Hi5's Alex St John

I was the founder of WildTangent. WildTangent is the number one US gaming network with 19 million users in the US. And it's number two in the world after Spill. So WildTangent's one of the most successful online publishers in the world with a micro-currency based economy. One of the things that was interesting about WildTangent was we came up with an advertising model where half of the micro-currency that we sold was to advertisers sponsoring it to make games free for clients. And that's a very successful model. I think you're going to see it sweep the social and online space like free, it works well.

Before that I used to work for Microsoft. I was responsible for designing DirectX gaming strategy for Windows. So all the 3D architecture for Windows was a British company I acquired called RenderMorphics and moved to the US to build the 3D platform that is in the Xbox now.

I'd been there for 12 years. The company was making lots of money. I'm an engineer and a technologist. I'm really entrepreneurial, I like building new things so I wanted to move on and do something new. They had a great management team and 12 years is a long time.

Well, it was moving in that direction. The funny thing about social media sites like Hi5, MySpace and Facebook is that they're kind of audience engines with no purpose. They're a little bit identity free – they're platforms for doing nothing. There's no productive purpose, people are just socialising with each other, they don't really have very good business models. Facebook, after many years of having a huge audience, just went profitable last year. So I think the social networks are always going to struggle. We're really good at churning up audience, but we don't know why or how to monetise this.

What's interesting about Facebook is that they went, "okay, we think our brilliant vision is to be a utility" and then Zynga came along and said "actually it's for games, but you guys just didn't figure that out", and now they're going, "oh games – yeah, we do some of that". That's kind of funny to watch.

I look at social networks and any time you see people spending a huge amount of time clicking and staring at the screen for no productive purpose, they're playing. They may not have realised they made a game, they may not have called it one, but they've got a game.

And when I came to Hi5 they had that same sort of Facebook condition of going "we've got this huge audience so we're good at something, and we know entertainment is really popular but we're really not gaming guys". The thing that was neat about coming into Hi5 was that they realised gaming was the dominant use for social mediums so let's become a gaming company. And since we're not gaming people, we're social media people, let's bring some of those in.

So I was hired and brought in as president and CTO responsible for product and I immediately acquired Texas company Big Six, which had a number of mobile and online game industry veteran executives to help run the site, plus we bought the online commerce platform that these guys had built for hosting online games - they made $9 billion in micro-currency transactions between 2000-2007. 35 million paying subscribers. All of those guys are relocating out here as we speak.

The thing that's really nice about the social media sites is, in the downloadable game space you had a lot of technology barriers – downloading client games, security barriers, that kind of stuff. With social media games it all takes place in the browser, there's none of the download, distribution barriers, and that makes everything a lot faster and a lot more fluid, so I really enjoy working in that environment with such speed and flexibility.

It's funny watching Facebook grapple with their identity – it's nice that at Hi5 we have a pretty clear idea of what we're going to become.

Of course – people like to decorate and customise. And weirdly, Facebook tries to automate that with text and bitmaps, and that puts a lot of constraints on users. You really can't choose your background on Facebook or choose your look with any strength.

The interesting thing is that, again, these companies didn't evolve thinking about themselves as an entertainment platform so those were just neat little features that the developers left open and which were used, but there's not any real structure around it. And as a consequence, they didn't say, "hey we're going to provide a systematic, design-your-page" or design a business model that monetised that behaviour effectively. What they kind of did was say, "whoa, do whatever you like" and they did and the pages are a mess, covered with crap in many cases, and then no way of monetising that and it costs too much to host.

Social media emerged unexpectedly, they didn't know exactly what they were making or why and so I think if a later generation of people, like myself, come in and say "I know how to make entertainment products that work and you just have to see it through that lens", and if you do that then a lot of the things you're successful at accidentally, you can give meaning and a sense of order that people really appreciate and enjoy, you'll strike that balance of commerce and customisation. People put porn up or make the page so obnoxious it's like a trojan horse to the people using it – that kind of thing needs addressing.

It's interesting, in many ways MySpace's accident around customisation is synonymous to Facebook's accident around gaming. In both cases, the same thing users just took off and ran with created a real detrimental experience to the rest of the users of the site.

It's the same thing Facebook's grappling with. Zynga took off and suddenly their users are being spammed with game invitations and Facebook's going, "whoa, that's huge and, oh my god our customers are complaining, what do we do?"

Hi5 is in very good condition to say we've got a really good engineering team, we really want to focus on being a gaming entertainment property and we've done a good job of defining that experience that is clean and consistent to the users and monetisable. And I know from experience that when you do that well, you get two results. You make a lot of money and you get more users, because it's a better experience.