Have We Seen The Last New Social Network?

Opportunities for social networks in business, consumer markets, and non-profit arenas are prevalent.  They not only revolve around providing the infrastructure and technology which enables the creation of focused communities with common interests, but also provide a shared experience where people can exchange information, interact, strengthen and expand existing relationships, and foster new one with like-minded individuals for a greater purpose. By doing so, users find themselves engaged and satisfied.

The next wave in social networking has begun, and organizations are tapping into a greater zeitgeist to foster communication, solve problems, and create greater value through collaboration.  As reported here before, the explosion in social networking and collaboration/crowdsourcing is a result of three converging factors: 1) the technology breakthroughs in telecommunications like Wavelength Division Multiplexing which made bandwidth cheap and super fast, thus enabling a practical and ubiquitous Worldwide Internet; 2) the development of software based platforms that enable the formation of huge communities of net subscribers to gather, interact, share (ie., Facebook, Twitter, Google+, etc.) and collaborate (ie., InnoCentive) in a well managed, reliable and controlled environment; and 3) the untapped mindshare of 2.1B internet subscribers who collectively have over 1 billion hours of Cognitive Surplus available for web surfing/networking/collaborating.

So when will this social networking phenomenon end?  Is there a point at which the 2.1B internet subscribers will reach a saturation point and willfully and purposefully restrain their fascination/compulsion to ‘socialize’?  Will this spell the end of innovation for the social media world?   Not likely!

Though Facebook is by all accounts the dominant social network (according to the July 2011 American Consumer Satisfaction Index (ACSI) survey), it has one of the lowest customer satisfaction ratings for e-businesses and among major companies in general – a score of 66 out of 100, in most books a “D-.” Ubiquity and buzz as it pertains to social platforms does not necessarily mean quality or consumer satisfaction.

While companies may focus on how to solve problems using more technologically driven platforms, moving beyond technology to address customer satisfaction (as ACSI’s customer satisfaction survey implies) and engage people will be a real game changer.   There needs to be a sense of connectedness and “we’re in this together” – a more spiritual or emotional bond.

Without a doubt, “mass market” social networks like Facebook, Twitter, Foursquare and even Google+ are the leaders for a reason. The buzz around social networking platforms was initially focused around the novelty associated with the technology platform and how it created a local community out of a global population – not necessarily around a cutting-edge user experience that mirrors how or why we need to socialize in the “real world” (although Google+ is an exception in that it has features which allow users to classify and group their social experiences -- addressing the “how” we socialize but not necessarily the “why”).   But to be sustainable and continue to grow, doesn’t your web experience have to take on a deeper relevance?  Despite the phenomenal growth of social networking sites, those same 2.1B internet subscribers still find time to watch a trillion hours or more of television every year.

Most people in the offline world have different types of social experiences and congregate separately with different groups who share similar traits -- familial, professional, proximity (i.e. neighbors), interests, passions and ideals and do so to meet particular belongingness, achievement, esteem, or personal fulfillment needs. Why LinkedIn is so successful and has satisfied users (beyond having a sound business model) may be because it serves very specific purposes and addresses basic human needs of belonging and fostering achievement in a specified niche - the professional realm.  Ah ha – that relevance thing again!  It provides users with opportunities to leverage and expand their own networks, build their professional identities and collaborate and engage with other professionals.  The online experience is professional networking, akin to how and why we network and socialize professionally offline while shrinking the dimensions of time and distance (and language, ethnicity, religion, politics, etc).

To be successful, new and emerging social networks must: (1) have a scalable model within a specific niche, (2) develop the technological infrastructure to enable communication and foster relationships, (3) provide a superior user experience, and (4) address particular belongingness, achievement, esteem, or personal fulfillment needs – in short, create a platform and experience where people feel they have something to contribute as well as something to gain. Delivering on these areas can result in further shifts in social networking, thus impacting the fallout in the entire space and bringing forth powerful shifts in how we view social networking and the social web as a whole.

Investors looking to catch the wave of the social media buzz which has driven valuations of the (currently) most popular sites – valuations stretching far into the billions for companies with minimal revenues or profits – need not fear that they have missed the cycle.   New and highly innovative social media companies are working feverishly to knock the current crop off their pedestals, usurp their communities and, along with it, their advertising revenues.  As these newco’s come to market with the benefit of 20/20 hindsight, a more highly refined focus, better end-user experiences and a higher relevance quotient, the opportunities for investors will be many and the returns extremely attractive.

Consolidation within the social website market is not yet an imminent threat – the playing field is still wide open and receptive to new experiences, new paradigms and greater personal connectivity between members of communities.  Those of us who remember the Great Browser Wars of the 1990’s now realize that, despite the apparent Explorer victory, a great many users embrace Firefox and Google Chrome with avid dedication.   Bing is now an established alternative to Google and the iconic and dominant Blackberry is now playing catch-up in the iPhone and Android marketplace.

With 2.1 billion internet subscribers growing by double digit percentages every year, it is easy to understand why much of the creative energy in the technology startup space is focused on this dynamic, relatively untapped and innovation-ripe market.   Investors will be challenged to sort out the potential solutions, place their bets and let 2 billion people decide the winners.