This morning, Seattle-based AppBank (www.appbank.com) announced that it has created a new service which allows people to easily create their own applications in Facebook, and share in ad revenues from those applications. The firm is the latest startup of Fred Hsu, a serial entrepreneur who recently moved up here to Seattle, and previously had success as co-founder of Los Angeles-based Oversee.net. Fred is CEO and President of the firm, and talked with us last week about today's launch.
Tell us about your background and what Appbank?
Fred Hsu: My background, is I co-founded Oversee.net. Oversee.net is a domain management leader which we founded in 2000, and grew to over $200M in revenues. In 2007, we took private equity money, in a $150M round, and since then I moved from LA with my wife and family, and created this startup.
In winter of last year, I had a cousin who was a college student. She was spending lots of time and Facebook, and didn't have lots of money, and I saw she needed more earnings power. We thought to ourselves: with the proliferation of all these quizzes and applications on Facebook., wouldn't it be interesting to pay an end user to create this stuff? So, we started building on the idea, and in about four or five months, we had a product going.
What Appbank is, is it's a third party website that complements Facebook. Together, the two systems are a patent-pending platform, which rewards people for creating entertaing, engaging applications, like quizzes and polls and gifting applications. We've seen lots of stuff out there, and we've create a network of applications based on our platform.
What kind of applications are you helping to create?
Fred Hsu: Social entertainment applications. Things that are very viral, like quizzes, personality test, trivia, and knowledgebase applications. Anything which is interesting to users, who want to find out more about themselves. The thing with our service, is it is very easy for end users, and you need no programming skills and no business skills to create applications. All you need is an Internet connection and a Facebook account. It's a a completely hosted platform.
Is there any issue with you running ads on Facebook?
Fred Hsu: We run compliant ads. Everything on the right hand of Facebook, those are Faebook ads. On the left side, is the application canvas, and you as an application owner--and there is a network of thousands of creators--own that space. We use that to monetize through ads, and pay an ad share to the end user application creator.
Is this tool available now?
Fred Hsu: We've been building this since April of 2009, and just got it up and running in June. The application is now in the final stages of beta, although we haven't launched it publicly yet. We've relied on a handful of beta testers.
With the platform, you are given the ability to create an application. We a enable you to make money, and you'll have to qualify for the program. You can create an app, sumbit it, we'll review it, and if it meets our quality standards, has an initial base of users, we welcome them to the program, and start logging that into Appbank. You then will see daily revenues, and we provide tools to manage those apps, accounts, reports, and all kind of other cool tools.
How do you pay users?
Fred Hsu: We pay via PayPal, every two weeks. On time, every time. It's something I borught in from Oversee, which is the operator of the world's largest domain parking program. That's one thing about the domain world--the competition is cutthroat, and if you've got to pay on time, and provide support 24/7 365.
How did you end up in Seattle?
Fred Hsu: I sold a big chunk of Oversee.net to a private equity firm in 2008. With that, came time and resources. I was getting married, and thought we'd move up here. Number one, we have family up here, and second, we visited in 2006 during the summer, and felt it was a great place to live. It's a great environment, the people are friendly, it's got it own startup alley, which we think is really cool. It's very conductive to these type of projects.
How is the company financed?
Fred Hsu: It's been completely bootstrapped, with no outside funding. We took advantage of the experience of Tracento, one of the oldest Facebook application development companies. We hired the founders from Tracento, which had created gifting apps and had over 50 million users in Facebook. Tracento was ramping in 2007, and we took that expertise and took it in-house. In the prior experience, Tracento developed individual apps as an app development company. We now have brought that expertise and experience in growth, stats, and optimization and sauce to the crowdsourced model. As part of what we're doing, we wanted to cater to advertisers. Part of our system is directed towards advertisers, and also ad networks. The value proposition is--they pay less, and they convert more. It's pay for performance. Application creators see a 25 cent to $1.00 eCPM. Users in the U.S. and Canada seem to do better, due to advertisers density. We don't disclose our revenue share, but the benefit is that no one else out there is paying you to create an applications.
What's your plans for the company now?
Fred Hsu: We're already profitable, and our goal is to reach 50 million active users on Facebook soon. According to our August stats, we already have 8 million active users on Facebook. Our revenue target, conservatively is $1.2M dollars, and we've got six people full time now. Our headquarters are in Seattle, but we've also got office sin the Bay Area, and in the Los Angeles area, specifically the Inland Empire. We have over 3,000 applications, and 50,000 users using our application builder, although not every single person who installed our application builder necessarily builds and application.