The class that struck gold with homework

All right, class, here’s your homework assignment: Devise an app. Get people to use it. Repeat. That was the task for some Stanford students in fall 2007, in what became known here as the “Facebook Class.” No one expected what happened next.

The students ended up getting millions of users for free apps they designed to run on Facebook. And, as advertising rolled in, some of those students started making far more money than their professors.

Almost overnight, the Facebook Class fired up the careers and fortunes of more than two dozen students and teachers here. It also helped pioneer a new model of entrepreneurship that has upturned the tech establishment: the lean startup.

“Everything was happening so fast,” recalls Joachim De Lombaert, now 23. His team’s app netted $3,000 a day and morphed into a company that later sold for a six-figure sum.

By teaching students to build no-frills apps, distribute them quickly and worry about perfecting them later, the Facebook Class stumbled upon what has become standard operating procedure for a new generation of entrepreneurs and investors in Silicon Valley and beyond. For many, the long trek from idea to product to company has turned into a sprint.

Startups once required a lot of money, time and people. But over the past decade, free, open-source software and “cloud” services have brought costs down, while ad networks help bring in revenue quickly.

Early on, the Facebook Class became a microcosm of Silicon Valley. Working in teams of three, the 75 students created apps that collectively had 16 million users in just 10 weeks. Many of those apps were sort of silly: De Lombaert’s, for example, allowed users to send “hotness” points to Facebook friends. Yet during the term, the apps, free for users, generated roughly $1 million in advertising revenue.

Such successes helped inspire entrepreneurs to ditch business plans and work on apps. Not all succeeded, but those that did helped fuel the expansion of Facebook, which now has nearly 700 million users.

Venture capitalists also began rethinking their approach. Some created investment funds tailored to the new, bare-bones startups.

“A lot of the concepts and ideas that came out of the class influenced the structure of the fund that I am working on now,” says Dave McClure, one of the class instructors and founder of 500 Startups, which invests in lean startups. “The class was the realisation that this stuff really works.” Nearly four years later, many of the students have learned that building a business is a lot harder than creating an app – even an app worthy of an A+.

“Starting a company is definitely more work,” says Edward Baker, who was De Lombaert’s partner in the class and later in business. The two have founded Friend.ly, a social networking startup.

Still, many students were richly rewarded. Some turned their homework into companies. A few have since sold those businesses to the likes of Zynga. Others joined hot startups like RockYou, a gaming site that at the time was among the most successful Facebook apps.

The Facebook Class changed De Lombaert’s life. His team’s app, Send Hotness, brought in more users and more money faster than any other in the class. And its success attracted the attention of venture capitalists.

“The class, more than anything, set the tone for us to try to start something big,” says Baker, 32, Friend.ly’s CEO. When the Send Hotness app began to take off, Baker encouraged De Lombaert to treat himself to a new car. De Lombaert settled for a laptop. (He also put some money aside to help to pay his Stanford tuition.) They eventually sold the app to a dating website.

The startling success of some of the class’s projects got Silicon Valley buzzing. The final session, held in an auditorium in December 2007, was attended by more than 500 people, including many investors.

“The Facebook platform was taking off, and there was this feeling of a gold rush,” said Mike Maples Jr., an investor who attended some of the classes and ended up backing one of the startups.

The Facebook Class was the brainchild of B.J. Fogg, who runs the Persuasive Technology Lab at Stanford. An energetic academic and an innovation guru, he focuses on how to harness technology and human psychology to influence people’s behavior.

Fogg thought that the Facebook platform would be a good way to test some of his theories. Creating a new model of entrepreneurship was far from his mind.  From the start, many students approached the class from a business angle. Baker, for instance, was a graduate business student but lacked technical skills, so he spent his first week interviewing engineers. “I wanted a technical co-founder,” he says.

He settled on De Lombaert, and the two, along with a third student, Alex Onsager, created Send Hotness. It let users send points to friends they considered “hot” and to compare “hotness” rankings. In five weeks, 5 million people signed up. When the team began placing ads on the app, the money poured in.

 “The students did an amazing job of getting stuff into the market very quickly,” says Michael Dearing, a consulting associate professor at the Institute of Design at Stanford, who now teaches a class based on similar, rapid prototyping ideas.

Dan Greenberg was sitting at the kitchen table one night when he and another teaching assistant decided to get into the app game. Greenberg, a graduate student who had done research for Fogg, hadn’t planned to get app-happy. But the students’ success whetted his appetite.

Four weeks into the quarter, he and his colleague, Rob Fan, set out to create an app that would let Facebook users send “hugs” to one another. It took them all of five hours. The app took off. So they moved on to apps for “kisses,” “pillow fights” and other digital interactions – 70 in all. Their apps caught on with millions of people and were soon bringing in nearly $100,000 a month in ads. After the class ended, the two started a company, 750 Industries, named after the 750 Pub at Stanford where Greenberg and Fan where drinking when they decided to become business partners.

But juggling the business and schoolwork was too much for Greenberg, then 22. His father advised him to pull a Mark Zuckerberg and drop out and Greenberg did just that. Now 25, he works out of a glass-walled corner office in San Francisco. He is CEO of his company, now called Sharethrough, which uses social media to distribute videos across the Web for companies. It employs 30 people and has raised about $6 million in venture capital. “It feels like a fairy tale when you look back on it,” he says of the class.

Johnny Hwin and his Stanford class team set out to build a ‘Love child’ app that would let two users create and raise a virtual child. It never took off. “We were overly ambitious,” Hwin says.

Seeing his classmates strike gold with simpler ideas proved to be a valuable lesson. In 2009, he began working on Damntheradio.com, a Facebook marketing tool that helped bands and musicians connect with fans online.

It opened in June and was acquired in January by FanBridge, where Hwin is now a vice president, for a few million dollars, he says. Hwin, who is 26 and also a musician, now lives in a loft space in the Mission neighborhood in San Francisco.

Another class member, Robert Cezar Matei, says he had only modest success with his projects. After graduating from Stanford, he wanted to earn some money to go traveling, but instead of getting a job, he decided to write Facebook apps.

After a few false starts, he created an app that let people send points and “kisses” to friends. It struggled until Matei, who speaks several languages, translated the app. The next day, traffic jumped fivefold. He added games, and employees, and the app became one of the most popular Facebook programs in Europe. In late 2009, he sold to Zynga for an undisclosed sum.

Also in the class was Joshua Reeves, who built an app that created animations that Facebook members would send to one another as birthday greetings or other messages. It made enough money for him to quit his job in 2008 to start Buzzeo, a content management system for Facebook. One recent afternoon at the headquarters of Friend.ly in Mountain View, Calif., 10 engineers worked away as two employees turned their attention to a companywide project: a 24,000-piece jigsaw puzzle.

Baker says the Facebook platform is a magnet for young developers, even though the kind of simple apps that were the focus of his Stanford class now face bigger hurdles. Facebook has made it harder to develop big-hit apps by controlling how apps spread virally.

But Fogg says that for those who were at the right place at the right time – in late 2007 – things were different. “There was a period of time when you could walk in and collect gold,” he says. “It was landscape that was ready to be harvested.”

The New York Times