By Zachary A. Goldfarb
Monday, August 4, 2008

Tech Post, which looks at people and ideas driving the local technology industry, runs Friday on the WashBiz Blog, athttp://washingtonpost.com/washbizblog.

Lawrence Lee, a former employee of McLean business software firm MicroStrategy, packed up his bags earlier this year and moved to Silicon Valley. He wanted to see whether he could make money building applications for Facebook.

His first app was called MyGirls, an application for women. "What we do with this one is basically allow people to show who their best girlfriends are. It allows them to send hugs and write on each other's wall to communicate with each other," said the 24-year-old Carnegie Mellon computer science graduate.

Around that application and dozens of others that he and his roommate have created, Lee features advertising that has, on good days, generated $1,000 in revenue.

That's in part because he has partnered with SocialCash, a District company that has launched an ad network for all the slight, entertaining applications developers have built. Some apps with seemingly basic utility -- sending a virtual gift to a friend, for example -- can go unexpectedly viral.

SocialCash wants to be there to help developers turn some of the hundreds of thousands of users into profit, and share in some of the proceeds as well. "It used to take years to get the traffic you can now get overnight," said Rob Jewell, chief executive of Gratis Internet, which owns SocialCash.

SocialCash has two products. The first is the advertising network, called BannerCash. Developers put a slice of code into their applications, which serves ads to users of the app, and the revenue is split between SocialCash and the developer.

Another product called PointCash enables people to pay real dollars or sign up for services to get virtual goods -- whether it's poker chips or a fancy virtual card to send to a friend.

A big risk is that Facebook could pioneer its own program to allow developers to tap into its advertising network, with its enormous scale and advanced technology. SocialCash claims to be unconcerned.

"Just having a lot of money and a lot of power doesn't make you successful. . . . It takes a small upstart to understand the developer and be innovative," said Don Charlton, Gratis Internet president. Charlton was the co-founder of local telecom company InPhonic and joined Gratis to help navigate the company though its next phase.

Charlton is now looking for investors to help grow the company faster. "We see this as such a huge opportunity that if we continue to invest at the pace we're are, we'll be successful, but we think we can even accelerate that," he said.

The firm runs ads on about 1,000 applications, including HonestyBox, which allows people to post frank messages on the profile pages of others, and Visual Bookshelf, an online book recommendation service.

The ads could move to other social networks, including MySpace and Bebo.

Jewell and a co-founder no longer affiliated with the company joined Gratis in 2000 after graduating from University of North Carolina at Chapel Hill. Gratis got started pioneering marketing programs, such as getting a free iPod in exchange for signing up for services.

The lead guy for SocialCash is Gordon Peters, a University of Virginia grad who has worked for Bain and an online marketing firm. He also spent a few years doing technology consulting for nonprofits in developing countries. The Gratis team has about 40 people.

The two guys can give off a bit of a frat-boy feeling, but in a slightly geeky way, and their own marketing strategies can verge on the goofy.

Their pitch sheet has the tagline: "SocialCash: It's Crazy Advertising Magic."

At a recent Facebook conference, the company had someone dress up as a gorilla and pass out materials to focus on its "gorilla marketing" expertise.

And SocialCash hands out a plastic card -- emphasizing that it will pay developers in debit cards if they want -- with contact information. The fake account number on the debit card: the first 16 digits of pi, the famous number from high school math.