What do eyeballs and friends have in common with each other? Except for the fact that your friends have eyeballs, not much. Or do they?
Let’s go back to the year 1999, the time the unshakeable belief that so long as you had “eyeballs” on your website, unstoppable riches awaited you. This was the age of web page “hits”, greedy (or gullible?) venture capitalists, and the 24-year-old vice-president. Sadly, it was not the age of business models, integrated marketing strategy, or prudent financial management. When the dot-com crash happened a year later, there shouldn’t have been a surprise.
I was there. I built my first company in 1994 and sold it in 2000. Like today, we were focused on helping traditional organizations with their Internet strategy and then implementing it. We did this for KPMG, The Toronto Star, The Globe and Mail’s Globefund and GlobeInvestor, McGraw-Hill Ryerson, what is now Workopolis, and many others. These venerable organizations are still around, and are highly reliant on Internet technology as a critical part of their real-world, revenue-focused business model. And as an advisor, we learned lessons along the way about building communities, discussion forums, relationships, and yes, transactions. Because our work was not rooted in “eyeballs”, but in real revenue and real expenses, we prospered along with our clients. Those agencies, consultants, investors, and companies who focused on eyeballs, crashed and burned.
Perhaps we’ve learned something over the last decade, but the evidence suggests otherwise. Instead of chasing eyeballs, people are now chasing Friends, Connections and Followers. We use terms like Twitterverse and Blogosphere, as if everyone truly understood what they meant. While it is true that the number of Friends may be a proxy for influence, unless there is a strong connection to the business model and bottom line, at best the chase is for a chimera.
And like the heyday of 2000, there is a sordid cast of characters who have become instant experts (Social Media Experts) who are whipping the gullible and the greedy into a frenzy. They used to be (and probably still are) experts in advertising, technology, selling information products, market research, and just about every other field. Some probably sold real estate, vacuum cleaners, and all manner of merchandise, before they too jumped on the bandwagon, started a blog, and are now the new gurus.
And what do we see when we look at the companies that are “successful”? Twitter still doesn’t have a business model – yet they are able to raise millions of dollars without blinking. Groupon – which does have a business model, turned down a six billion dollar takeover bid several years ago. Facebook, which does have a business model, is a public company with $350 billion valuation: incredible. And explain the 26 billion recently paid by Microsoft for LinkedIn? (I did try in an earlier post.) Beyond these players there are 500+ other Social Networking sites that are clamoring to be our Friends. Its “eyeballs” all over again.
What does this mean? I may be proven wrong, but I believe we’re in line for another huge tech crash. Yes, there will be a number of big deals, but we can only have so many Friends. And investors will eventually wake up.
This week’s action plan: Is your organization’s strategy dependent on any particular social site? If you don’t have a plan to collect your relationships in an owned-by-you database, now would be a good time to start.
Action plan #2: It might also be a good idea to look at your stock portfolio.
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