The Coming Bubblet
I was part of a panel discussion sponsored by MIT/Stanford Venture Laboratory last night on social networking. I was joined by social networking CEOs Jonathan Abrams, Ross Mayfield and Reid Hoffman and enjoyed being the sceptic on the panel: viral growth is good but it's not a revenue model.
Tony Perkins, who moderated the panel discussion, made public the not too secret rumor that Friendster is taking an investment from Benchmark and Kleiner Perkins. Jonathan did everything he could to not confirm it.
More broadly, the event was very well attended by the venture community. Tony commented on that during the panel and put me on the spot about whether social networking is going to be the hot new space for venture investment. Seeing the excitement in the space -- this event was way oversold and standing room only -- it's hard to believe it won't be. I think enough lessons were learned in the 90's that this is not going to start Dotcom Gold Rush 2.0. But I did predict a coming "bubblet" in the space. There are a lot of companies developing social networking technologies and services and over the next six months will likely be a rush of VCs investing in them.
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Fun and interesting evening at the VLAB event that begged the question: Social Networking: Is there a business model? I think we answered this question. Duh, yes. Actually, the attention swung to the other side: Social Networking: Is there a Read More
Over on VentureBlog, Andrew Anker predicts a Bubblet (nice word) in the space of Social Networking.... Read More
Actually, there was a another person on the panel, sitting in the middle. Me. -- Cynthia Typaldos
> I did predict a coming "bubblet" in the space
Well, I guess I should have attended this since I just don't get it.
What's the revenue model? You telling me that people are just going to open up their roladexes for strangers? Yeah, right. Companies can't even get their own sales people to collectively share their contact information of their customers - and that's because that's the main value a lot of people have at their companies, and they are not just going to open it up for the general population.
On the non-biz side, maybe 13 year olds will be happy to do this, but I don't exactly see building a business empire on it.
If there is anything to it, I imagine some groups at Yahoo and Google are already working on this, so I don't see any return out there funding start-ups.
VCs wasting even more GP money...
Unfortunately business models were almost completely ignored. Abrams literally said: "I don't think is an appropriate venue to discuss that" - when asked what HIS business model is....
If not at a panel on business models, then where?
Meanwhile - certain VCs on the panel reduced it all to - "cost of acquisition, how much can you make off of exploiting those people."
Now I hate to sound like a hippie, but THIS time around you all (and I mean the investment community) are gonna have to realize that maybe, just maybe us "users' out here have other issues on our minds - besides lining the pockets of companies who provide us software.
Just maybe it's about people to people, it's about helping, it's about US not YOU. If along the way, somebody can make a few bucks - great - but to call social networking "just technology" as Abrams did - is to display a complete mis-understanding of what's going on.
That's why it will remain so elusive to so many VCs. Ever wonder why Plaxo is NOT taking off? 'Cause they haven't disclosed how they intend on making money off thsoe names. At least Spoke is more honest.
Yes, people are definitely not going to open up their Rolodexes to strangers. Also, peope don't want any email from strangers.
At least for professional applications, the systems that survive will be referral-based, so that you never hear from strangers and so that you can decide on a case-by-case basis which requests to pass on to your connections. I only like to pass on win-win requests.
Also, I find that personal requests are a lot more likely to receive my endorsement since I'm only connected to people whom I'm happy to recommend to other friends. However, if someone sells some kind of product, it is really about the product and not about them. Since I don't know the product and I don't know who needs a product, those requests have a low probability of making it through.
I was an original member of The WELL when that was _the_ place to meet. Our reasons for belonging (and paying for the privilege) were multiple: social, business, political, etc.
What made The WELL attractive, besides this holism, was the ease with which new participants could integrate with the existing community. The WELL in its heyday was vastly preferable to the quiet, alienating Web with its foolish chat rooms and instrumental forums.
Today, I am a member of at least five of these "social space" systems, ranging from the social to business to the political -- all disconnected. None compels me to go through the complex, time-consuming, privacy-invading motions necessary to register my account, signal my presence, and detect and contact others of interest.
In the rush of first romance, hoping I might have found another WELL, I invited some close friends and colleagues to join one or another of these systems. I'm sorry I did. They had no better time with these systems than I did and let me know it, in no uncertain terms.
The WELL's business model was no paragon, but it managed to survive for at least five years as an exciting destination offering discovery, access to experts, and camaraderie. (It lives on as a Salon subsidiary, though with less vigor.)
Until another similarly complete social system is organized -- probably for a fee, once enough Internet users tire of the prevailing anomie -- I probably will spend my time surfing the web, using my email, and hoping that a bigger vision will once again assume centerstage.