What's After Facebook: Launch Seeks Social Startups With Focus on Privacy

Xconomy San Francisco — 

The Facebook and Cambridge Analytica data scandal may be the most prominent controversy the social networking company has had, but Jason Calacanis appears to call Facebook the “dark side” of social media for more reasons than that.

Calacanis is an angel investor and founder of San Francisco incubator Launch, which announced last Friday it has started a competition that aims to produce a new social network—with a focus on privacy. Called the Open Book Challenge, Launch put out an open call for people or startup teams to apply to the competition to “build a billion-user social network to replace Facebook—while protecting consumer privacy.”

The incubator will pick 20 teams as finalists on July 1; they will get a closer examination during the ensuing 90 days, with various conversations over e-mail and video conferences, says Calacanis (pictured above at an event in San Diego). Then, on Sept. 30, Launch plans to make offers to seven startups to join its incubator, which provides $100,000 in exchange for 6 percent equity. The incubator, founded in 2014, runs three sessions annually, which last twelve weeks each.

So, why try to replace Facebook (NASDAQ: FB), which still has a $481 billion (or so) market cap despite the Cambridge Analytica scandal?

“No matter how strong or big a company is, there is always a chance that an indefatigable founder with a clever idea and a kick-ass team will be able beat them,” Calacanis said in an interview with The Guardian, which he posted to his website. (Calacanis told Xconomy he will try to respond to additional questions, so check back for updates.)

The way these startups may differentiate themselves remains a bit unclear. In its announcement, Launch said it is looking for startup teams with a product that has familiar functionality to current social networks, but also new features and experiences. The startups might use subscriptions, advertising, cryptocurrency, or other sustainable business models, Launch said.

It hasn’t been easy to outpace Facebook in the past, even with new social networks that have new features—think of Snap or Instagram. That’s in part because Facebook CEO Mark Zuckerberg has either acquired those companies or tried to, Calacanis said.

“Zuck’s ‘sell or die’ threat has put a paralysis into the venture and entrepreneurial communities, making both scared to challenge him,” Calacanis told The Guardian.

Facebook’s watchful eye over other social networks has been noted, particularly by The Wall Street Journal, which reported on Facebook’s Onavo app and its ability to keep tabs on competitors.

Still, Launch and Calacanis believe they can help entrepreneurs create something that can stand its ground against the world’s largest social network. Money, skills, marketing, and a large network (Calacanis says he has 2,400 investors in his angel syndicate) are among the things that he said will help startups. Plus, he noted he has experience as an investor, having participated in more than 150 deals, including in the first rounds for Uber and Thumbtack.

Calacanis told The Guardian that even if one of his startups were offered a buyout deal by Facebook, he would suggest that the founder reject it, raise more money, go public, and compete against Zuckerberg. “My job as an angel is to give the founder advice, money and options, but ultimately it’s the founder’s decision if they go to the dark side,” he wrote in a Medium post.