Tuesday, October 5, 2010

Can We Use Yet Another Social Network? Yes, Because Context Matters

One thing I've learned while working in startup venture is to ask the right question. It is because question reveals one's assumption about parameters as well as perspective. Asking wrong question will inevitably lead you to incorrect answers.

Is There Room For More Social Networks?
I Think So
Hence I paused a few minutes before asking the question to myself. Can we use yet another social network?

Question is not whether we need yet another social network, or we want another one. But instead it's asking whether we could make use of another one. Are we at saturation point where people will not have time or interest to use yet another social network?

It turns out that I wasn't the first one to ask this question. As early as 2007, people were talking about social network fatigue. Now that we look back at 2007, it surely was premature. Since 2007, Vevo, Groupon, foursquare and strings of notable social networks have launched and gained popularity to sustain themselves through their own niche market.

But now that we are in second half of 2010, at the cusp of new decade, are we there? Are we closer to that social network saturation point?

My read is that we are not anywhere close. We will not only see more social networks starting up, there will be more fragmentation in social network market to come. Furthermore, there will still be successful social networking sites that are yet to launch in next decade. Here's why:

1. Context Matters

I agree with Jeff Wiener on this point. Context does matter. We don't put our home address on our business card, and we certainly don't share our kids birthday photos with newly established business contact. Befriending someone on Facebook and following someone in Apple Ping have two different context. People have many social roles they play, and based on context we connect with people for different reason.

In fact we are seeing just that from Groupon and Opentable. The reason why Opentable is successfully taking a bite out of Groupon's restaurant recommendation is because Opentable is all about connecting people who are interested in eating out.

2. Brand Image Is Not Easily Malleable

It's very difficult to extend brand image to apply even the similar tool to different purpose. Remember the lesson of Oldsmobile rebranding failure, "not your father's Oldsmobile". Oldsmobile was trying to rebrand their image to young and hip while holding on to the baby boomers buyers. Same car, but different image, and with this rebranding campaign, Oldsmobile was able to hasten their own demise by losing their most loyal customer base as well as failed to appeal to new audience because of lack of design change.

People still think of Xerox as copier company. It will be near impossible for one social network site -- yes, that would be Facebook -- to dominate all aspects of information sharing.

VC Shifting Back to Seed:
From Small Business Trends
3. VC Shifts Back To Seed Startups With Social Focus

VC firms are shifting back to seeding startups at early stage. Reid Hoffman in his interview with TechCrunch has echoed this trend, and announced that he has set $20 million funds to go after early stage startups. By the way, he also thinks that there is room for other social networking media.

Reid is not alone. Ron Conway's recently leaked Tech Megatrends slide on TechCrunch also confirms that VC is looking for "social" in their funding equation.

4. Explosion of Devices, Data Sources

Last, but not the least, is the explosion of mobile devices. But that's not all. There will be many more devices than mobile. TV and automobiles will start the next wave of smart device surge. This means one thing. More devices that can be connected with social media, and more sources of information that can be shared with users. Traditional means of sharing information will not be able to scale to support all these new data sources.

There you have it. I think that we are still long way from seeing mature market pattern and consolidation. So make room for new killer social network apps on your smartphone screen. I promise they won't be all disappointing.

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