Â This Economist cartoon suggests Facebook’s valueÂ is overblown; but what if social networks become the “Good Morning Americas” of the Web generation?
IÂ observed, covered andÂ suffered through theÂ dot.com bubble.Â Moreover I have a natural antipathy to excess — at least as regards the hype thatÂ seems to accompanyÂ the rapid acquisition ofÂ wealth. So while I can certainly understand the talk about a Web 2.0 bubble,Â a supposition thatÂ Online Publishers Association spreadÂ in a recent Intelligence ReportÂ that pulled togetherÂ press coverage ofÂ the Microsoft investment in Facebook.
IÂ understand how the size and terms of that deal has stoked the bubble talk.Â Hell,Â I wish someone or something would pay $15,000 for one percent of MiniMediaGuy.org. (That is roughly what it would cost to replaceÂ my 24-year-old shake shingleÂ roofÂ which looksÂ bad but has not yet begun to leak.)
However no such investment willÂ ever occur because this site does not meet what entrepreneurs and investors seem to have agreed are the prerequisites of a fundable Web 2.0 idea: a strong working prototype with aÂ cash flow, ideally a positive cash flow, a viral adoption rate and thus the indication that the a shot of capital would help the thing take off rather than provide the startup kids with really cool swivel chairs.Â
For instance,Â visit Outside.in, aÂ siteÂ based inÂ Brooklyn that has createdÂ a news-scouring system thatÂ notes the geographic locale ofÂ incoming IP addressedÂ and serve even the first time visitor a reasonably localized offering of news, blogs andÂ photos.Â Plug in your zip code and — assuming you don’t live in one of the Big Empty placesÂ where cows and cornfields outnumber people and parking lots — the search software will refresh the page and bringÂ the selectionsÂ closer to home.Â Outside.in saysÂ it has tuned its system toÂ 3,400 neighborhoodsÂ in 55Â cities. I have previously blogged thatÂ Outside.in hasÂ so far taken $2.4 million in venture cash.Â Who can sayÂ whether the site will ultimately succeed in creating someÂ gigantic neighbood-portal-in-a-can but I’m impressed by how much functionality this outfit hasÂ been able to build for what seems like a modest investment. (HereÂ isÂ myÂ first posting on Outside.in.)
So I see no generalized froth in Web 2.0 land, certainly nothing approaching the abandon that typifiedÂ company formation during the dot.com period. Even the Facebook deal, which may be overblown in some sense, could prove out. At a recent cocktail reception i found myself chatting with aÂ senior sales exec for a social networking site (not Facebook). Just to be argumentativeÂ IÂ suggested that social networkig would beÂ a passing fad. Not so said the sales exec, putting the question to me,Â What do you do, first thing in the morning? Check email? I nodded. Well,Â the seller said, what we’re finding is that youngÂ people log on to their social networks the way old farts likeÂ you obsess about email.Â The speaker did not actually say “old fart” but it was implicit and truthy.
That exchangeÂ got me toÂ thinkingÂ about what constitutes value in an Attention EconomyÂ if not habitual behavior in which a person dedicates a certain amount of time per day to a given site?
With that in mind I fished the following extractÂ out of a generally-skepticalÂ Economist article:
“Facebook has made two genuine breakthroughs. The first was its decision to let outsiders write programs and keep all the advertising revenues these might earn. This has led to all kinds of widgets, from the useful (comparing Facebookers’ music and film tastes, say) to the inane (biting each other to become virtual zombies). The entire internet industry reckons this was clever and is planning to copy it.Â . . .Â Facebook’s second masterstroke is its “mini-feed”, an event stream on user pages that keeps users abreast of what their friends are doingâ€”uploading photos, adding a widget and so on. For many users, this is addictive and is the main reason they log on so often. Jerry Michalski, a consultant, calls the mini-feed a â€œdata exhaustâ€ that gives Facebook users “better peripheral vision” into the lives of people they know only casually.”
As an old fart who is also a newspaper reporter and thereforeÂ has no friends, only sources and potential sources, I would have little use for suchÂ peripheral vision. But it strikes me that other other people might. Estimating how many people might use social networks how often to support what valuation for any given deal is spreadsheet work. I am merely a word guy soÂ what would IÂ know.Â
ButÂ I’ve gotta believe that somebody out there isÂ working on next-generation coffee-makingÂ widget that would not only start myÂ machine in the morning but also add enough rules-based artificial intelligence to sift through the headlines and decide: The news sure is grim; MiniMediaGuy is gonna needÂ a doppio.