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Posted Sep 01, 2009

WSJ: Facebook’s Rev Program Gives Start-Ups Deeper Connections

WSJ Article

By Tomio Geron

For the 20 start-ups that participated in Facebook’s just-ended summer incubator program, called “Rev,” the benefits are obvious – learn the tricks of the trade from the brains behind the Web’s largest social network and get advice from top Silicon Valley entrepreneurs and investors.

There are already a number of tech incubator programs that have sprouted up in recent years, such as Y Combinator, based in Silicon Valley and recently backed by Sequoia Capital, and Colorado-based TechStars.

But the Rev program, which is funded by Accel Partners and Founders Fund, has emphasized Facebook’s own method of quickly launching a product and rapidly making changes in response to user behavior. Rev also offers a structured program that includes conversations with several top Silicon Valley executives per week.

The incubator program, headed by Dave McClure, a venture capitalist at Founders Fund, is part of the $10 million fbFund, which has previously held two rounds of funding. Previously, fbFund awarded grants and did not provide a program for the entrepreneurs. This year the company decided to go the way of others such as Y Combinator, by taking an equity stake in participating companies in exchange for an average of $25,000 and by holding an on-site program.

“What we thought we’d do this summer was turn it into a social incubator program,” said Dave Morin, senior platform manager at Facebook. “We saw the success of Y Combinator and TechStars and we really were inspired by what happened in those types of communities. The best way to do something like this is to turn it into a community, not just a fund for handing out grants.”

The 20 start-ups - 18 companies and 2 non-profits - were set up in the downtown Palo Alto, Calif., offices where Facebook was based before it recently moved. The companies have been able to work closely together in one shared space, which is a major plus, Morin said.

For Nisan Gabbay, co-founder of Rondavu Inc., doing business as Sociable, and others, the opportunity to work with top venture capitalists and investors was important, and especially helpful was the opportunity to work directly with top executives at Facebook.

One of Gabbay’s advisors during the program was Josh Elman, platform program manager at Facebook, which was helpful since Gabbay’s company is integrated tightly with Facebook Platform.

“You’re building relationships with top class VCs, and you’re getting deeper connections with the people at Facebook,” said Gabbay, who previously worked at Sierra Ventures. “A lot of these companies in fbFund are building a big portion of their business off Facebook Platform or Facebook Connect.”

Sociable provides large companies with integrations into social networking services such as Facebook, Twitter and the like so that users can see what their friends bought on a site and share information about a site with friends. The company’s clients include ticket Web sites Live Nation Worldwide Inc. and RazorGator Inc.

The Facebook summer program was also attractive for Ed Spiegel, co-founder of Rent Mine Online Inc., because of the important place that Facebook and social networking hold in his company’s business.

“Y Combinator has a bunch of great, different ideas. What’s really interesting with (Facebook’s program) is the commonality here. Everybody somehow is related to Facebook,” Spiegel said. “The common link is Facebook and the social graph as a determining factor in the business.”

Rent Mine Online was founded about two years ago and changed its business from an “eBay for rentals” service into one in which people renting apartments could receive referral fees for getting their friends to rent an apartment in the same complex. The method people use to send out the information: Facebook, Twitter or other social media services. The company charges property owners or managers to use the service.

For one company, Nutshell Mail Inc., the acceptance into the program was an important factor in the company receiving about $600,000 in seed funding from Zelkova Ventures and the Houston Angel Network. The funding was closed after the company was accepted into the program.

“It definitely was a factor for our investors,” said Mark Schmulen, co-founder of Nutshell Mail. “It definitely brought them over the fence. They knew we would come out here and that would significantly increase the chances of our success.”

Schmulen formed Nutshell Mail after having trouble getting access to Web sites such as Facebook, MySpace, Twitter and Gmail while working at JP Morgan. The service sends email to people with all their friend activity, messages and other updates from these sites, while also allowing people to do things like email a response to Nutshell Mail that will then be posted on another person’s Facebook Wall.

The connections the Houston-based company made this summer – at what Schmulen called “very much like a start-up MBA or start-up bootcamp” - will also help as he plans to open an office in the Bay Area soon.

Today, graduation day at the Rev program, the start-ups are making five to seven-minute pitches about their company

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