AppBank Helps Facebook Users Make Money, Looks to Become the Ad King for Social Apps
It’s always good to hear about another small Seattle startup that’s bootstrapped and already profitable. Yesterday it was Appature, today it’s AppBank. They may share the first three letters of their names (and bootstrapped profitability), but after that they’re about as different as two Internet software companies can be.
AppBank is a six-person company focused on developing software to help Facebook users create social entertainment applications—and get paid for them. The company is rolling out the public beta version of its site today. The world of Facebook apps is very crowded, of course, but what AppBank is trying to do is give average Facebook users easier ways to make simple apps like quizzes, surveys, and games in their spare time, and more effective ways to make money from them by providing targeted advertising. “It’s the first time a company has paired relevant ads with crowdsourced social entertainment,” says Fred Hsu, AppBank’s founder and CEO.
Hsu started the company in April of this year, together with chief operating officer Joyce Chang. Hsu is the co-founder of Oversee.net, a Los Angeles company that holds Internet domain names and does domain marketing for the search, display, and lead-generation industries. Oversee did $200 million in revenue last year, and Hsu sold a minority stake in the company to private equity firm Oak Hill Capital Partners for $150 million. Chang, for her part, came from Seattle-based Tracento, which implements Facebook applications like Friend Hugs, Kisses, and Send Flowers. Both UCLA computer science grads, Hsu and Chang are based in Seattle, and the rest of the company’s employees are in the Los Angeles and San Francisco areas.
What AppBank offers is a quick way to create a Facebook quiz, for example—”What type of underwear are you?” or “Are you left-brained or right-brained?” or some such—and then free tools to optimize advertising (which AppBank runs) for those apps. It also displays a dashboard interface that shows how much money you’ve made this week, how many users click on the app per day, their demographics, where they’re based, and so forth. App creators—the startup has about 3,000 signed up so far, earning an average of almost $800 a month—receive ad revenues deposited in their accounts via PayPal, and AppBank takes a cut of those. AppBank also has direct advertising relationships with some big companies, including Netflix, whereby AppBank gets paid whenever it sends them a new user signup.
AppBank faces competition from the likes of San Francisco-based LOLapps, Los Angeles-based Sometrics, and any number of online ad networks. But Hsu says AppBank is unique in that it focuses on multiple aspects, like the app building, the dashboard and analytics, and the ads, whereas competitors “mostly focus on one area” like analytics or ad monetization. AppBank’s main differentiator, he says, is that “nobody [else] pays people. We’re experts and religious about building our own platform.”
Which raises the broader question of how to build a successful business on top of Facebook. In fact, AppBank is trying to get its ads seen by a broad customer base of 300 million Facebook users—but it’s already looking elsewhere as well. “We have good relationships with Facebook,” Hsu says, but “the next step is to build beyond Facebook” and into social sites like Bebo, MySpace, and others.
Hsu says Facebook apps made through AppBank currently reach 8 million users per month. The goal is to reach 50 million users per month by the end of the year, and about $1.2 million in revenue. Then, after the next quarter or two, the company will focus on building its software out to other social networks besides Facebook. Hsu says he is targeting three types of end users: college students, stay-at-home moms, and, increasingly, working professionals who have some time to spare and some expertise that can be useful in making useful and entertaining apps (psychologists, for example).
AppBank started private beta testing in June, but today marks the first time the site is open to the public. On Facebook, any user can click on a button, say, to “create your own quiz and make money.”
Lastly, Hsu reflected a bit on his bootstrapping philosophy, harkening back to the early days of Oversee.net in 2000. “I started the company with zero in my pocket,” he says. “I keep my head ducked down, and build, build, build.”