June 13, 2012

Facebook will remain king, but social pure plays will fade


Facebook collage by Jennifer Daniel

Look for the rise of sites with deep social features

This is second of a three-part series on Facebook as an investment. Also see:
Facebook’s biggest barrier to enormous wealth? Trust
Brands: How to cut your exposure to Facebook business risk

Christopher RollysonFacebook will remain the dominant popular social network in many markets for many years, and it won’t have to worry about being “displaced” by another social network the way that it displaced MySpace. In the near term, this lack of competition will give the company some breathing room, but a more daunting threat awaits: the waning of social network pure plays’ influence by 2017. Nonetheless, the fate of pure plays should be top of mind for serious Facebook investors: to produce the fabulous returns that current investors expect, Facebook will have to move far beyond adverts.

In part one of this series, I argued that Facebook had a significant trust gap with users that would inhibit its ability to monetize its most unique and valuable assets, and that the trust gap was recently compounded by its “IPO irregularities.” Below I’ll take a different tack and analyze the investment prospects of Facebook the platform.

Social networks’ disappointing investment results

Pure play social networks (Friendster, MySpace, Facebook, LinkedIn) have not lived up to investors’ ROI aspirations, despite the fact that people (‘users”) have loved the networks and lavished mind-boggling amounts of time on them. The Web 1.0 logic behind investor expectations held that the more time people spent on the sites, the more ads they would see and the more they would click. #fail

In retrospect, it is understandable that pure plays’ management and investors didn’t appreciate social networks’ social context. It turns out that very few people understand the intricacies of “sociality,” much less how to wire it into a value proposition or a business ROI. Continue reading

July 30, 2009

Marc Andresseen on 17 layers of management

JD LasicaAt the Fortune Brainstorm:Tech conference in Pasadena, Calif., on July 22, 2009, one of the lighter moments came when Internet pioneer Marc Andreessen spoke on stage about “one of the defining experiences of my career” when he spent 9 months as an intern at IBM in 1990-91 when it had 400,000 employees. He used a program in the office that determined the number of layers of management between him and the CEO was 17, “from which I concluded that it was unlikely I would make a career at IBM. … It was essentially like working for the Soviet Union at the time.”

He had a great experience at IBM, but that serves as his internal reference for big companies. In this three-minute segment, recorded with a Flip Ultra HD recorder, he compares the culture of small and large companies and concludes, “Startups are where a lot of innovation happens. … But you have to get big to have a big impact. I’ve always thought an entrepreneur needs to think in terms of getting to a large size in scale in order to have a big impact.”

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March 1, 2009

Jumped on the bandwagon but who should steer?

Joanna LordSo you joined the craze. You finally converted to our side and find yourself evangelizing the very networks and applications you once doubted. You go back to your desk, ready to restructure your Q2 goals in hopes of successfully capitalizing on social media.

Enter panic. Who should you put in charge of your social media efforts? Do you need an entire team? Should you hire new people? What qualities should they possess? Suddenly you realize you are not only out of touch with social media itself you are also at a loss for how to appropriately manage the workload associated with it.

You are not alone. In fact you are the majority. Just like all new marketing trends before it, social media has brought with it confusion on how to delegate company resources and structure a successful team. You aren’t sure what qualities and skills are needed to manage social media. You aren’t sure if you should be shifting the priorities of your in-house marketers or if you should you be hiring interns. After you have a staff allocated you are left wondering how much company time you should be devoting. You are literally engulfed with questions, with no lifeline, no call-a-friend option, and (gasp!) no Google SERPs to scan for an answer.
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