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October 21, 2012 11:00 pm GMT

Post-Facebook IPO: What VCs Are Looking For In The Next Great Social Network

www.softbank.com_newweb_team_joe-medved.phpEditors note: Joe Medved, a partner at SoftBank Capital, focuses on early-stage consumer and enterprise mobile, social marketing, gaming, and commerce investments. He serves on the boards of BestVendor, CrowdTwist, Jump Ramp Games and Thumb. SoftBank Capitals other investments include BuzzFeed, Buddy Media, The Huffington Post and Omgpop. You can follow Joe on Twitter @joevc or read his blog at www.joemedved.com. As recent doubts have been cast upon Facebook in response to its stock market dip, its interesting to take a step back and look at the company from a different perspective. Despite the precipitous fall of Facebooks stock price post-IPO, the company continues to grow at a rapid pace globally and sees high retention of new users, with over half of monthly active users coming back daily. In October 2012, Facebook announced hitting 1 billion monthly active users (MAUs), meaning 1 in every 7 people on the planet log into Facebook monthly. The companys leadership in engagement is also undeniable; the average user is spending over six hours on the site each month. However, as the world shifts from Web to mobile, there has been a lot of scrutiny as to how Facebook will monetize mobile users. Investors are now looking out for social companies that can build upon Facebooks success in engagement and growth, and learn from the companys weakness by driving monetizable behaviors on mobile devices. Data from AppData To maintain its dominance as the world embraces a mobile focus, Facebook spent a hefty price on adding Instagram to its wheelhouse. Since being acquired, Instagram has grown dramatically, shooting from 35 million registered users to over 100 million registered users in just 6 months. Instagram continues to show strong user numbers and mobile engagement, with 7.3 million daily actives and 257 minutes spent on the mobile app each month as of August 2012. Given the current social media landscape, investors have seen a number of social services with similar potential appear over the past several quarters. Many have demonstrated rapid growth but have lacked scalable long-term value, such as social video apps like Viddy, Socialcam and Cinemagram to name a few. As recently debated by Paul Graham, Fred Wilson, and Mark Suster, growth is tricky. Graham warns against running out of possible users so fast that the great growth suddenly stops, or falsifying growth by counting inactive users, bleeding out invites at a regularly increasing rate. Suster

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