I wanted to talk to Maha Ibrahim because I kept running into Watercooler. Not a real watercooler, but the community-based fan and games network that's generating lots of buzz in social networking. Ibrahim is a general partner at Canaan Partners, a $3 billion venture capital fund that's one of Silicon Valley's oldest. Several people I knew were either using Watercooler products, pitching business to the Mountain View, Calif.-based company or studying its business model.
Ibrahim sits on the company's board because Canaan was the first venture investor in the company. Talking to VCs about their investments often will give you a very different version of the story that you hear from the CEOs of the bank-rolled companies. In this case, I had heard Ibrahim speak before and was impressed. Ibrahim's Web profile bills her as a "technology trend spotter with deep operational experience." All true.
DailyFinance: Tell me a bit about Watercooler. How does it work?
Maha Ibrahim: Watercooler has the largest sports- and fan-based communities on the social web. These communities can be anything from people addicted to Lost to hardcore fans of Cal [UC Berkeley] or Stanford football. These are communities that allow these rabid fans to interact in a convenient setting, where they can watch and discuss video, play trivia games, or, in some cases, watch full length episodes.
The main difference between what we have done and traditional fan communities is that everything is designed to work well in the social Web. For example, the sports communities are much easier to share with your existing social media friends on Facebook or wherever. And comment streams are easier to weave into your existing Facebook presence. It's very different than logging on to a stand-alone website.
How does Watercooler make money?
Watercooler started out making money by selling ads. But it has evolved to monetizing communities also with offers. Our March Madness bracket on Facebook grew to be the second-largest on Facebook by its second year. Our communities are not only tied to the topic and context, but also to the user's friends and others connected on Facebook. It's a powerful thing. So we are taking these large communities and offering them ways to interact easily, not only in activities around their passions, but also in activities with their friends.
We are launching in concert with some large media companies' fantasy sports leagues -- football, baseball, soccer, hockey. Watercooler is also moving into media-sponsored community development. For example, that can be casual online games developed around a TV property such as American Idol or Big Brother. And Watercooler just received a $5.5 million Series B investment with BetFair, the online betting company. That means Watercooler will be branching out into Europe and the rest of world and offering communities and fantasy league programs around cricket, English premier league soccer and other internationally popular sports leagues.
Canaan has another social media investment, right?
Yes, Zoosk, the largest social dating platform. It has 40 million members in 40 countries. Zoosk allows people in Facebook, Bebo, Hi5 or other social networks to date across social networks, for a subscription fee. You can also buy virtual goods for flirting. It's free to join. Zoosk is doing what the social Web is meant for. You are theoretically matched with friends of friends; you won't be matched or date anyone that is too far removed from your ring of friends.
Zoosk is also building a social graph which will have some predictive capabilities down the road with algorithms that can help singles match up with compatible people. You are talking about a social Web that is younger and dates more frequently. They are not doing it for marriage like the crowd on eHarmony. They range from just entering the dating market, to the early- to mid-30s cadre.
Facebook is one of your biggest partners. Yet it changes the rules of the game all the time. How do Watercooler and Zoosk deal with that?
I admire what Facebook has done for many reasons. Going forward, their ability to target their users from an advertising perspective is critical for them. They know it, and they are working on it. When they do come up with a solution to mine the data that they have and better target ads, it will be a huge win for them.
That said, what we've taken away is that Facebook is a private company and it's still an ever-changing platform. Over time, they will be more and more partner-friendly. But they may continue to make development changes to their platforms several times per year. All these companies are young and changing very quickly. So it's important to design your business model not to depend on any one company too much and to make sure your value can be delivered via multiple formats or platforms.
Most of Watercooler's communities are driven by user-generated content. What lessons has Watercooler learned about that?
These types of communities have accelerated because they are all about things that people are passionate about. These are the most dedicated, rabid fans who want a forum to interact with other dedicated, rabid fans. It's like when the Web started out in 1995 with these small groups of chihuahua owners who communicated back and forth on the bulletin boards.
We just have learned to encourage these types of fans, give them games, tools and things that make their passion even more accessible and interesting, and get out of the way. The most powerful user-generated content can create a strong affinity between users and site. They don't have to search for it. They bookmark it. They contribute to it and it quickly grows.
Alex Salkever is Senior Writer at AOL Daily Finance covering technology and greentech. Follow him on twitter @alexsalkever, read his articles, or email him at firstname.lastname@example.org.