(Page 2 of 2)
Charlene Li, founder of the social media consultancy Altimeter Group, based in San Mateo, CA, says that it makes sense for smaller companies like Pownce and Values of n to be gobbled up by bigger players. "These companies had really interesting features and services that are much stronger being part of an existing service that has a lot of people using it," Li says.
Alden declined to say which aspects of Pownce's technology are most interesting to Six Apart, but he agrees with Li that many Web startups are largely focused around one good idea. "It's not always easy to convert that into a vibrant, self-sustaining company," he says. "When economic times are good, you have a longer runway to make that happen. When times get tougher, it dramatically decreases."
It's hard not to compare the current shakeout with the dotcom bust of 2000, but those within the industry dismiss the comparison. "That burst with a thunderclap; this'll burst with a pop," says Paul Gillin, a social media strategist based in Framingham, MA. He believes that this will be a less violent contraction cycle, less intense than that suffered, for example, by personal-computer makers during the 1980s.
At least there has not been the same profligate investing that there was during the dotcom days. There is no counterpart to the excesses of investors who put $830 million into Webvan or $280 million into Kozmo.com.
Six Apart's Alden argues that consolidation is in the nature of the startup business. He can speak from experience: his own startup, Rojo, was acquired by Six Apart in 2006. Alden also argues that no one should confuse companies shutting down or being acquired with a lack of interest in social media. "With the Web 2.0 or social media trend, we're still seeing very, very strong activity and behavioral trends," he says.
Web 2.0--the dream of the user-built, user-centered, user-run Internet--has delivered on just about every promise except profit. Will its most prominent example, social networking, ever make any money?
Social-networking sites are fighting over control of users' personal information.
The prophecy putforth on internet Social
Network businesses and investments,
few months ago, and in this same
medium, is now coming into reality.
My friend, Jason, editor in chief,
can be a true witness on this same
analysis in one of my emails to
him in reaction to one of Emerging
Technologies publications.
A business is a business not by
number of social interactive clients
it gains in unit time, but how well
generating resources from the venture
are sustaining not necessarily in the
short term, but in the long term context.
More importantly, any business, relying
solely on loans and running capital from
investors, without forseable guaranteed
income generation from within, is
doomed to fail. I am therefore never
suprised at all.
At MPGA.TECHNOLOGIES, Multipurpose
Global Application Technologies, it
is essentially, extraordinarily
cautionary approach that evades
receipt of any monies from individuals,
private and governmental institutions.
We make sure the race is
steady, persistent and indepth.
And we will finish it and finish
it with every dignity, no matter,
lenght of time ....
a marked difference between management
from technologist's perspective and
a lay Executive's view point.
(martin@mpgatechnology.com)
Re: Social Networks dying out.
Words of wisdom,
Again solid business knowledge prevails.
I was always mystified by the bubble in social networks.
However, I am sure the M&A lawyers made out well.
Brian Glassman
Ph.D Candidate in Business Purdue University
Michael Fitzgerald's Article "Are Social Networks Sinking?" is in my eye's a solid piece of technology journalism. This short and well written article contained lots of supported numbers, and argues a unpopular view but realistic view of technology (social networking in this case). This is why I read Technology Review.
Thanks
Brian
Commercialization
Innovation Management
This is reason
While I certainly agree there is no escaping the laws of economics, which is what we see happening all around us, the author's reference to Jive Software only as a "social networking site" is a factual error. Jive is primarily a software company focusing on enterprise collaboration software and services. Its social networking services support that primary business focus. (Disclosure: I have consulted to Jive in the past.)
Dennis McDonald
Alexandria Virginia USA
http://www.ddmcd.com
Frankly, the peice seems to be well researched and carefully drafted, however, there are certain issues which need to be clarified. But for the time being this article is a good example of writing and researching on a very debatable subject where almost everyone has his or her different perspective.
Rakesh Sharma An Article Writer, SEO Writer & eBook Writer based in India
The social networks that are having problems are the general interest ones run by companies. The ones that are run by individuals (or small groups of people) and are focused on specific interest groups are doing much better. Some of those have an enormous number of users.
As with other trends on Internet, bigger is not always better. Hobby sites and small mom-and-pop online stores can grow as needed, only adding more complex financial stresses when they are ready to handle them. Having profit as the initial goal puts social networks on a deadline that most will not be able to keep.
- Jesse
Manufacturing in the United States is in trouble. That's bad news not just for the country's economy but for the future of innovation.
Our list of the 50 most innovative companies, including the following:
On Twitter
Become a Fan on Facebook
Subscribe to the Feed
nocky100
1 Comment
Social networks are adjusting
They are not sinking, but as in the name of the site Powers of N, they are dependent upon the power of the network to provide value and if you have too many sites, then the value (for the user) just does not come. The current financial malaise is just helping this shakeout on its way.
Reply