Attention VCs - Please Read Before Funding Another Social Network
Here’s a bit of free (yet unsolicited) advice for VCs. And I’m not trying to be too presumptuous, pessimistic, or mean but if you are trying to fund a new social network - whether niche based or otherwise - I’d seriously reconsider.
As part of that target market and a web strategy consultant, I have the distinct advantage of both knowing who your users and competitors are. Yesterday, for example, I told several friends about the features of some other social networks. In our conversation, their conclusion was pretty simple - “I don’t care what the features are, if my friends aren’t on it, I won’t be.”
I know there is a lot of buzz around the idea of niche based social networks. But whether it’s based around a store, sports, or person, in many cases, it just won’t work - WalMart’s The Hub is only one example of that.
Is the behemoth MySpace generally slow, sometimes crude, and often painful to the eyes? Most definitely. But guess what, people don’t care - it’s a place for friends. It’s a place for their friends and that’s what matters most to them.
Now, perhaps you think that MySpace (or rather Fox Interactive Media) might buy out your technology. For starters, that’s a bad way to think about business. More importantly, MySpace has proven they’d rather squash competitors and adapt their ideas then play nice and/or purchase their technology.
So, don’t be convinced by the buzz words you read in a business plan about The Long Tail, The Wisdom of the Crowds, etc. I like those ideas and think they add a lot to the discussion - but they should not justify the investment of your money.
The preceding was a VCSA - a VC Service Announcement - courtesy of Ken Yarmosh.
August 18, 2006 at 12:39 pm
Too true. The other day, my niece asked what the difference between MySpace and Spaces are. She said she was on the same one as my daughter. Ah, MSN Spaces. They don’t even know which social network they are on. They only know that their friends are on it too. Further, she asked why they changed it to live.com and I said “Stupid peopel at Microsoft”. She asked “Why Microsoft?” She didn’t know the MS in MSN was Microsoft. Us techies are too smart for our own good. The world is a very simple place.
August 18, 2006 at 12:58 pm
Are you implying that upcoming social networks will never be able to dethrone the big boys? Or, are you simply stating that investing in a social network is just not a good idea for VC’s?
I believe that the market for niche social networks will continue to be in demand as long as the niche networks deliver services that are deeper than upload photos and talk to friends. Niche social networks have the advantage of (1) Most people you meet aren’t your physical friends and (2) If done properly, they create value related to that niche. So asking your friends to join a social network related to the alaskan snow crab is a waste of time if they’re not passionate about snow crabs. Niche social networks are about passion for the niche. The passionate will come.
Who’s passionate about Walmart?
August 21, 2006 at 10:06 am
Actually, a lot of people are passionate about Walmart. I hear friends all the time say, “I just love Walmart.” They complain when there are no Walmarts around.
That aside, I’d say a little of both to your first point. (1) No, I don’t think that upcoming social networks will be able to dethrone the big boys (I don’t see MySpace as Friendster 2.0). (2) It’s not a good idea for VC’s to invest in social networks.
You don’t need a niche based social network to do what you’ve described. That can be done with tools and features of the larger ones. And that’s the same reason why the “smart” social networks I’ve previously written about will likely simply be assumed into the ‘big boys’.