps that collectively had 16 million users in just 10 weeks. Many of those apps were sort of silly: One allowed Facebook users to send “hugs.” Mr. De Lombaert’s allowed users to send “hotness” points to friends. Yet during the term, the apps, free for users, generated roughly $1 million in advertising revenue.
Such successes helped inspire entrepreneurs to ditch business plans and work on apps. Not all succeeded, but those that did helped to fuel the expansion of Facebook, which now has nearly 700 million users.
Venture capitalists also began rethinking their approach. Some created investment funds tailored to the new, smaller start-ups.
“A lot of the concepts and ideas that came out of the class influenced the structure of the fund that I am working on now,” says Dave McClure, one of the class instructors and founder of 500 Startups, which invests in lean start-ups. “The class was the realization that this stuff really works.”
Nearly four years later, many of the students have learned that building a business is a lot harder than creating an app - even an app worthy of an A+.
“Starting a company is definitely more work,” says Edward Baker, who was Mr. De Lombaert’s partner in the class and later in business. The two have founded Friend.ly, a social networking start-up.
Still, many students were richly rewarded. The Facebook Class changed Mr. De Lombaert’s life. His team’s app, Send Hotness, brought in more users and more money faster than any other in the class. And its success attracted the attention of venture capitalists.
“The class, more than anything, set the tone for us to try to start something big,” says Mr. Baker, 32, Friend. ly’s C.E.O.
Facebook did not actively participate in the Stanford class. But some of its engineers attended sessions, and it benefited from the success of the students’ apps. “It really felt like an incubator,” says David Fetterman, a Facebook engineer who helped develop the applications platform.
The startling success of some of the class’s projects got Silicon Valley buzzing. The final session, held in an auditorium in December 2007, was attended by many investors.
“The Facebook platform was taking off, and there was this feeling of a gold rush,” said Mike Maples Jr., an investor who attended some of the classes and ended up backing one of the start-ups.
The Facebook Class was the brainchild of B. J. Fogg, who runs the Persuasive Technology Lab at Stanford. An energetic academic and an innovation guru, he focuses on how to harness technology and human psychology to influence people’s behavior.
Mr. Fogg thought that the Facebook platform would be a good way to test some of his theories. Creating a new model of entrepreneurship was far from his mind. At first, university administrators pushed back. “Facebook was not taken so seriously in academic circles back then,” Mr. Fogg recalls.
Mr. Baker says the Facebook platform is a magnet for young developers, even though the kind of simple apps that were the focus of his Stanford class now face bigger hurdles. Facebook has made it harder to develop big-hit apps by controlling how apps spread virally.
But Mr. Fogg, says that for those who were at the right place at the right time - in late 2007 - things were different. “There was a period of time when you could walk in and collect gold,” he says. “It was landscape that was ready to be harvested.”
Joachim De Lombaert, left, and Edward Baker, who took the Facebook Class, now run Friend.ly, a social network site.
B.J. Fogg’s class at Stanford University in 2007 taught students to make apps simple and to perfect them later.
By MIGUEL HELFT
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