Sachin Rekhi

So are you thinking about adding a virtual economy to your app or website? The great news is there are a variety of startups out there waiting to help you!

2008 saw an explosion in virtual currencies and their associated virtual goods all across the internet. With Facebook social game Mob Wars suspected of making a million dollars a month and Zynga rumored to have made $50 million in revenue in 2008 off of its social and iPhone games, companies are seeing real revenue from this burgeoning monetization model. Even other indie social game developers like Mobsters and Lil Green Patch who also monetize virtual currencies have seen huge success with 13M users on MySpace and 5.9M monthly active users on Facebook, respectively. To top it off, over $580 million was invested in virtual goods related startups in 2008.

Silicon Alley Insider recently announced The Create a Twitter Revenue Model contest. I decided to throw together an entry and today SAI has picked it as one of the finalists. So I thought I would write a blog post summarizing my submission.

Y Combinator is famous for its well known motto "Make Something People Want." This very simple statement serves as a guiding principle for a startup, helping to focus it on this core goal early on: to ensure that its product provides compelling value to its target audience. It also de-emphasizes many secondary issues that, while important, are not likely to be an early cause of failure for a startup. I'm a big fan of the motto and use it myself as a quick filter for all the startup ideas I evaluate.

Yet the economic recession that we are in the middle of poses new challenges. While it hit in the financial and real estate sectors first, it is undeniable that it will have a lasting effect on all sectors of our global economy.

The announcement of Facebook Connect in May 2008 brought the next major chapter in the Facebook platform story. After building the first and most successful social networking platform, Facebook decided to expand beyond its own destination to bring the power of the social graph to any third party site.



Facebook Connect promised to deliver on the five following tenants: trusted authentication, real identity, friend linking, dynamic privacy, and social distribution. In the half a year since the announcement, how has Facebook Connect done?

Let's take a closer look at how Facebook Connect has fared on each of these tenants.