Wednesday, January 16, 2008

Is Facebook useful? LinkedIN? Social Networks for everyday living

Since there's nothing really new about this Web 2.0 medium and how it has been defined by greater social interaction and many interesting developments in the past few years (Wikipedia, Digg, Flickr, ad infinitum...) the largest buzz in the past 18 months have been generated by social networking tools, notedly MySpace, LinkedIn, and then Facebook (in approximately that order). 

Now that Facebook has been in the national consciousness (in terms of sheer number of members, MySpace still has the most, followed by FB, and then LinkedIn as of late 2007), the question must be raised, "what on earth is Facebook actually good for?"  Same goes for LinkedIn and MySpace. 

A bit of history first: MySpace made a big hit in late 2005 and an article in BusinessWeek then cited that it was originally designed as a platform for helping promote interest in lesser known pop music artists through "fansites" and connecting fans. Interest in connecting in general quickly spread as people outside of the teen-early20something set started flocking to MySpace and connecting their pages with their friends' pages.   Meanwhile, the folks at LinkedIn built a similar tool start with their launch in 2003 that sought to connect people based on their professional interests and experiences - uploading resumes, linking industry professionals, helping with job searches and business opportunities. Again, people (with jobs) flocked to connect themselves with friends and business contacts.  Finally, Facebook was launched in 2004 and made available then only to people with a .edu email address. It was started in part as a web based extension of those "freshman facebook" photo albums that many colleges and universities put out.  Toss in some interactive messaging tools and you have you basic college network tool online.  In late 2006, Facebook announced that they were opening registration to any email address, basically opening the floodgates against their competitors.  Finally, in May 2007, they announced that they were opening the platform to allow developers to build applications that can "plug-in" to facebook and take advantage of the social capabilities.  Since then, membership has skyrocketed, but has it proved to be useful?

To date, there are more than 13,000 applications the most popular being FunWall and SuperWall by Slide and RockYou respectively, two early comers to the FB app game that basically took an existing app (Wall) and made some improvements.  There are about 3.7 million active daily users of SuperWall which represents about 6% of the total number of registered daily users in FB (60 million).   After these top two apps, there's a tremendous decline in number of users from iLike to HoldEm Poker to "Where I've Been."  The other thing that you note about these applications is that all they do is either send messages to your friends, play games, or provide information about yourself and your interests.  In about 8 months of open application development, not a single application that makes any business sense has reared it's ugly head. 

That's not to say that applications need to make business sense.  But take a look at what Google did with acquiring Writely and turned it into Docs and Spreadsheets; how they acquired Blogger, JotSpot, YouTube, GrandCentral, and so on.  I'm not saying that the strategy needs to  be to acquire technologies that benefit your business but it might be time for the FaceBook guys to consider that there's a place to put partnerships and capital and that might be in applications that would actually help your bottom line.  So far, Facebook is not a business tool, nor does it appear headed in that direction.  It will be interesting to see in the coming year how they do define their strategy to be in a space greater than just connecting friends otherwise, they risk becoming a more purely entertainment type tool like MySpace and the vast majority of their  users will remain under 25. 

The other interesting observation will be to see how Google's OpenSocial tools come into play.  I've long thought that Google has been on the right track - they're not trying to suck you into their platform or everything that you do and commit you to their standards. It's up to you to decide if their tools make (business) sense for you and to move forward with it.  They're compelling on their own right and not trying to lock you into their world.   If the Google tool is better than anything else out there (often it is) then you stick with it.  And it usually costs you nothing.  I see the same strategy going forward with OpenSocial.

On the other hand, what is LinkedIn doing?  At first blush, it is a compelling tool - network with people based on your social and professional interests.  Business people don't have time to waste flirting or "poking" on social networks.  It's get in, get out, business sense is the bottom line.  So I've been puzzled for some time why LinkedIn doesn't build apps that are truly smart for business or at least make the same move FB did with opening up an app development platform so that applications like Writely, QuickBooks, etc. might find their way in?  I know, it's much more complicated than it sounds but it's a business opportunity that has $$ written all over it. 

So at this point, in early 2008 it's easy to say that there's not much useful under the sun with social networks however, there is a tremendous amount of business potential out there.  I have high hopes for all these tools (even MySpace) but at this point don't feel that the high valuations are particularly compelling.  If the capital potential right now is membership, MySpace should be a runaway winner however the vast majority of their users are very young.  LinkedIn has the greatest potential in terms of who their capital are - they just need to figure out how to make their product more interactive and compelling.  And finally Facebook, well it's just too darn bulky right now.  It's like the Yahoo Messenger of social networks - great features, lot's of users, and probably going to be stable for a while - but leaves itself to be open to become less relevant in a world that wants applications that help the bottom line.

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