How do you know if a Social Media Startup will Fly?

Last week I was at an intimate round-table event where two bright and enthusiastic social media entrepreneurs touting around a new location-based service. On the face of it their proposition had something going for it – they began their talk with a whole host of scenarios where it could be useful, and a number of different groups of people it could work for. For as long as they were talking, the picture they painted was vivid, but as soon as they stopped, that image disappeared.

When the topic under discussion was thrown open to the group, there were a lot of tough questions posed, some around the specifics of the social media space, and others which were simple basic business:

  • Is the service really different enough from what’s out there already?
  • Is it going to serve an actual need in practice?
  • Does it gel with the way people are already behaving?
  • Who is it for – will it “own” a particular group or demographic to begin with?
  • How will it generate revenue and make money?

Watching the owners of a social media startup being comprehensively grilled was struck a chord with me at a deep level. I have been through the ringer myself trying to get something off the ground that seemed entirely plausible, that generated enthusiasm, but which didn’t get anywhere, and which should probably have been abandoned a long time before it actually was.

The Key User Question in Building Critical Mass – What’s in it for Me?

In our case, the key question that we never really got a satisfactory answer for was how to build the traffic to critical mass. For network-based social media services, the value of the service is proportional to the square of the number of people already using the service. So, having 1000 people using such a network is about 100 times (102) more useful than having 100 people using it. Hence, for the earliest adopters, the value must lie somewhere other than in the practical use of the platform itself. At the most basic level, the platform must be capable of demonstrating their status as an early adopter – being ahead of the crowd.

Enabling the growth towards critical mass, where the platform becomes useful for users other than the earliest adopters, requires answering one question repeatedly for all groups of users, for all stages of development and launch – what’s in it for me?

Users won’t do something for the benefit of your platform unless you make it worth their while. In our case, the time and effort involved in sourcing or authoring appropriate video was probably prohibitive for early adopters – the platform did not facilitate them showing off their early-adopter status. Without content, there could be no audience of people to either comment on, vote on, or even just view the content. In hindsight, this was the kiss of death to our own venture.

Believing in Oneself whilst Listening to Others

I am not sure how much the social entrepreneurs we met were listening – I suspect they took some of the tactical considerations for success to heart, but I’m not sure they will be seriously questioning their key premise. Getting a startup off the ground certainly requires sufficient self-belief to generate enthusiasm in potential partners and users alike, but that must be mixed with being receptive to good advice. Overall I felt that what I witnessed had too many holes in it – the answers to the basic business questions were too equivocal, too complicated, and, ultimately, not quite plausible.

I really wish that I had been given a similarly rough ride before I had committed to spending a lot of time, effort and money on my own doomed pipe-dream. Did I learn anything in my adventure? Yes, definitely? Would I attempt to create a pure social media platform again? Possibly under the right circumstances – but I wouldn’t do it if I wasn’t sure that all the basic business questions has been posed and answered plausibly and unambiguously. In particular, I would want to see a clear plan for building traffic and measurable sign-posts that would offer early exit points if it didn’t to take off.

Roundup of the Week (w/e 06/02/2011)

Web

  • Microsoft and Google trade blows over the ownership of search results after Google leave a “honey trap” for Microsoft
    but was this a smokescreen to draw attention from Google’s legal proceedings in Europe over the alleged manipulation of search results? http://www.techmeme.com/110201/p22#a110201p22
  • Hotmail Add Alternative Emails – up to five aliases
    A relief for those who use hotmail addresses for testing, or junkmail, or just for specific sign-up purposes
  • RSS central to easy-access Cloud Data?
    Cloud hosting and data is a hot topic, but does it concern the everyman? Dave Winer – creator of RSS introduces thinks it does. He introduces his vision of a more accessible paradigm for backend storage and functionality on the web, glued together using RSS – enticingly named EC2 for Poets project – http://www.webmonkey.com/2011/02/take-back-the-tubes/
  • IPv4 addresses running out
    For all you geeks out there (and me too) – a significant milestone is the allotment of the last available IPv4 blocks – with IPv6 to receive a publicised promotional day of its own in June.

Android

  • Google displaces Nokia as number 1 seller of smartphones (by OS on phones sold)
    For anyone, particularly in the corporate sector, who has been trying to ignore it – Android is now officially impossible to ignore – as number one OS on new smartphones. This very success, however, is the main challenge to Google – the sheer diversity of suppliers and device formats involved means that Google will have to work very hard to avoid the obvious danger of fragmentation of its market – a problem that Apple clearly does not face.
  • Android 2.1 and above now on 90% of Android devices
    Which means that developers are unlikely to be losing too much sleep over older versions, focussing on the capabilities of the newer OS versions.

iPhone / iPad

  • Apple Enforcing Rules on e-Book Publishers
    Hard to avoid the big Apple story of the week – namely its enforcement of its policy that if you sell items used in an app outside of the app, they must allow them to purchase through app as well. This seemed focussed at eBook providers like Sony, and could well be a key mechanism for ensuring Apple’s dominance over the iOS platform as a commercial money maker. However, I wonder how long it is likely to be before we see a case brought in the European Court on the basis of anti-trust legislation – as Microsoft faced a while ago over its packaging of Internet Explorer with windows.

Tablets

  • Android takes 22% of Tablet Market
    So far, with the exception of the Galaxy Tab, there has yet been a compelling Android based rival to the iPad – despite this, Android already has a 22% share of the tablet market – which is sure to rocket when the next generation of Android pads, like the Motorola Zoom, become widely available – see http://www.mobilemarketingmagazine.co.uk/content/android-takes-22-cent-tablet-market
  • Samsung Galaxy Tab – disputes over reliability and sales
    Over the last week there have been stories claiming that the return rate on the Galaxy Tab has been 13% (according to ITG Investment Research), whilst Samsung have claimed only 2% – comparable to the return rate of the iPad. At the same time, Samsung claimed a massive rise in sales of the Galaxy Tab whilst then later ‘clarifying’ that the sales quoted were to distributors rather than end-users. A case of lies, damned lies and statistics?

Blackberry

  • RIM release BlackBerry AppWorld 2.1
    Which features in-app payments, allowing developers to create ‘lite’  versions with in-App upgrades. Could this provide a significant stimulus to the BlackBerry app market?
  • RIM India Ban Unlikely
    India still wants access to messages through Blackberry platform but now look unlikely to introduce a ban. Interesting to see how the issue of privacy is shaping up not just in developing economies, but around the world more generally.

Mobile Market

  • Mobile Web Traffic doubled in 2010
    According to Mobile Marketing Magazine, although a Cisco’s study suggested a massive 150% increase over the same period. There is no doubt about it, mobile is likely to be the preferred option for accessing the web outside of work, where the choice of platform is likely to be out of the users’ hands. Over the same period, the consumer expenditure on online entertainment was up 23% – which only goes to show that early adopters must be disproportionately high consumers compared to later adopters.  See http://www.mobilemarketingmagazine.co.uk/content/mobile-web-traffic-doubles-2010
  • Nokia and Microsoft Up a Tree?
    Now deposed as top seller of smartphones, and with Symbian effectively being declared dead, though on temporary life support, Nokia is realigning strategy apparently, with an announcement due regarding a tie up with Microsoft next week, possibly involving Windows 7. Could be a good tie-up for Microsoft who have had quite poor initial market share – Q4 2010 only 2%.
  • Marie Curie and Salvation Army with firsts for Charities in mobile
    Whilst Marie Curie were the first to release a virtual collection tin,  allowing their volunteers to encourage donations via SMS to contacts. The Salvation Army enjoyed 190,000 downloads of its Virtual Cup app, highlighting issues of health and social inequality. Interestingly, for the iPhone, the Virtual Cup has been implemented as an advanced web app to get around Apple’s ban on in-app donations – although it is available as a native app on other platforms.

Social Media

Social networks for corporates seems to be flavour of the week, if not the entire year. A lot of action to be seen in this area over the coming year, both as add-ons for Enterprise platforms, and for third-party SAAS providers:

  • Salesforce release Chatter.com
    a free social network that can be used by anyone with a business address
  • Microsoft Dyamics CRM acquires Vibe as Option in Market Place
    Enterprises implementing Dynamics now have social networking option
  • BranchOut Grew 2500% In January
    The LinkedIn style corporate networking Facebook app is experiencing a meteoric rise in traffic,  going From 10K To 250K Monthly Users

Web Standards

  • Microsoft offers H.264 plug-in for Chrome
    interesting Microsoft play which undermines Google’s own choice to not adopt H.264. Could plugins and add-ons provide a useful mechanism for platform providers to wrong-foot each other’s strategic plays on standards adoption?
  • W3C addresses touch screens and semantic web
    The consortium release a rough draft of specs targeting touch screens and tables, and announce the formation of a working group to update the foundations of the semantic web

What I got Excited About this Week

In no particular order:

  • Yahoo Pipes (Feed Aggregation and Filtering on Steroids)
    if you like to use the web as an active research tool, then you’ve got to see this to believe this – an easy online interface for clever aggregating, filtering, translation and coding of feeds and web content, which you can then publish as another feed!http://pipes.yahoo.com/pipes/
  • Yojimbo – Personal Knowledge Manager
    I’m trying out this personal knowledge management app for the Mac – I’ve tried PersonalBrain, but I wanted something quick and easier – which it seems to be http://www.barebones.com/products/yojimbo/
  • Ubuntu – OS OS (Open Source Operating System)
    having been mainly PC and Mac based, I thought it high time that I tried out Ubuntu properly – given one of my colleagues is a bit of an evangelist. Now I have Ubuntu, Windows 7 and Mac Snow Leopard on one box – the world is my oyster! Ubuntu is great – once past the apprehension about geeky command lines, it is actually a breeze to use and fantastically easy to set up new software! www.ubuntu.com

Roundup of the Week (w/e 30/01/2011)

I have decided to try to do a weekly round-up of key themes across mobile, desktop apps, software, design, project management and anything else that affects my working life.

Key themes from last week that caught my eye:

CONTACTLESS MOBILE PAYMENTS – people will soon be able to pay for things direct from their mobile, eventually including things like tube fairs – Orange and T-Mobile to release tariffs to support this in summer. The next generation of iPhones and iPads will natively support mobile payments. This could be a small yet profound change to the lives of anyone who, like me, finds it easier to keep hold of their mobile than their wallet when out and about.
 
DESKTOP APP STORES– looks like we will soon have the mobile apps model on desktops – first to go looks like it will be Linux, can’t imagine we won’t have a Windows one soon though. Lets face it – the whole mobile app experience is so much better than going through a whole series of installation stages on a laptop or desktop – what will be interesting to see is whether the low-cost high-volume pricing model will spread into personal computing. Will the convergence in devices be matched by a convergence in methods of purchasing?
 
ENTERPRISE CMS – this year’s big themes in enterprise CMS likely to be social media and cloud-computing – EU will be laying down guidelines for provision of cloud computing.  Some larger corporates are moving their testing and approval platforms into the cloud – but questions still remain about privacy and security. At the same time, being able to keep up with the latest software and hardware as soon as it is available without fear of compatibility issues and expensive rollouts is surely attractive. A key issue here might be the way that legal developments in the US and other places may require Cloud Hosting providers to disclose sensitive personal or corporate information for legal or political reasons.
 
IPAD – use of iPads by corporates is growing rapidly. Appointment of new security chief at Apple seems aimed at RIM (Blackberry), much of whose success is based on secure communications. The snapping of Apple at RIM’s heels in the corporate market seems set to become more and more insistent. In a symbolic, and commercially significant development, last week saw Apple announce the release of the iPad in India even while political developments are making it look pretty certain that RIM will have to abandon the Indian market.
  
BLACKBERRY BIGGEST IN UK 2010 – The Blackberry range was the biggest selling smart phone platform in the UK in 2010! Everybody is focussing on the iOS and Android as key platforms for consumer development, but the Blackberry remains hugely popular amongst corporates. Who knows what impact the RIM Playbook will have on the tablet market when it is in the next couple of months. On the other hand, Apple have decided to release the iPad2 at roughly the same time (no coincidence of course).
  
MOBILE LOCATION SERVICES  – location based services that permit use of services / advertising / offers based on  user’s location will take off massively this year, although issues of personal privacy will be a major issue. Most of us are probably used to enjoying the benefits of map related location services on iOS or Android. However, the key concern here is that we may start to be tracked in space and time generally and not just through our buying habits or points of contact with corporates on the net. It seems almost inevitably that information, once collected, ends up being used for purposes other than those first proposed…caution will need to be the watchword here, along with clear opt-ins.
 
ANDROID HONEYCOMB – new tablet-OS emulator released (to Ben’s delight) last week – pundits have also found traces of mobile phone specific functionality – so maybe for phones as well as tablets – functionality warmly received despite emulator being very slow. Our Android guru is almost beside himself with excitement over Honeycomb – especially now that it seems it has been designed for phones as well as tablets. Whilst they seem to be hitting all the right notes with Android itself, even Google have admitted disappointment with the growth of the market for Android apps – they need to spend a significant fraction of this development time on tidying up the wild-west feel of their marketplace. 
 
SEARCH / SEO – Google will be cracking down on content farms (providers of content for SEO purposes), and auto-complete results for P2P. Google exists in an ongoing cat and mouse game with SEO specialists. Content farming in general seeks to use relatively reputable content for the specific aim of promoting SEO – Google will have its work cut out differentiating between content farming and legitimate corporate on-line marketing – and they seem set to involve some kind of content rating or qualitative feedback from users in order to improve the quality of its search results.
  
SOCIAL MEDIA – Malware controllers are using social network apps to coordinate malware attacks. US courts granting lots of orders for opening up private Facebook areas – reminder of how software as a service (SAAS) generally may be affected by local legislation. It comes as no surprise really that social media is the focus of malware creators, as much as it has become the focus of legitimate corporate interest. We can see a simultaneous encroachment on the ‘public space’ of social media from hackers, organised crime, marketeers and legislators alike. I guess that simply means that these virtual spaces are becoming as contested as real public spaces. Just like in real public spaces, our actions, our disclosure of information and our relationships are beginning to have potentially unintended consequences. The problem is that for many users, this reality is not clear…but it needs to be.
  
  More next week…
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