Archive for the ‘social networks’ Category

Can Enterprise Software Be Social?

A few days ago, a fairly prominent entrepreneur named Jeff Dachis (he founded interactive ad agency Razorfish) is “creating an industry leading strategic consulting practice and an enterprise class Social Software-as-a-Service (SaaS) suite.” Other new outlets have called this a “social network for corporation”. Here are a few articles about the announcement:

Silicon Alley Insider

Austin Ventures Press Release

Based on this quote from the Austin Ventures press release, it looks like Dachis is building a service to help business collaborate internally on projects, as opposed to our focus on helping executives collaborate externally.

I believe there is enormous opportunity in helping companies devise and implement a strategy to engage their constituents in a meaningful dialog throughout the enterprise. As companies begin to see the benefits of utilizing “social” technology to engage their customers, employees, suppliers, shareholders, and communities in an active and transparent dialog, they will need a trusted partner to help them navigate the opportunities, and an integrated set of scalable, robust, and secure enterprise class tools to implement them. We are here to provide both expertise and implementation.

Related to this announcement, there has been some discussion in the blogging community as to the question “can an enterprise use social applications”?

One discussion I thought that had a great deal of insight was from Fred Wilson, a leading Web 2.0 venture capitalist. He contends that social media and enterprise applications are inherently misaligned, due to security issues and the inherently protective nature of businesses over their “secret sauce”. However, the comments on Fred’s blog have countered some of his argument. Here is one of my favorite comments, as to the difference between traditional social media and enterprise social applications:

I think that the fundamental difference between social applications and enterprise application is that social applications are, at their core, about self expression, whereas enterprise applications are about process automation.

Enterprise applications may borrow elements of social apps to facilitate collaboration (still a big enterprise opportunity) and ease of use (always a winner), but fundamentally self-expression is not a goal for the enterprise.

As much as I admire Fred, I would disagree with his points here. Self-expression is not the core goal of social media. Social media works because people find value in sharing with one another.

The community experience can serve enterprises as much as individuals. Brand managers, payroll administrators, and HR reps all over the globe are essential doing the same tasks, building the same reports, and facing the same challenges on a day-to-day basis. An external enterprise community would give those people the ability to share work, exchange idea, and collaborate on large projects at little or no cost.

Imagine if we could all share the work we created with one other? Why would you ever create a new market analysis report, if you had the template from your “buddy”? That would give us all more time to catch up on our dozens of unread Facebook messages…

P.S. – I know there are security and privacy issues here. How do I suggest we overcome them? I’m not sure… but I do know that someone will, and I look forward to that day.


Why Facebook is Overvalued…

Today, published an article called is Is Facebook the Next Google?. I have a simple answer to that question… no. Do I think they are worth the US$15B valuation? Definitely not.

Why do I think Facebook is overvalued and over-hyped? Because they choose to focus on advertising as their core revenue stream.

Let me get one thing straight… I love social networking and online communities. I use Facebook, MySpace, Wikipedia, YouTube, LinkedIn, Craigslist, Stockpickr, and many others. I currently work for a company that recently launched a online social networking platform that allows senior corporate executives to share solutions to common business challenges. I even helped to develop a hyper-localized social network called HolaNeighbor during Startup Weekend DC.

I like social networks because they bring like-minded people together to create and interact, and these networks provide an extremely effective way to build, find, and organize new content. Plus, social networks develop huge data assets that can be used by companies to mine for trends, develop new products or enhanced features, better understand target markets, etc.

Ultimately, the value of a social network lies in the content and data assets they create, not the ability to advertise to users.

Facebook or any other social network will never become as large as Google if it focuses on advertising because, by nature, social networks restrict the number of people it can reach. Right now, Facebook has about 50 million registered users. Since Facebook can only advertise to registered users, that means that they get, at most, 50 million potential customers (even though about half of its users are on Facebook in a given month).

On the other hand, you don’t have to be a registered user to take advantage of Google’s advertising. Heck, you don’t even have to be on Google’s web site or use their search engine. That gives Google a potential global market of over 1 billion people, with over 500 million unique visitors to its web site per month. Even if Facebook meets its growth projection of 300 million registered user, that still gives them only 150 million unique visitors… by no means small, way behind Google.

Can Facebook target advertising to users better than Google. Possibly, but I’m not sure. Right now, Facebook has more data about its users, but I’m not sure if all that data is 100% relevant when advertising to a user in the moment. Because Google’s ad strategy focuses on using your search strings as the data, it’s advertisements are more likely to be relevant to what you are thinking about in the moment. So, just because I put “soccer” as an interest on my Facebook profile, it does not mean that I want to buy a new pair of Adidas clients or buy tickets to a D.C. United game.

What if we could build a social network that was valuable to both users and non-users alike? Then, you wouldn’t need to limit your advertising to registered users, and you would be able to build a valuable data asset. Not a bad idea.

UPDATE: Fred Wilson blogged today about the diminishing economics of Facebook advertising.