This Is Facebook's Secret Weapon For Making A Lot More Money

mark zuckerberg facebook

Photo: By Justin Sullivan/Getty Images

While the world was focused on Facebook’s stock trading for the first time on public markets, the company quietly announced the acquisition of Karma, a social gift giving mobile application.Karma, with just 16 employees, appeared to be another one of Facebook’s talent grabs.

It is not.

Karma was Facebook’s second biggest acquisition, going for a reported $80 million. It will be Facebook’s attempt to tackle the potentially lucrative market of social commerce.

Karma imports Facebook data about your friends. It then suggests gifts for those friends based on Facebook postings. It’s still in the early stages, but the potential for this application is huge. This could be a truly social e-commerce experience, posing a threat to Amazon, which dominates online retail.

Considering that Facebook’s ad business has not exactly blown the doors off, it’s smart to find new streams of revenue.

Karma is just starting, but it has a lot of promise. We’ve played with the app for a little bit and we were impressed. We think you will be too.

We've got an iPhone, so we looked for the app in the App Store

Once the app is installed, we launch it

Karma gives us a preview/explainer of what the app is all about

This is the nice packaging Karma uses, apparently

Enough of the intro! Let's fire this puppy up. First, we must connect to Facebook

We have to allow Karma to access our address book...

... and connect through Facebook

Once that's done, we're dumped into app again

You can flip through the app to see gifts you can give. These are REAL, physical gifts, not virtual goods

In the geek section, you can get a subscription to Netflix

Or a subscription to Spotify

Or even these big Mario Brothers stickers!

Maybe you want to buy a friend a tee-shirt?

Who gets a gift? Who has a birthday coming up? Karma, via Facebook, can tell us.

It's not just birthdays. When someone is promoted, or had a bad day, Karma suggests getting a present

We don't really feel like getting a present for those people. Instead, let's get something for Steve Kovach!

Some organic fruit? Nah...

An IOU? Why yes! It's right in our price range.

But which IOU? What do we owe this guy?

There we go. A Bear Hug. We owe him one.

After clicking on Bear Hug, we get a description

Next, we select a card to send to Steve that matches the present. This one isn't right.

Along the bottom, you can choose different categories of cards

This seems like a great card.

We can change the message inside the card.

BEAR HUGZZZZ!

The next step asks us to fill in Steve's email and phone number

We then send him the gift...

Our phone's text message app opens so we can send Steve a message

Once its set, we're done...

When Steve gets the message, we get a text from Karma that hes' reading it.

On Steve's end, here's what it looks like to get a present via the web...

Here is his IOU...

We get a text message from Steve to say thank you...

We open the message ...

And we see a thank you card! How sweet.

That's Karma!

Karma has to increase its catalogue, and ramp up its users, but there is real potential to crack social commerce.

If Facebook can make this work, it could have another big stream of revenue.

That's Facebook's future... here is its past

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