Social Business Models: Can Superstores and Boutiques Co-Exist?

by takingpitches

Bryce Roberts of O’Reilly AlphaTech Ventures has a post where he uses the analogy of Walmart for Facebook relative to the smaller social networking sites, that are more specialized, honed in on a better functionality, and/or cooler.  So for example, Twitter is the premium NewsFeed, Instagram is the premium photosharing, etc.

I think this is right to a large extent, but the question is whether users have limited attention and time, to handle perhaps a limited number of sites or apps. And to the extent that you need network effects to retain interest in a site, can all these social networking sites survive over the long-term if they cannot retain attention: i.e. as people stop using the sites that creates a momentum where others stop using the sites as well, and the site fades.  Perhaps some only need niche membership to survive, assuming there is a sustainable revenue model that the niche can support.

As I have said before (here and here and here, for example), something that helps contain the risk from a founders’ perspective of limited attention and time of users is the need for companies to make bets to become “social.”  So if you can make something compelling in the short-term, then you can pass on that risk to someone more willing to take the risk.

Here is an excerpt from Bryce Roberts’ post:

“Facebook is less like the hot new dance club and more like Wal Mart. Its huge and you can find just about anything you’d need there. But if you’re into fashion, you aren’t going to buy clothes at Wal Mart. If you’re into cycling, you’re not going to buy your bikes there either. Both Wal Mart and Facebook are great businesses, but neither are suited for all people all the time.

Entrepreneurs and users understand this and are building and flocking to services that deliver a more satisfying user experience for various interests or social circles. As these services are adopted the social graph created morphs to the new context. The way I’ve organized my social graph on Twitter is very different than how I’ve done so on Tumblr. The people I follow on Foursquare are different than those I follow on Instagram. I don’t chose just one of these services to the exclusion of all others, in the same way I don’t chose to do all of my shopping at Wal Mart.”

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