Union Square invests in a virtual virtual business

Fred Wilson announced today his “first investment in a company that has no website”. Hot on the heals of yesterday’s announcement that Flip is becoming a widget only social network Union Square invests in Zynga Game Network – which exists only as widgets inside social networks (Fred says they will probably get a website today, but the point is that the traffic and functionality will reside elsewhere).

Zynga is a games business that lives within social networks, largely Facebook, but also Bebo and others. There is the usual quality post on the Union Square blog explaining why they made the investment, which is worth a read if you are in this space.

One of the cool things about Zynga is that you can log in to your account on Bebo and play e.g. Texas Hold’em against your friends on Facebook. If they can get a lot of people playing games across networks then there will be liquidity (and value) in Zynga that is independent of the underlying traffic. The cross network play makes it harder for the competition (e.g. a competing Texas Hold’em game would need to be successful simultaneously in multiple networks) and also gives them negotiating power vis a vis their network host.

  • Jay

    So many businesses are capitalizing on the social networking craze that has been taking over. Businesses are investing in these technologies not only as products, but also utilizing them (ie. Linkedin) in building business relationships and networking. Social networking is actually listed as one of the top technology trends for businesses for 2009:http://www.itstrategists.com/social-networks.aspx