The Social Networking Bubble Gets A Bit More Hot Air

from the but-when-will-it-burst? dept

So, I was one of the many people crammed into the Stanford classroom last night to hear the well-hyped panel discussion on whether or not there was really a business model for this new social networking craze. I thought it was a pretty good panel, overall, in the sense that it was entertaining. It certainly didn’t answer the posed question (at all), but did make “public” the not at all secret rumor that Friendster took in a bunch of money from KP and Benchmark. CBS Marketwatch has written up a dreadful summary of the panel where things that were clearly said in jest were taken seriously. The article also ignored the healthy skepticism on the panel from both Cynthia Typaldos and Andrew Anker (who called the whole space a bubblet instead of a bubble) and who jokingly denied his skepticism as a way to encourage all the other VCs present to go throw their money away on social networking companies. In fact, the Marketwatch write-up takes one of Anker’s quotes out of context to suggest that he thinks it’s a big space. Ross Mayfield didn’t get much time to speak on the panel, but gives his thoughts on the panel. He’s a big supporter of the space and seems to think that the panel did say there was a business model. I didn’t hear that. I heard that there were some investors who might be investing. However, we shouldn’t get confused (as many did in the bubble years) and start thinking that venture funding is revenue again. Meanwhile, I never got a chance to ask my question about whether some of these “explicit social networking” systems can actually cause harm to real social connections. While both Friendster and LinkedIn claim that since you approve your connections, you guarantee that they’re people you “endorse”. However, that makes it sound like a binary decision. If they’re in your network, you endorse them. That’s not true. Let’s say I want to contact a hotshot at a big company, and see that he’s connected to a friend of mine. What if (a) that friend is getting so many requests to have people introduce him to the hotshot and (b) he thinks that introducing me to that hotshot will harm his relationship with that hotshot. Instead, he’s now harmed his relationship with me, because now I know, explicitly, that he doesn’t want to introduce me to someone. Sometimes things are better left unstated, and some of these social networks are going to discover these problems as they expand. Already, I’ve heard of people trying to figure out what to do about people they don’t like adding them to their Friendster network. You don’t want to turn down people and insult them, but each of those connections makes the whole thing less valuable.

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Comments on “The Social Networking Bubble Gets A Bit More Hot Air”

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jay (user link) says:

Soon to be, the newest SocialTree

The questions you raised will be answered in the world’s newest online social network. will be introuduced to the world in the next few months that will answer many of the haunting questions of social software discussions that are buzzing right now. One of the most commonly asked questions has to do with the business model, or lack thereof. The model cannot be revealed for obvious reasons, but the model does exist. I’m sure with the new addition of Friendster’s “corporate friends”, they will be the first to let the cat out of the bag about the business plan and model of the social networking websites. Keep your eyes and ears, and most importantly your mind open as this new trend unfolds over the next year!

Pankaj Sharma (user link) says: Aims to Revolutionize Indian Social - is hoping to take social networking to a new realm. Launched in the last week of May 2006, is a new social networking website on the block with a refreshing look and loads of features to attract people of all ages and interests. With an ever increasing number of users, targets to have 50 thousand users by the end of this financial year.

“Once Indians see the value of HumSubka, they’ll make sure their friends and families use it,” said Avnish Saxena, VP, Marketing and Sales of HumSubka, who himself shares his family photographs through the website with his friends across the globe. “We’re here to build a meaningful, good community of Indians”, he added.

HumSubka’s development center is located in Delhi and is promoted and privately funded by a US based company in California. Still in its beta version, the site has already been bookmarked by thousands of users across the globe.

Anil Jindal, CEO of LAN Services L.L.C. and one of the promoters of HumSubka, acclaimed, “This site will be an online hub for Indians across the globe with user-generated content, where a user can create content, share his profile and connect with others who love his personality traits.”

Critics question how an Indian company with less than 10 employees can compete against social networking giants like MySpace, owned by Rupert Murdoch’s News Corp., which has more than 100 million member profiles, or Facebook, which as more than 7.5 million members in high schools and colleges.

Even if it catches on with its target audience of people in their late teens, business experts say HumSubka, like Friendster or Hi5, could be eclipsed by a trendier site in the crowded social networking niche.

“If we tried to create a Yankee-Doodle-and-NASCAR site, it would be a big mistake,” said Avnish Saxena, “Our marching orders are to create a global site. India is so multi-cultural that if we can make it here we would have a scalable model that could be embraced in Europe and elsewhere.”

“A social network is a social structure made of nodes which are generally individuals or organizations. It indicates the ways in which they are connected through various social familiarities ranging from casual acquaintance to close familial bonds”, said Mr. Jindal in an Interview recently. “This is a phenomenon we’re seeing not only in the U.S., but also around the world. The challenge for social networking sites will now be monetization and how advertisers will respond to the global marketing potential of these sites.”

Social networks can also be organized around business connections, as for example in the case of HumSubka. It provides business community a full web page, with no charges, to display and market their products and services with unlimited pictures and features description. Above all, the advertising companies can now develop the audio & video clips about their products and upload the same under their respective public profile page to promote a particular brand. This would certainly reduce the advertising cost and will boost the awareness amongst the web surfers for the brands available in the market. Social networking websites, like HumSubka, have initiated a revolution in the advertising world by providing a lucrative and cost effective medium for the small as well as medium scale businesses.

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