SchoolFeed helps users find out whatever happened to their freshman crush, of course — as well as plan reunions, scan their yearbooks and play games together. It also uses a lot of the standard viral persuasion techniques from Facebook social gaming apps, like rewarding users with virtual coins and gifts, and constantly urging them to add and share with their friends.

Instead of mining school directories, the company reverse-engineers high school class lists by getting its users to contribute their Facebook data. In my experience, the app seems to automatically include all your Facebook friends, regardless of what high school they say they went to.

Former RockYou CEO Lance Tokuda founded schoolFeed last year and is conducting a sort of RockYou class reunion of his own, having recruited former RockYou employees and RockYou investors like First Round Capital, SK Telecom and Nicolas El Baze of Partech. (Crosslink Capital and InterWest invested, as well.)

SchoolFeed really does look and feel like a cross between Classmates.com and a Zynga-style game. Tokuda pointed out that Classmates still makes significant revenue in the age of Facebook. But where Classmates charges its users, schoolFeed plans to monetize through ads and virtual goods. Its first in-app game is Bingo.

Speaking of Bingo, Tokuda told us he’s hoping to attract a relatively older audience with SchoolFeed. That’s in part because Facebook itself already serves as a sort of living yearbook for many younger people.

“We’re targeting people age 36 and older, who graduated before the Internet was born,” Tokuda said.

Last week, PopCap accepted Electronic Arts’ bid of $1.3 billion, including earn-outs, and opted to turn down a smaller — but all-cash — $1 billion offer from Zynga.

With that kind of dough raining down on the games industry, it’s obvious that more blockbuster purchases will ensue.

If that’s the case, the question is who will be next?

First, it’s important to understand why there’s a sense of urgency. Right now, nontraditional digital gaming platforms, like mobile and social, are really starting to take off, and game publishers need new content and expertise to be a player on those platforms.

“The general conversations have increased,” said Kushal Saha, the managing director of the Information Technology practice at Cascadia Capital, a Seattle-based investment bank. “We are seeing a lot more activity in financings as well. When you have a $1.3 billion acquisition, that really creates a lot of tailwinds from investors and strategics.”

Tim Chang, a partner at Norwest Venture Partners, has a theory as to who will be the most active in the next wave of acquisitions: It will be companies from China and Japan that are trying to get a foothold in the lucrative U.S. games market.

Here are just some of the recent transactions: Tencent, the giant Chinese Web holding company, bought Los Angeles-based Riot Games for about $400 million; OpenFeint was purchased by Japan-based Gree for $100 million in April; and Japan-based DeNA bought San Francisco-based ngmoco for $400 million late last year.

Specifically, he says these companies will be looking to buy game studios, which can create content for new platforms.

Ngmoco is building a mobile social network, and while it develops some games in-house, DeNA will need much more content to be successful. Same goes for Gree, which purchased OpenFeint, a mobile social platform that has 100 million players signed up.

Gree’s Senior Product Manager Jori Pearsall said that Gree is trying hard to get up and running in the U.S., where they have hired about 40 employees who are independent from OpenFeint.

Pearsall says its first game is expected to launch soon on the OpenFeint mobile social network.

In other words, first comes distribution. Next up: content.

One example of this already taking place is the merger between 6waves and Lolapps, which was announced earlier this week. San Francisco-based Lolapps is making social games for Facebook, while Hong Kong-based 6waves has been more focused on building a publishing platform.

Together, the two will have a publishing platform with its own games.

One of the companies that is being considered an obvious acquisition target is Glu Mobile, which is making social games for smartphones and tablets. Since the PopCap acquisition was announced, Glu’s stock has been trading close to $6 a share, up from $5.20 early last week. It is now trading at $5.64.

Are people sniffing around Glu?

“Nothing is off the table. We’ll do what’s best for the shareholders. We have a vision and a strategy and we are executing on the goal of transitioning to one of the top three feature phone companies to our goal of being one of the top freemium tablet and smartphone games company,” said Michael Breslin, Glu’s VP of marketing.

Other potential acquirers are in the U.S., ranging from content companies like Time Warner and Disney to other game makers like Activision, THQ or Ubisoft. Zynga has been acquiring more than one company every month for nearly a year. Google could even be a candidate if it’s truly serious about its Google+ games network.

Other companies for sale that would have the content and the talent include any of the independent studios in the top 20 on Facebook or iOS, ranging from Crowdstar to RockYou, or even a virtual world like Linden Lab.

Photo Credit: Jason Pratt.

Despite the heads-up, a few slackers were still busily updating their games this week in time for today’s deadline.

Facebook Credits is a currency used to buy virtual goods inside many games on Facebook. Users can pay with a credit card, PayPal or by using their mobile phone.

Going forward, that means a player must purchase virtual goods with Credits, instead of paying for them directly using a credit card or other payment service, like PayPal. Once Credits have been purchased they can be used in any application on Facebook.

Many developers started implementing Credits more than a year ago, and by the time the announcement was made in January, many were already on board. At that time, Facebook said 350 applications, from 150 developers, were already using the payment system, representing more than 70 percent of virtual-goods transactions.

But this week, I talked to two companies — RockYou and RealNetwork’s GameHouse — that were scrambling to get their final implementations done in time. Other big players, such as Zynga, Playfish, CrowdStar, Digital Chocolate, Lolapps and PopCap, jumped on board early and have been up and running for a while.

Facebook said the primary purpose behind Credits was to make payment more straightforward for the consumer.

But it would be an oversight not to mention that the company is also generating big bucks from implementing the program, since Facebook takes a 30 percent cut of all sales. (See Liz Gannes’ interview with Dan Rose for the latest on the program.)

In fact, Facebook Credits is a lot like Apple’s iTunes, which keeps 30 percent of the revenues and shares 70 percent with application developers.

When first introduced, the program met a lot of criticism from game developers, but over time they’ve been pleasantly surprised at how easy Facebook Credits is to implement and how well it monetizes.

Take GameHouse, for example.

The Seattle-based game developer has some 15 games on the social network, and was working up until yesterday to get all of its games on board. Ian Fliflet, RealNetwork’s senior director of corporate strategy, said some of them weren’t worth the time to convert. So some games won’t be monetized going forward, but will be kept up to generate traffic.

He said in the case of the games that have already been updated, the conversion has definitely been worth it.

“We’ve seen an increase in the number of people paying, so it’s been net positive for us. There’s an advantage to players already having Facebook Credits in their account — the biggest hurdle is to get them to get their credit card out of their wallet,” he said.

In the case of UNO, since implementing credits, the number of people now paying to play the game has increased 10 times, which more than makes up for the 30 percent they are paying to Facebook.

RockYou, a Redwood City, Calif.-based developer of social games, switched over most of its games earlier this year, but waited until yesterday to transition Zoo World over to Credits, for several reasons.

Lisa Marino, RockYou’s CEO, said the company did not have enough developer time to get it done earlier, and it is reluctant to switch because the two-year-old game was monetizing well using PayPal. She said the game accounts for about a third of the company’s digital goods revenue.

In general, she’s found that if you have to completely retrofit a game to accept Credits, revenues will decrease. But when you have the opportunity to build a game from scratch with Credits built in, it does better than any other payment platforms.

As for cutting a check to Facebook, Marino calls the 30 percent “pretty standard.”

“If you are looking for eyeballs, then you have to be willing to pay the toll,” she said. “I don’t lose any sleep over it. It’s my operating environment and I optimize for it.”

Marino can also share her opinion as a gamer who spends $300 to $400 a month of her personal money on social games. ”I don’t have an issue with Credits … as long as I can do things quickly and conveniently, then I’m good.”

Photo Credit: BeingSelfEmployed.org.

The neXtup research (free with SharesPost registration) values LivingSocial at $3.6 billion to $4.1 billion, Facebook at $52.7 billion, Yelp at $561 million and RockYou at $264.7 million.

But one more caveat: Of those four companies, only Facebook has been actively traded on SharesPost since the beginning of this year, according to SecondPost’s record of transactions.

Please see the disclosure about Facebook in my ethics statement.

RockYou plans to keep Playdemic independent, but will help grow the company’s first social title, Gourmet Ranch. The game, like many others on Facebook, expect people to complete taska, in this case everything from growing organic crops to raising animals to preparing a meal for friends.

Terms of the deal were not disclosed, but presumably it tapped into some of the $130 million RockYou had raised in multiple rounds from Sequoia Capital and others. Back in March, when it raised a round of capital, the company was valued at an astounding $300 to $400 million.

Since then, the five-year-old company has refocused its energies on making social games to target a massive industry. Its Zoo World game has been installed 50 million times to date, and it claims more than 200 million monthly unique visitors and 15 billion monthly global impressions. Besides virtual goods, it also monetizes through an advertising network.

The new business represents a shift from its original focus on making widgets for Facebook, including one that allowed users to jazz up their walls by giving them options such as “Hug Her, Slap Him, Tickle Them.” Some of its older legacy apps are being shut down, a spokesman said.

Together, the two companies will have 170 employees. The Playdemic office will be tasked with creating games for the RockYou audience, and will mark RockYou’s first official physical presence in Europe.

The consolidation of companies within the social games space will likely only continue. Investors and traditional game makers are hungry to get a piece of the growing market. In July, Disney purchased Playdom for upward of $700 million, including earnouts, and in late 2009, Electronic Arts paired up with Playfish by paying $400 million. Zynga, which is the largest social games company on Facebook, has remained independent.

Thomas Korte

AngelPad is captained by the amiable and energetic former Google product evangelist Thomas Korte, who brought in many of the eight participating start-ups from his personal connections. They included somewhat typical tech start-up fare: A couple of Web curation tools (Curated.by and Snip.ly), a get-together planning app (RollCall) and a simpler interface for selling your stuff online (EggCartel). There was also a user-generated outdoors site (AllTrails) and an app that tracks the energy consumption of computers and other devices (Hug Energy).

Probably the most notable difference between AngelPad and other incubators is the level of high-profile experience most of its founders already have. At least half seemed to have worked on product and engineering at Google, and others come from established companies like Microsoft, Yelp, Playdom and RockYou.

(Also, is it just me, or does the name AngelPad scream for a reality show that would be sort of like “Real World” mashed with “Top Chef” about Silicon Valley start-ups?)

After the demos, I asked MoPub founder Jim Payne, who managed product for Google Maps Premier and AdMob metrics, what he and his co-founders thought the AngelPad differentiator is. He said, “As compared to Y Combinator?” I said, “First of all, as compared to doing this outside an incubator.”

Payne replied that he “wouldn’t and couldn’t” have started his company without an incubator, and that taking that route would be forcibly sitting yourself and your start-up “out in the weeds.”

MoPub is a mobile ad server, and will soon announce its first round of funding, said Payne. He and other AngelPad participants said they liked the small size of the program and the more free-form curriculum as compared to more established incubators.

Sean Plaice of Hug Energy at AngelPad's first Demo Day

Bill Tai of Charles River Ventures, who had been chatting with Payne when I walked up, bid him goodbye with the admonition to let Tai get in on the MoPub round. Tai told me that he thought MoPub and Adku were the most interesting of the AngelPad eight. Adku wants to help e-commerce sites optimize what products they are featuring using real-time data mining about what’s relevant to a visitor’s location and demographic.

Tai said he agreed that founders in the first AngelPad class do have more experience, particularly at large companies. But he added that’s not necessarily always an asset. “At Y Combinator there may be a higher probability of a breakout idea,” Tai said, “because less-experienced people don’t have context.”

RockYou CTO and co-founder Jia Shen said at a social game summit in Beijing Friday that the company, which plans to expand its presence in Asia, is “actively” looking at acquisition targets in China rather than more users because social games are less lucrative here than in other markets, mostly due to a lack of openness of Chinese social networking sites.

According to Shen, companies that operate social networking Web sites in China, including Tencent Holdings Ltd., have huge user numbers, but demand an average of 40 percent to 50 percent of revenue from the games distributed on their Web sites, or more than is standard in other markets. And though a higher rate of Chinese users pay to play the games, they spend much less, he said.

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Yet another Web 2.0 wunderkind got itself more shelter from the economic storm–widget maker RockYou announced today that it has nabbed a $17 million investment from two Asian firms, SoftBank Group and SK Telecom Ventures.

The investment will be added to $35 million from the Redwood City, Calif.-based start-up’s C round in June. Overall, RockYou has raised a total of $67 million from investors, including DCM, Lightspeed Venture Partners, Partech International and Sequoia Capital.

It is unclear if the company’s valuation is at the previous $400 million level or not.

In a video interview with BoomTown on Friday (see below), the company’s co-founders, CEO Lance Tokuda and CTO Jia Shen, said the money would be used to expand into the Asia-Pacific market, including onto Xiaonei, one of China’s largest social-networking sites.

As part of the investment, SoftBank–which has major Web investments all over Asia–and RockYou, the company said in a press release, “will also set up a new joint venture company that will develop widget and application products and services for use on PCs and mobile devices in the Asian market, in particular the Japanese, Korean, Russian, and Chinese markets.”

Well, that’s a horse of a different color, what with most Web 2.0 outfits pulling in their horns of late.

Indeed, RockYou said it would also use the money to open offices in New York, Los Angeles and Detroit and look at making some opportunistic acquisitions, as well as adding to its advertising sales force and developing more brand and vertical channels.

The company’s NYC sales office, previously a one-man shop, is expanding, adds MediaMemo’s Peter Kafka. It hired two people since August and still has one position open and plenty of applicants, says sales boss Paul van de Kamp.

Why all the frenetic activity from RockYou, which says it had over 100 million monthly uniques with over eight billion page views from its popular third-party applications like Super Wall?

Well, a few good reasons, such as: the need to keep up with its key competitor, Slide, which raised its own huge war chest; to find new audiences away from the two top social-networking site, Facebook and MySpace, from which it gets most of its traffic; to improve its products, in order to get better ad rates; and, most of all, to weather the current econalypse in the ad sector.

While RockYou’s execs believe the ad market for widgets and social networking is on the rise in comparison to other kinds of media, it will still be a glum outlook for everyone for a while.

Tokuda and Shen talk about that, as well as the investment, in the video here, and below that is a video I did a year ago with the pair:

Tomorrow, when it rolls out its new platform, one of the more interesting pieces of news from Facebook will be its initiative to dub certain of its third-party app developers more special than others.

According to sources, the social-networking site has selected just two, in fact, iLike and Causes, to receive “preferred” status.

Several sources said that this initiative has to do with developing in a way more in line with the goals of Facebook Founder and CEO Mark Zuckerberg.

Some issues Facebook has had since unleashing third-party applications on its platform last year have been related to the widgets producing too much spam, not having adequate privacy protection and simply being too buggy.

Included in the criteria for inclusion as a preferred partner is being “meaningful” and also not having been in violation of a wide range of Facebook policies in the past. Individual apps can be approved, even though others made by the same developer might not be.

Causes and iLike are the inaugural partners in the program, with others to follow.

Perhaps more interesting about this move is why two of Facebook’s major developers, Slide and RockYou, are not part of the preferred program.

The pair that have been are among Facebook’s most popular.

iLike is a hugely popular music discovery and sharing service (I will be posting a video of my visit to its Seattle offices tomorrow) and Causes is an app that allows users to share information about various charities and social initiatives.

Facebook declined to comment on the initiative.

But it surely will tomorrow. Facebook is in the midst of a major redesign of its service and will be mounting its second developers’ conference tomorrow in San Francisco.

Project Granola?

Apparently, that’s the jokey nickname that’s been given by some in the company to Microsoft’s (MSFT) new online strategy, in the wake of its failed efforts to acquire Yahoo (YHOO) that ended in a big heap of mess this past weekend.

Now, sources tell BoomTown, it is all about “organic”–hence the image of a healthy handful of granola (except for the fact that, in my experience, nobody really likes granola after eating it as much as they think will before).

In any case, it is a word Microsoft folks have been slipping into the conversations with BoomTown over the past few days, so much so that I have started to feel like I was talking to execs from Whole Foods.

Now Microsoft’s greenness has gone public.

Case in point: Brian Hall, Windows Live General Manager, who trotted out the organic word in front of Merrill Lynch analysts yesterday, as reported by CNET’s Ina Fried, saying: “We’ve withdrawn the offer and moved on, and now are focused on how we grow as fast as possible organically.”

But what does organic mean exactly?

Two things, it seems.

First, stepping up spending on marketing, technology and research to try to find ways to differentiate from Google (GOOG) and get into the No. 2 spot now held by Yahoo.

Of course, that plan has not worked out so well as yet for the software giant, with Microsoft spending billions of dollars with no profits and little gain in online search or ad market share, while its archrival Google keeps growing stronger.

Even so, while in Korea today, Microsoft Chairman Bill Gates backed Microsoft CEO Steve Ballmer’s do-it-yourself path and his move to walk away from Yahoo.

“The key decisions on that will be made by Microsoft CEO Steve Ballmer, who took a look at Yahoo and decided that, on our own, he likes the stuff that we’re doing,” said Gates.

Gates also added what amounts to the second option for Microsoft. “I wouldn’t rule out some partnerships, but we don’t have anything imminent there,” he said.

While a return to Yahoo is a possibility, in fact, buying up Web 2.0 stars is likely to be a bigger focus of the company.

“Yahoo can twist,” said one source. “Microsoft has lots and lots of other options.”

According to sources close to the company, for example, Microsoft’s bankers had been putting out subtle signals to Facebook to see if it would be open to a full buyout.

Microsoft already invested $240 million in the hot social-networking site, an investment that gave Facebook its kooky $15 billion valuation.

And its execs have long told Facebook execs they wouldn’t mind a bigger bite–um, like all of it.

“We just wanted to gauge their interest, more than any real effort,” said another source, who expects Facebook to stick to its longish path to an eventual IPO.

But, as is no secret, Microsoft has selections all over Silicon Valley to help it improve its Internet chances.

Those would include buying bigger vertical sites in strong categories like autos or jobs or finance, and also scooping up smaller but fast-growing socially oriented sites like Digg, Meebo, Yelp or focusing on ad plays like Spot Runner (which just got another big dollop of funding).

There might even be some sense in spinning some of these and all Microsoft Web units off into a separate Internet company, which would be another way of integrating even bigger deals for properties like Time Warner’s (TWX) AOL or News Corp.’s (NWS) MySpace (which are longer shots, I think).

In a post I did in February right after Yahoo rebuffed Microsoft for the first time, I suggested such a course for the company.

As I wrote:

Here’s a list: LinkedIn. Digg. Flixster. Slide or RockYou. Veoh. WordPress. Sphere. Sugar. Some international stuff. And more.

Then, some noted, Microsoft would have to give massive financial incentives to those entrepreneurs to stay and thrive. Most importantly, it would have to keep its Redmond hands from interfering.

Now that would send shivers up the spine of Larry and Sergey.”

And that, most of all, would be more like icing on the cake for Microsoft and be much more tasty than a bowl full of granola.

And, as Martha Stewart says: It’s a good thing.

Who’ll get Digg? (Odds-on favorite and sources tell me much sooner than later: Google.)

And who might make a bid for Slide, RockYou, LinkedIn, Meebo or imeem? (It might be smart for News Corp. [NWS] to double down in the social- networking space, if it can’t trade MySpace for a piece of Yahoo.)

And what about a plethora of really useful and interesting small start-ups all over Silicon Valley and elsewhere that are going to have to eventually find safe harbors when this Web 2.0 thing cools off, as it inevitably will. (AOL [TWX], Amazon [AMZN], eBay [EBAY] and, again, Google [GOOG], are natural choices.)

But not Microsoft (MSFT) or Yahoo (YHOO) if they persist in competing in this endless geek cage-match for too long.

Yesterday, more blustering bluster from Microsoft when it said, during its quarterly conference call, that it would not pay more to acquire Yahoo and might very well walk away from the deal.

My advice: Microsoft CEO Steve Ballmer should stop talking and start walking. If not, pay up and finish the deal.

And Yahoo’s CEO Jerry Yang should cooperate and stop its now-tiresome posturing (we get it, it’s worth more!).

Why?

Well, while the pair remained locked in mortal combat, a status that will continue if they actually do manage to unite and have to then conduct a doubtlessly slow-moving merger, their main rival Google and others are the likeliest to benefit every day this drags on.

Right after Microsoft made its unsolicited for Yahoo in February and it was quickly rebuffed, BoomTown suggested in a post that the software giant move on quickly and use its tens of billions to buy up the choicest and most innovative companies in the digital space.

What I wrote then bears repeating:

And what are the other options Microsoft might have that are actually better than scooping up Yahoo, especially to serve its Captain-Ahab obsession with harpooning the Great White Whale of Google?

If that is the actual goal, then many point out that a Yahoo win does not really frighten Google all that much, since the search giant has done just fine competing against both already.

In addition, many noted that a union of the pair, which would distract both Yahoo and Microsoft, might not be the magic bullet needed to fell Google from its high perch. And then what?

One idea I have heard, for example, was that Microsoft take its $44.6 billion in cash and stock it plans on spending on Yahoo and go on a shopping spree of the Web 2.0 companies all around Silicon Valley and all over.

And not just a few–lots and lots of them. And, more than one person suggested, it should start with Facebook, even at that wacky $15 billion valuation that Microsoft itself validated when it invested $240 million in the social-networking site recently.

“So what if it is only worth $10 billion or even less,” said one person. “They could lose a lot more on the risk of buying Yahoo.”

With the $30 billion left over, it could be like Christmas in July for the geeks and venture firms of Silicon Valley. But Microsoft could scoop up a lot of good stuff, even if prices are high.

Here’s a list: LinkedIn. Digg. Flixster. Slide or RockYou. Veoh. WordPress. Sphere. Sugar. Some international stuff. And more.

Then, some noted, Microsoft would have to give massive financial incentives to those entrepreneurs to stay and thrive. Most importantly, it would have to keep its Redmond hands from interfering.

Now that would send shivers up the spine of [Google's] Larry and Sergey.”

It still would. So maybe, as it has threatened yesterday, Microsoft should run and not walk.

Please see this disclosure related to me and Google.

Our quest was to find out what some savvy Web 2.0 types thought would–or should–happen next in the Microsoft (MSFT)-Yahoo (YHOO) takeover battle, following Yahoo’s earnings report yesterday.

Thus, we made the scene–at widgetmaker RockYou’s “Rockin’ Spring Mixer” at Bong Su and news site Digg’s get-together at Mighty–to get some advice on what’s going to happen next.

Frankly, BoomTown is running low on ideas and we got a good range of predictions to bolster our bare cupboard.

So here’s a good mix of interviews on the topic, with folks such as RockYou CEO Lance Tokuda, Broadband Mechanics’ Marc Canter, Digg Founder Kevin Rose (in the very, very dark and noisy club–sorry!–but you can hear him at least), Digg CEO Jay Adelson and others.

And, at the end of the video, using a dinosaur toy as a metaphor, Louie and Alex Swisher, who pretty much have the situation down cold.

Here’s the video:

RockYou, widget maker, is the latest example of a sane valuation heartbreaker, as it is undertaking efforts to secure an investment from mainstream financing firms that would value the company at between $300 million and $400 million.

First reported by Valleywag last night, the start-up, said one source, “is being squired around Wall Street” by investment behemoth Morgan Stanley (MS), in search of the same kind of deal its rival Slide got in January.

BoomTown broke the news of that deal, which nabbed Slide $50 million and a $550 million valuation with investments from blue-chip investors T. Rowe Price (TROW) and Fidelity.

Thus, RockYou’s motto: Anything Slide can do, we can do slightly smaller!

And, indeed, not to be SuperPoked by Slide CEO and Founder Max Levchin, sources said RockYou Co-Founders Jai Shen (also CTO) and Lance Tokuda (CEO) were quickly on the march for their own payday.

It is, in fact, a quest that a lot of Web 2.0 companies seem to be on, since the sector’s fearless leader–Facebook–got its $240 million and $15 billion valuation from Microsoft (MSFT) last year.

All of this frantic funding activity is, of course, this bubble’s version of going public–grab big cash investments from investment firms and hedge funds, desperate for a good bet on the sector, without the pain of public scrutiny of questionable business prospects that did in Web 1.0 shooting stars.

It’s that or get bought for an ungodly sum by equally desperate Web 1.0 companies (See: AOL+Bebo).

Sources close to RockYou, which has had acquisition feelers put out to it from larger companies in the past, said the company has had several strong offers of funding, but it is trying to select the right partners for the latest round of funding.

“We want our investors to be strategic and helpful to the company,” said one person close to RockYou.

RockYou has so far been funded by Sequoia Capital, Lightspeed Venture Partners and Partech International.

(Interestingly, Sequoia backs another instant messaging and chat widget maker, Meebo, which is reportedly seeking a $250 million valuation, which I posted about here yesterday).

To be fair, makers of highly distributed third-party apps like RockYou are garnering immense traffic and their widgets are syndicated everywhere. RockYou’s Super Wall, which lets you turbocharge your digital wall, for example, is one of the most popular on Facebook.

Other RockYou apps include: X Me, a communications tool that allows you to “Hug Her, Slap Him, Tickle Them!”; and Likeness, where you can “compare yourself with friends and movie stars like Angelina Jolie, Jessica Alba, Keira Knightley and many more.”

The company has been trying to monetize all this traffic and popularity and distribution, as well as knowledge of user behavior, by offering advertisers new forms of engagement.

But the jury is still out on these interesting but unproven efforts by all the social-networking players.

In any case, the money is apparently still flowing into these start-ups, taking a chance on them being the next big media play.

Here are two videos I made when I visited RockYou’s offices in San Mateo, Calif., last October, after I had called the widget market juvenile and faddish.

The first is my tour of the office, where I was playfully accosted by an infant–oops, a RockYou engineer–in a suit. The second is my interview with Shen and Tokuda.

It’s Bubble Time!

As BoomTown broke the news in its post earlier today, Slide grabbed a big pile of cash from new investors–$50 million from Fidelity and T. Rowe Price–which puts the value of the company at $550 million.

In our post, we said the San Francisco start-up, whose widgets are among the most popular on Facebook and MySpace, was completing a round of funding that could value it at many times a multiple of its most recent $60 million to $80 million valuation.

The investment from the pair of private equity funds gives them a 9% stake in the maker of widgets and other social-networking applications.

Allen & Co., the media-connected New York-based investment firm, helped Slide execs in raising the latest round.

Don’t think we did not notice that the venture investors already in Slide did not pony up more funds at this–let’s just say it, shall we?–crazy valuation.

But it is noticeable that such mainstream investors are jumping into the giant pool of Kool-Aid that the social-networking industry has been swimming in over the last year.

Slide’s last round–an investment of $20 million–took place in November of 2006 with investors that included Khosla Ventures, BlueRun Ventures, Founders Fund and the Mayfield Fund.

So Slide’s investors, of course, were smart to get in on the ground floor to take advantage of the bubble that is expanding at alarming rates.

The ground-zero of that trend came when Facebook got a $240 million investment from Microsoft that valued the company at $15 billion.

Of course, while garnering revenues, neither Facebook nor Slide has the kind of business yet to deserve being worth this lofty amount, except for the fact that investors are counting in its potential and recent quick growth.

Slide’s business plan includes making money from selling premium versions of its widgets, as well as selling advertisers on its large, although disparate, audience.

The company calls itself the “largest personal media network in the world, reaching more than 134 million unique global viewers each month and 30% of the U.S. Internet audience.”

But the company recently said reports had put that number at 144 million, excluding its 50 million users on Facebook. Its competitors include other widget-makers like RockYou.

Slide makes a wide range of software, called widgets, that have been attracting many millions of users each. They include everything from slide shows to a program called SuperPoke that allows a user to, well, poke another in a super way.

A lot of Slide’s current growth has been through taking advantage of the huge spike in users first at MySpace and now at Facebook, which is promising, but also not certain.

To say that we have seen this story of fast growth, insane valuations and then the inevitable drop-off would be an understatement.

But Slide Founder and CEO Max Levchin and his team consider the company to be a new kind of distributed content and application company that is not dependent on large platforms like Facebook and MySpace and has huge potential.

Minor blogging annoyance: Of course, in a fit of pique since we revealed the funding without their help, Slide hand-fed the details of the deal to the New York Times and BusinessWeek, both of which somehow forgot to link to our post that said Slide was landing the deal. (Brad, Sarah: Please, please don’t tell us you figured it all out on your own this morning over eggs.)

UPDATE: A New York Times deputy tech editor just wrote an email to tell me its reporter already had a “previously scheduled” meeting with Slide about the deal–like I said, hand-fed!–this morning, which “inspired” its post and did not know of BoomTown’s news of the funding (even though it was up since 12:06 a.m. and noticed by everyone else, including Slide). Also, they had the hand-fed details! They did! I admit it! I went hungry, since I did not agree to an embargo! “In light of this we didn’t feel that a link was warranted,” he wrote me.

But we’re not bizarrely ungenerous like that, so here is the link to the New York Times story, in which Slide’s Levchin said his company makes Facebook and MySpace worth using. (And here is the BusinessWeek link too.)

“It’s impossible for social networks focused on scaling the network itself to build all the niche applications that bring people and keep people on these sites,” Levchin said, noting Slide widgets “add the bulk of perceived value to the consumers of these Web platforms.”

He also said he would use the money to expand its repertoire, but said Slide would try to develop in-house.

But others close to Slide said this was not exactly so, and that the company would also look around for good acquisition targets, using stakes in the newly valued Slide as currency.

I am still collecting details, but Slide–the San Francisco start-up whose widgets are among the most popular on Facebook and MySpace–is completing a round of funding that could value it at many times a multiple of its most recent $60 million to $80 million valuation.

That would be a large leap from a round that Slide announced in November of 2006 with investors that included Khosla Ventures, BlueRun Ventures, Founders Fund and the Mayfield Fund. Sources said the investment then was $20 million.

Slide is reportedly using Allen & Co., the media-connected New York-based investment firm, to help them in raising the latest round.

The reason for getting more funding, said sources, is to be able to acquire other companies and expand, using cash and the stakes in the higher-valued company, much in the same way that Facebook has done.

The social-networking universe was recently shaken up, when Facebook got a $240 million investment from Microsoft that valued the company at $15 billion.

Slide makes a wide range of software, called widgets, that have been attracting many millions of users each. They include everything from slide shows to a program called SuperPoke that allows a user to, well, poke another in a super way.

The company calls itself the “largest personal media network in the world, reaching more than 134 million unique global viewers each month and 30% of the U.S. Internet audience.”

But the company recently said reports had put that number at 144 million, excluding its 50 million users on Facebook. Its competitors include other widget-makers like RockYou.

A lot of Slide’s current growth has been through taking advantage of the huge spike in users first at MySpace and now at Facebook.

But Slide and its founder Max Levchin, as well as its investors, have grander dreams than riding on the coattails of bigger players.

They consider the company to be a new kind of distributed content and application company that is not dependent on large platforms like Facebook and MySpace.

More to come about the funding, but here is a post of a visit I made to Slide in September of 2007 and also a video interview I did with Levchin:

In the interest of time-saving, we will group them all here in one easy list that you can clip and save.

DEALS AFOOT?:

Yes, there is always a lot of sniffing around out there, especially given that a lot of Web 2.0 companies are more likely to be acquired than go public.

Do look for smaller ad networks to be bought up in the wake of a spate of bigger sales of late–DoubleClick to Google, aQuantive to Microsoft, Right Media and BlueLithium to Yahoo).

Now, it looks like AOL might get into the game again, after presciently grabbing Advertising.com way back in 2004 for $435 million. The new target, in a deal that a source close to the company said is “80% there,” is Quigo–the content-targeting ad network. The price? About $300 million.

Less likely for action are some other names being bandied about.

WordPress (the blogging software and hosting company AllThingsD.com uses), for example, has some suitors and is contemplating a sale after some offers. But don’t bet on it.

And RockYou is not being bought by, say, Yahoo–at least not this week. While rumors of wild valuations for the No. 2 maker of widgets on Facebook (Slide usually outranks it) have been bandied about, it has not had any significant talks with anyone.

GOOGLE GETS FRIENDLY (EXCEPT TO FACEBOOK):

As we wrote in a post yesterday, contrary to rumors, the Google project (codenamed Maka-Maka, doubtlessly by that wacky pair, Graham Spencer and Joe Kraus, pictured here, formerly of JotSpot and Excite, who worked on it) was imminent. As in now. Right now. This instant.

Officially named OpenSocial, it is a way to create a social graph over the Web that is open to third-party apps friendly and, as I wrote, is indeed both a “real attempted assault on the Facebook platform or more of a way to widely spread the gospel of social networking (and, thus, an assault on the Facebook platform).”

While Google has signed a bunch of prominent partners, it has yet to grab the No. 2 social-networking site Facebook (unlikely) and the No. 1 MySpace (much more likely, but don’t hold your breath). But it’s definitely a put-up-or-shut-up dare by the search giant, especially given Facebook’s professed love of openness.

Who knows if it will catch on, given that it is clear it is all in the hands of the apps developer community. If not, it will surely be a big black eye for Google, if it can’t motivate widely beyond search.

FACEBOOK IS A BIG BOY NOW:

It looks like former Yahoo Mike Murphy–who heads ad sales at Facebook (and is pictured here)–is finally getting his ducks in order with a new ad offering to be called SocialAds next week at its big confab in NYC.

Unlike the competition’s contextual ad programs, this will be squarely aimed at people’s self-expressed interests and demographics.

And, of course, Microsoft will be Facebook’s partner in serving the ads, for now at least. Good lord, it has bought and paid for this date many times over, so a fine time must be had by all!

I can’t tell you how thrilled we are that Facebook (and that nice boy Mark Zuckerberg) is finally putting some meat on its skinny little business model to take advantage of its fast-growing popularity.

But let’s keep in mind that it remains to be seen how lucrative this kind of ad network is and how scalable it is across the Web (and not just on Facebook).

It will also be interesting to see if the offering is truly innovative and different than existing solutions–or if it just serves up some dumb and useless ad for blood supplies, because you happen to be playing Vampire a little too much.

(We’re teasing, Mark, but not very much at all.)

OH, YES, THAT GPHONE:

More open verbiage from Google, which will roll out a mobile-phone operating system of software and services for a new kind of open cellphone sometime in this millennium (are you as sick of the speculation about the Gphone as I am?).

Since we’re talked out, here’s a much better Wall Street Journal Online video on the subject:

BOVINE UPDATE

Yahoo’s holy cows? Still sacred and going strong!

Please see this disclosure related to me and Google.

So I recently ventured into the heart of the empire of toddler developers with a visit to the San Mateo, Calif., HQ of RockYou, the super-popular maker of third-party apps on hot social-networking sites like Facebook and MySpace.

I have been on a bit of a grumpy tear of late about the juvenile nature of these widgets, whose use has taken off explosively, as the sites they live on have grown.

I have felt that most of them have been a bit silly, useless and faddish, rather than long-lasting and relevant.

RockYou’s apps, for example, include: Super Wall, with 1.26 million active daily users on Facebook, which allows you to turbocharge your basic posting wall; X Me, a communications app with 706,000 Facebook users, which allows you to “Hug Her, Slap Him, Tickle Them!”; and Likeness, where you can “compare yourself with friends and movie stars like Angelina Jolie, Jessica Alba, Keira Knightley and many more,” which has 611,000 active Facebook users.

Like another widget maker, Slide (I did a post and video on Slide here, as well as a three-part interview with founder Max Levchin too), the start-up has big VC backing. In RockYou’s case, it is funded by Sequoia Capital, Lightspeed Venture Partners and Partech International.

Of course, there are the rumors of big-money buyouts and even IPOs for these developers.

I am not so sure this is a good thing, but I do also believe there is something important going on with companies like RockYou, which could become akin to the major software makers of the past era. If, of course, they grow up a bit first.

Here’s my video of a visit to their office (and here is an accompanying interview with its co-founders Lance Tokuda and Jia Shen), where one employee jokingly played dress-up just like an adult, sporting a suit and tie just for me.

Oh, those crazy kids!

When I paid a visit to the offices of RockYou in San Mateo, Calif., recently (see my other video of the office tour here), I interviewed its co-founders CTO Jia Shen and CEO Lance Tokuda.

Here’s my chat with the pair who helm one of the top developers of third-party applications for trendy social-networking sites like Facebook and MySpace.

I have been attacking such widgets of late for being too faddish and infantile, which we discuss here, as well the trends to come in the fast-moving space.

Onstage at the Web 2.0 Summit last week, after a widget-maker panel he was on slapped BoomTown around a bit, Tokuda offered to make a special app for AllThingsD.com. In this video, his suggestion involves Walt Mossberg and digital cameras being tossed in his direction.

I say: Bring it on!

Why? Apparently because inane is the goal! Well then, I guess: Mission accomplished!

At an appearance at the Web 2.0 Summit yesterday, a group on a panel called “Facebook as a Platform,” led by Dave McClure, talked about a lot of stuff.

But it seemed to get lively when the discussion turned to my comparison of the boom in third party apps on Facebook to the arrival in my home of a box of shiny plastic toys from China.

I was at home with my own actual 2-year-old playing a rousing game of hit-mama-with-the-foam-finger- and-crack-up-hysterically, when the group–which included Seth Goldstein of SocialMedia, Ali Partovi of iLike, Keith Rabois of Slide and Lance Tokuda of RockYou–declared me humorless.

All because I did not realize that these apps were meant to be silly and more fun than a barrel of monkeys.

Actually, I did know that and, by the way, monkeys are much more fun.

Here was my initial argument:

But, so far, as popular as those apps have become, what [Facebook founder Mark] Zuckerberg and the widget-makers have wrought is mostly silly, useless and time-wasting and the kazillion users of these widgets are pretty much just acting like little children.

“I never thought I would call the often frivolous AOL back in the day–very simply, a Neanderthal version of Facebook–a mature offering in comparison.

“While I will admit when I am not chewing nails that a lot of these apps are somewhat fun, I can’t help but ask myself that lyric from the old Peggy Lee classic: ‘Is that all there is?’

“And if that is all there is, can Facebook really build a viable and long-lasting business on what is essentially a bunch of games that will ultimately become wearying for users? Doesn’t it need more robust apps that actually are useful and relevant and make Facebook the service that Zuckerberg has often told me was a ‘utility’?

“While Facebook–with a cleaner and more strict look and a better navigation–is surely less goofy than rival MySpace for anyone over 12 years old, and its video, photo and email features are nice, the vast majority of its apps are still mostly as dumb as a box of hammers.”

“Kara’s argument is ridiculous,” said Slide’s Rabois, according to a report on Wired.com.

“Why do people watch movies and TV? Because they’re bored or looking for something to do to relieve stress in their lives. Apps are providing entertainment to users.”

Really, Keith? I had no idea, despite the fact that “Gilligan’s Island” was my favorite show for way too many years!

Seriously, I know what he is saying and I agree on the need for some fun on this tragic little spinning globe of ours, except:

1. I would be fine with silly widgets, if there were more serious ones too, well beyond Vampires and SuperPokes and even an app called Pop Ur Zit. All of these have the longevity of a gnat, designed to be faddish and quickly forgotten. And, if you are going to be fun, one might try a little harder to come up with some offerings that are a little less disposable.

In fact, on a recent visit I made to RockYou HQ (post coming Monday), its savvy tech lead noted that there was surely a limit to how much crap people wanted to throw at each other.

2. Entertainment, especially the idiotic kind, will not get you to massive sustained usage that characterizes a true paradigm shift that McClure claimed was happening.

For example, was it all the games that made the personal computer become a ubiquitous device? No, it was serious programs like VisiCalc and Lotus 1-2-3.

So where are those kind of apps for systems like Facebook, I wonder, as I noted in another post about what to do with a group of 2,500 techies I have gathered on the social-networking site. So far, we have a whole lot of nothing to offer them.

3. Another argument made on the panel was that the blogosphere used to be disdained as goofy only a few years ago and now it is a true media power.

Well, it was never disdained by me and, actually, there were a lot of substantive and important blogs even back then to balance out the fluffier ones. In fact, there were more.

4. As RockYou’s Tokuda said, referring to me: “I believe for her the apps are useless because she’s not a teenage girl.”

This is not a news flash, although I probably am one of the older diehard fans of “Hannah Montana.”

But it is not necessarily true that advertisers will flock to these widgets, just because the kids love it.

Because as much as advertisers want to reach a younger demographic, they also do not want to do it in an environment of frivolous engagement and I doubt there is much appeal to them when people are busy slapping each other digitally or cartoonifying their friends. In addition, advertisers want to reach people who will buy things and few are in that mindset when they are anonymously telling someone else the “honest” truth or being a Human Pet.

I could go on, but will stop there, so the Lollipop Guild can respond in crayon.

But here’s one offer I will take RockYou’s Tokuda up on: A promise he made onstage to build something just for me.

Just some guidance, Lance: No poking, slapping, tickling or zit-picking.

Call me old-fashioned, because I know you will anyway.