Kevin Laws compares startup companies to peacocks recently on VentureBlog. He observes that both could be seen as flashy to a fault. Wouldn't peacocks be more agile and less visible to predators without their big, beautiful tails? Couldn't startups find stronger chances for success by focusing solely on designing and marketing great products or services rather than "puffing up" for VC's? Kevin finds answers in sex and signaling. Sex because even a little flash can deeply impact the reptillian brain-stems of VC's and peahens for no good reason. Signaling because birds and businesses that survive despite the sharp disadvantages of "puffing up" amidst competition are that much stronger. The very fastest birds and the most promising ventures rise to the top.
Social software seems similarly peacocky -- perhaps just a little too big and beautiful for its own good. On the one hand, many VC's seem to be less skeptical by the day. Google's gotten into the game just recently by acquiring Dodgeball, and TheFaceBook scored a $12 million buy-in from Accel Partners a few weeks prior to that. eHarmony Inc. secured $110 million from Sequoia last November in the year's biggest VC round. Users can't get enough, flocking to Friendster to the tune of 17 million and spiking Spoke with "27,300,123 relationships in 500,700 companies."
On the other hand, it's unclear how many of these sites can spin rapid user growth into black ink. It's difficult to tell which platforms, if any, turn short-term profits, let alone justifying multi-million dollar VC investments. Some would say we've already played this game five years ago.
Massive privacy, economic and competitive issues abound just beyond near-term profitability and valuation. But social networking is nothing new in human society. We've used family trees, corporate hierarchies, Kereitsu and buddy lists to traverse societal landscapes for tens, hundreds and thousands of years. Its software analog is also extremely cool -- it might even be revolutionary. Social software has potential to transform the way we share, relate, interact and create both online and offline by pairing a fundamental human technique with explosive digital capabilities for sorting and communicating. It would be a shame if nobody figured out how to put its sexy form to profitable function in the long run.
There'll be plenty of time to chew on the promise and perils of social software, though. For the moment, I'll simply write that I hope to use this space to do exactly that with a minimum of "puffing up." Hopefully, the result will be worth at least as much as the paper it's printed on.
hey Jon, what's up? what's your analysis on any emerging social networks out there?
Guod
Posted by: Guod | July 09, 2005 at 11:15 PM