More on the Rise of Interest Based Networks

TechCrunch posted an article I wrote this evening, titled “Beyond Facebook: the rise of interest based social networks.”  In it, I write about my thoughts on the rise of a new generation of interest-centric social networks like Pinterest, Thumb, Foodspotting, and Fitocracy, in the face of the absolutely astounding rise of Facebook.

This post is a follow-up to spend a little more text on two topics.

The first is my strong bullishness on Facebook.  If I were making betting in Vegas, I’d bet Facebook will be either the second ever $500B company by market cap to achieve this milestone.  (Apple is currently at $468M, less than 10% away from crossing this threshold!)

My rationale here is straightforward.  Their revenue and business model is really in the early innings of its full potential.  As they continue to revamp and iterate, I’d look for more and more of the commerce and advertising streams that currently exist on the broader internet will start to gain traction in the Facebook ecosystem.  So revenue and usage in my view will continue to go up.

In addition to that, I don’t see any real competitive threats on the horizon that are credible.  Facebook indeed owns the identity–its how I log on to the vast majority of sites.  And as I point out in my TC post, even the new sites like Pinterest and others rely on the Facebook API to access the user information and to gain user distribution.  Facebook has executed a platform play as effectively as WinTel did in the PC era–it has created a market and an ecosystem which in turn fuels its growth and power.  Amazing stuff, and yes, anyone interested in selling shares of Facebook now or at IPO should drop me a line at jjamison brv com! :)

So I’m bullish on Facebook, that’s point one.

Point two I wanted to write more about the history of broadcast tv industry, as the parallels are I think interesting.  As I mentioned in the TC post, in the early 80’s, the only TV networks that mattered were ABC, NBC, and CBS.  With the early adoption of cable, networks like MTV, CNN, and ESPN popped up.  Many thought the idea of channels dedicated to music videos, 24 hour news coverage, or all sports all the time was batshit crazy.  Would never work.  Viewers would never be interested.  The Big 3 networks were really all the TV content that users ever would really need, so

But users were interested and these channels all grew.  ESPN is now an enormously important profit pool within the total market of cable television in the US.  CNN, while running in to tough times, was a gigantic acquisition when AOL/TW were on their historic drunken spending spree a decade ago.  Etc.

In a similar way, I think of Facebook, LinkedIn and Twitter as the big 3 social networks today.  They are the big dogs, like ABC, CBS, and NBC.

Pinterest, Thumb, Foodspotting, Fitocracy and others are the ESPNs, CNNs and MTVs of the early 80s.  Upstarts focused on delivering a different type of media to users: today, its social media services, in the past, it was TV media.  Same basic disruption, just different media type.

Where the analogy between today’s social media landscape and yesterday’s network television industry breaks down is with the incredible distribution power that Facebook, in particular, has as a distribution channel for any of the new interest-based networks.  Any new upstart social service is going to look to the Timeline API Facebook provides to drive awareness and user growth.  With this platform distribution capability, Facebook in effect not only innoculates itself from competitive disruption, but in effect is looking to see a robust ecosystem of Pinterests, Fitocracy’s, Foodspotting and others.

In effect, Facebook realizes that it cannot be all things to all people–users will want to brag about workouts on Fitocracy, or discuss food on Foodspotting, etc.

But while Facebook won’t be all things to all people, Facebook will be something–and I contend something very important–to everyone.   And that’ll be valued dearly, in the market and by users.



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