IOUCentral – P2P Banking isn't always so simple?

iou_logo.jpgWell, that didn’t take long. IOUCentral appears to have been essentially shut down by regulators here in Canada and they have disabled their loan and application functionality and are now repaying any fulfilled loans. The startup, which we covered, launched just a few weeks ago.

We are not aware of the specific “regulatory matter” that seems to have shut down IOUCentral, and I won’t pretend to know enough about the banking industry to comment, but we did ask them about regulatory issues when we first interviewed them earlier this month. At the time they indicated that their legal agreements should have provided sufficient operating cover. It now appears that wasn’t the case.

In a recent Toronto Star article, IOUCentral competitor CommunityLend indicated that they were focusing on making sure that regulators were satisfied before their launch.

” . . .CommunityLend executives hint they will have an edge because of the time devoted to satisfying a host of regulators across Canada.

Marleau of IOU Central, however, is under the impression “there is no watchdog watching this business.” . . ”

This now puts IOUCentral back in the race with CommunityLend and PeerMint among others to become Canada’s first peer-to-peer lending operation.

We have asked IOUCentral for comment and will update this post with anything they have to say.

Your Facebook app is a disaster, and I was right.

In the middle of the Facebook App frenzy (was that a whole 4 months ago?!) I wrote “Delusions of Facebook” to try to dissuade as many startups as possible from going down that path. I hate to say it, but man — I was right.

The fact is, Facebook Applications simply have not become great businesses. The few who have made any revenue are also taking almost all of the available revenue, and it is the startups who focused on things like cross-application advertising that made the most.

Facebook Applications are an unmitigated disaster from any perspective

tdtrust1.pngThe most glaring example of this comes straight out of Toronto, the TD Canada Trust “Split the bill” application, which I have to admit seemed like a decent idea to me when I first heard about it. I mean, it seems like the perfect app for the Facebook demographic right? Apparently not. The application, which sports 6 Daily Active Users is a failure. If this were Uncov, I would be saying much meaner things.

“$plit It” is, in case you are wondering, beaten squarly by the the “Which millionaire should you sleep with?” application, which has 32 times the number of users and presumably has significantly less grand goals. There are examples of underperforming Facebook applications everywhere however, it isn’t just TD Bank that has struggled with the concept.

The last stand, unstood(tm)

One argument could be that Facebook Applications might attract fewer active users than a valuable Web Application, but they are more valuable users because Facebook let’s you leverage the “Social Graph” and the network effects of Facebook exposure. While I thought I debunked that idea in my last post, I still hear the argument sometimes.

Sadly, the numbers don’t seem to add up there either. The best example out there is the Causes Application.

Cause Users Donations
Cancer Research 3,005,750 $58,520
Stop Global Warming 1,681,907 $20,908
Animal Rights 1,232,162 $19,423
Against Child Abuse 927,120 $7,685
Save Darfur 800,674 $12,528

Read/Write Web recently broke down the numbers for the top-5 Causes applications (Causes lets anyone create and application to support a particular charity). As you can see, even with over 3million users (more than you will ever get signing up for your application by the way), the Causes application still only managed to raise $58,520. If I remember correctly, my elementary school was regularly raising similar amounts of money by selling things like chocolate bars and pens.

Junk Food for your Business Plan

Building Facebook Applications is not a business plan, unless you are a web developer who does freelance Facebook application development (now, there is a place you can make money on Facebook Applications). It is the McDonalds equivalent of a business plan. Quick, cheap, greasy and ultimately unfulfilling.

I am glad that the hype is dying down, but even as FacebookCamp Toronto continues to draw a crowd of easily over 400 (and was a lot of fun, I admit), I worry that there are some bright startup-ready developers out there who still have Delusions of Facebook. Snap out of it, and get on with business.

Moving On

It is time for you to take your bright ideas and to put your energy in to things that can give you a return on your investment. I think even Omar saw the light, as he and his team never did venture in to the Facebook Application line of business.

The web is the most powerful platform we have, and just because someone comes along and says “hey, we made it as easy as a Big Mac” doesn’t mean you need to give them all the upside. Focus on the value you are creating, find a market that wants your product and then start building.

Eat your vegetables, you will be rewarded greatly.

Novell acquires PlateSpin for $205M

Novel PlateSpin LogoPlateSpin, based in Toronto, has entered into a definitive agreement to be acquired by Novell for $205M. The company, which makes a suite of solutions for the server virtualization market, was founded (for the second time) in 2003. You see, PlateSpin is a restart.

PlateSpin1 was founded in 2000, raised $1.9M in 2002, and closed up shop in 2003. PlateSpin2 was restarted with new management in 2003, raised $3.5M from Toronto venture funds Covington Capital, Castle Hill Ventures, Skylon Capital, and Four Quarters, and another $7M in 2005 from Insight Venture Partners of New York.

Word is that PlateSpin2 had trailing revenue of $20M, and that Citrix, Microsoft, and Unisys were all vying for the prize. Congrats to PlateSpin and its backers on the Novell acquisition. We’re chalking this up as a win. While it doesn’t put PlateSpin on the road to VMware glory ($22B, P/S 16.84) it is a solid exit for all involved… especially the funds. I am guessing they cut a nice slice of pie as part of the restart.