Founders Brunch is important for the same reason Silicon Valley is important: There are all of these subtle network effects,” said Peter Thiel, a 40-year-old former PayPal executive now bankrolling some of the hottest Internet companies. “Otherwise why wouldn’t you start a tech company in Fresno where everything is cheaper? The advantage to being in Silicon Valley and the San Francisco area is that so many other people are doing the same thing.”

Jessica noted that I had a new beard, and I explained my recent decision on growing it:

Barney Pell, the 39-year-old co-founder of Powerset, a natural-language search engine trying to challenge Google, sported a new beard he vowed not to shave until his San Francisco start-up launched its new product.

To be more accurate, I vowed not to shave off my beard until the launch, but I didn’t vow that I wouldn’t shave at all. I made that mistake during graduate school. I thought I was ready to submit my PhD thesis in about 3 months, and vowed not to shave or cut my hair until it was done. This was partly a way to motivate myself to finish, and partly a way to let my friends stop asking about my progress as they would clearly know when was done. As it turned out, my thesis advisor thought I had more work to do, and I wound up taking a full year before finishing. So by the time I was actually ready to submit my thesis, I had really long hair and a very full beard indeed. I’m not going to do risk that again…
Anyway, you might think I’m a maverick, but it turns out that most of Powerset is in on the gig. Almost all our employees are growing moustaches and/or beards in preparation for our upcoming launch. Even women who can’t grow nearly as nice moustaches as the men have painted them on from time to time. And our folks even registered a domain name and created a website, PowerStache.com, featuring photos taken over time as people grow their beards and moustaches.
It’s pretty silly and really wasn’t initially a coordinated effort, but it’s fun and reflects the excitement inside the company as we are nearing the time when the early version of our product will be available to the general public.

Facebook Platform is a brilliant idea by the folks at Facebook to provide strong support for developers to create new applications on top of Facebook, both extending the functionality for Facebook users and lowering the barriers to create entirely new applications that leverage the technology and social data that make Facebook itself so useful and powerful.
Social networks pose new social etiquette problems. Services like MySpace and Facebook make it very easy to request people to be your friends and there is high social motivation to generate large lists of friends so you feel popular. But having accepted many friends, it is easy to get swamped with viral marketing emails and invites to use new countless new applications. Moreover, having someone on your friend list makes a public statement that you are actually friends with them (more or less).
To address this, services like Facebook make it possible to remove someone as your friend. However, the dynamics of deletion can be quite dramatic, so for social engineering reasons, the systems notify users only when someone has added them as a friend — no alerts or messages are sent when someone removes you as a friend. Thus a user has no easy way to find out if one of their “friends” has actually removed them. You can keep track of your friend count and try to remember who is no longer on your list, or periodically check your friends profile pages to see if you are still there, but all these approaches are generally frustrating and unmanageable. In thinking about this, I had an idea: to make an application that could tell you automatically when someone has removed you as a friend on a social networking service.
I was discussing this yesterday with Siqi Chen, a friend and colleague who recently left Powerset after his startup company, Fluid Play, received seed funding from YCombinator. Siqi is a strong engineer who is great with Ruby on Rails (he was a key developer on PowerLabs), and his new company specializes in building Facebook applications. Fluid Play already has several highly successful Facebook applications, including “Friends for Sale”, which lets you “buy” friends on Facebook and send messages to other friends pretending they are doing your bidding. In the 4 weeks since “Friends for Sale” has been out, it has already generated over 450,000 users!
Siqi thought it would be a fun and straightforward project to implement my “Unfriender” application idea on the Facebook platform, and I was curious to learn about application development on the Facebook platform in general. So we got together on Saturday afternoon for a hack session (since I’m not a Ruby on Rails programmer, this generally means I get to kibitz and “product manage” as Siqi does all the programming work…). As a testament of the power of Facebook Platform and Siqi’s coding prowess, we had the application built from scratch, debugged, and deployed in production within 8 hours wall-clock time.

We got a group of geeks together, had a great chef come in and teach us how to cook, handed out some wine, and kicked off an interesting conversation. Come on along for a San Francisco geek dinner.
Geeks involved are: Barney Pell, CEO, Powerset; Mary Hodder, CEO, Dabble; Henri Poole, founder/director, Civic Actions; Kathleen Lyman, CEO, LaunchMedia; Steve Gillmor. Our co-hosts were Robert Scoble [of Scobleizer fame] and Fred Davis, co-founder of Wired Magazine. Videographers are Eddie Codel and Glenn Gullmes. Chef is Rozana Ogneva of www.AreYouBeingServedCatering.com. Our host is Jeannine Barnard.

I knew some of these folks before, in particular Mary Hodder is a friend of mine. I didn’t know just how expert Mary was about food. The food itself was delicious and we all gave our compliments to the chef. In addition to food, we covered several interesting (to us) topics. Here are a few that I remember after a month (I haven’t watched the videos yet).

• I brought up the question of whether the MySpace generation would grow up to regret sharing all their personal information, and shared my view that more likely they would come into power and reshape the mainstream perspective on private/public information so that is is no big deal.
• We had an unexpectedly long discussion about Powerset (in Part 2) with several good perspectives shared by the other guests.
• Mary talked about trends in personal video creation, mixing, and sharing.
• Fred talked about the early history of Wired magazine, and his later startup companies.
• And we learned about the long history of publishing in the computer industry.

I enjoyed the event and look forward to doing this again.
For folks who don’t live in the Bay Area, I think this dinner gives a pretty typical glimpse into how folks here in the tech industry combine work and play in social contexts. It captures pretty well the way that everyone is passionate about ideas, technology, and startup companies.

• Overstock.com launches “reputation networks” (see article below)
• buy.com acquires metail.com
• tribe.net reaches 1 million classified postings
• I also heard about a site called “shopularity”, who are still under the radar.

Overstock.com Takes on eBay

Christopher Saunders

09/28/2004

E-commerce player Overstock.com is aiming to take a cut of the online auction pie with the launch of its own auctions site.

Salt Lake City-based Overstock.com is best known as a fixed-price liquidator of consumer wares, such as home & garden supplies, clothes, furniture, and electronics. By delving into the auctions marketplace, however, Overstock.com is delving into new territory while gunning for one of e-commerce’s biggest success stories: eBay.

The Auction system differs from Overstock’s core fixed-price model in that it will offer the opportunity for third-party sellers to make money using the company’s e-commerce platform. Overstock.com will continue to sell at fixed-prices, while Overstock.com Auctions will enable sellers to move their own products in an auction format.

However, like eBay, Overstock Auctions will offer a means — which it calls “Make it Mine” — through which buyers participating in an auction can pay a flat fee for the item up for sale, ending the auction.

Also like eBay, Overstock.com charges listing fees and closing fees (from 20 cents to $3.17 for listings, and closing charges ranging from 3.25 percent down to 1 percent of the item’s final value). Overstock.com Auctions likewise enable sellers to use reserve prices and to purchase boldfaced, “highlighted” or “featured” listings for additional exposure.

The similarities to eBay’s winning formula are intentional, Overstock.com said.

“I am a deep admirer of eBay: It is a fantastic company and a worthy competitor,” Overstock.com President Patrick Byrne wrote in a letter to shareholders.

But Byrne added that he believe Overstock.com could make a name for itself because it sees itself addressing shortcomings in eBay’s system.

“We have designed our auction site to give precisely those things which eBay’s community of power sellers has demanded and been denied,” he wrote, adding that the site would offer lower listing fees, volume listing discounts and live customer service.

However, Overstock.com’s play for auction dominance is most centered around integrating the popular trend of online social networking — as popularized by sites like Friendster, MySpace, Orkut, Ryze, and a slew of others — in which users rank each other and refer friends and contacts to others.

Like eBay, Overstock.com will use a feedback system to rate buyers and sellers. However, in connection with the referral concept inherent in social networking, Overstock.com Auctions will rely instead on what it calls “reputation networks.”

“These ‘reputation networks’ will work particularly well for on-line auctions, where buyers, sellers, enthusiasts and experts are traditionally anonymous — and opinions are often biased,” Byrne wrote. He added that anonymous bias is responsible for “the declining value of ratings and the increasing tendency for retaliatory and spiteful ratings.”

Specifically, users give each other a numeric rating (from -2 to +2) following a transaction indicating satisfaction with the deal. (Users can also enter comments alongside ratings.)

The sum of those ratings is a user’s Business Rating, and users with whom a buyer or seller has done business become part of their Business Network. Meanwhile, Overstock.com Auctions will also feature a separate “Personal Rating,” wherein social contacts can rank each other on a one- to five-star scale.

The upshot of all this is that users can see others’ with relationships to their own Business and Personal Networks — ideally making trading easier, less worrisome, and safer.

“This has been the missing piece in e-commerce: In the deafening cacophony of e-commerce, whom can people trust?” Byrne wrote. “Most people would say, above all others, they trust the opinions of friends, family, and perhaps even a few co-workers. They rely upon social networks to help make connections and guide decisions … We sought a way to integrate the trust inherent in these networks into e-commerce.”

To promote its new site to sellers, Overstock.com is offering a number of incentives, including credits toward listing fees, an additional 10 percent discount for high-volume sellers, and a $50,000 prize for the seller with the largest auction network by the end of October.

Whether sellers will find Overstock Auctions’ formula compelling remains up in the air. In the meantime, however, not everything was going smoothly at press time for the new online auction site, as it intermittent outages hampered page loading. Overstock.com Auctions Web pages occasionally appeared with a message asking users to “Please try back in 5 minutes.”

Christopher Saunders is managing editor of ECommerce-Guide.com.