Why Facebook Rejects Startups

Insiders know that getting close to Facebook product teams is the best the way to take your business to the next level. Pitching Facebook as a startup is hard, though. New Facebook features create a virtual gold rush for platform developers. New Facebook application-programming-interface features enable new ways to monetize virtual goods in social games, for example. New Facebook ads features create new ways to target advertising to specific users — audience segments like “everyone who has purchased virtual goods on Facebook” — creating huge opportunities for those who move to monetize first.

New Facebook products start out in beta, meaning that they are only tested and rolled out to a small percentage of Facebook’s user base. If the features are successful in a technical and business sense, they are slowly enabled for the rest of Facebook’s users.

Facebook works with its third-party platform developers when it is creating and testing new features. The social network asks them for feedback on new product ideas, and then asks a select few to participate in the beta of the new product that is eventually built.

Getting in on the beta phase of new products can be extremely lucrative. Imagine being a seller of virtual goods that gets to monetize them and target ads to users who will likely buy them — all before your competition does. You would have a new revenue stream and make money in new ways while the features are freshest and users are most responsive. Best of all, you will have optimized your use of new the features by the time they are rolled out across all of Facebook’s users, while your competition is still discovering and learning about them.

Startups are especially eager to work with Facebook, as getting in on new products can give their companies the momentum they need to succeed.

How Facebook Turns Down Startups

I witnessed a small startup pitch a Facebook speaker at one of our conferences recently.

This startup was a savvy user of the Facebook platform, both in terms of team talent and business model. However, it had a tough time getting the Facebook speaker to help them.

The Facebook executive had strong arguments against working with small companies:

Facebook needs scale: Facebook tests features with only 1 percent of its user base, but that is 10 million people. The Facebook executive said it easily reaches that 1 percent scale working with two to four of its top 10 partners.

Remember: If you don’t have tens of millions of users, Facebook is not going to see “scale.”

Facebook works in “startup mode”: Facebook teams that build new products are small. Product teams can be as small as five people, even on important new features.

The Facebook executive said small product teams do not have time to “cobble together” enough small startup partners to reach the scale they need to test products.

Remember: Try not to be a distraction to the product teams. Keep things quick and easy for them.

Facebook delays and cancels products: Beta delays and product cancellations make sense, given that there are many small product teams working on diverse products that may or may not get approved. Big companies all do this.

The Facebook executive said launch delays and product cancellations can be hard on its small startup partners, especially after 10 months of work done by the startup.

Remember: Don’t blame Facebook employees for not wanting to waste your time.

What Should My Startup Do To Work With Facebook?

You usually need to be a substantial company to work with Facebook. Here is our advice on how to get your startup in while you are still small:

Achieve some scale: Achieve some scale, and then figure out how to best represent it to Facebook. Maybe you are reaching an audience segment that its top 10 application developers aren’t?

Get in on insider gossip: You can find out about new API features from the partners helping to test them. Then if you know the right people at Facebook, you can ask to be let in on the features while the monetization is still hot.

Read the Facebook Developer Blog: You will probably be stuck reading the Facebook Developer Blog to find out about new features. But you should be doing this anyway. Being on top of what’s happening is the way to get noticed, and being fluent on the API is a way to be perceived as a startup that is easy to work with.

Hopefully, this advice helps your startup become a Facebook insider. We wish you the best of luck.

Image courtesy of Fotolia.

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