Today marks the peak of social networking

at least that’s my prediction. in the past week i’ve been pitched on three more social networking ideas. while i like and respect the people, i got a queezy (sp?) feeling hearing the ideas. painful reminders of march 2000 when the last people to show up were still pitching ecommerce it ideas.

now i’m sick of the ‘is this the bubble talk’, but we do all need to remain somewhat conscious of the environment we’re working in.

also heard today about a web 2.0 mashup company getting $5m in first round funding.

does anyone else ever wonder how all these newly funded companies are ever going to see exits without an ipo market? i do get that if they are good businesses and cashflow positive, the financial markets will follow. however, i’m not seeing a lot of companies hitting big numbers. even in the bubble it seemed like companies were mostly doing big revenue numbers.

curious if anyone else is seeing a lot of companies making money?

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7 thoughts on “Today marks the peak of social networking

  1. Mark,
    A lot of the “big revenues” during the boom were at very low and sometimes negative margins. I’ve got four projects in which I’m significantly engaged. Two are profitable and growing quick (iUpload and Dogster), and two are cheap enough to bootstrap indefinitely (WINKsite and MyBlogLog). All four will likely raise money this year, but the amount to be raised is approximately 1X forward revenues in all cases. Modest raises to execute on well-defined plans where the growth is such that liquidity comes when the market can handle it with no need to rush or drag heels.
    Re: social networking. Dedicated social networks may have peaked, but social networking creates the kind of 10X economic advantage in customer acquisition that will make it a basic CRM feature for everyone.

  2. Totally agree. With most consumer companies offering their application/service/solution for free and relying on Adsense, it really does seem difficult to see any of them being profitable, especially the ones that have raised money and have a significant burn rate.

  3. Mark,
    I got this great idea. It’s a network for those that own or work for social networks. It’s called meta-social-network.info.
    But, we’re thinking about expanding to meta-aggregate all the other social-networks. What’d’ya’ think.?

  4. Personally I’m not seeing many (ones I have direct and indirect ties to) generate any revenue. Most are going after the niche data and the “We were here first” argument with hopes of selling it off in a couple years max. Personally I think bootstrapping solves a lot of those issues. If you’re providing a valuable service, be it saving people time or making the world a better place, then people will pay you for that service.
    If I was approached with a VC offer of $1 million for 30% ownership versus being forced to get a day job, I’d take the day job in a heartbeat. After all, with a day job I wouldn’t owe my boss $1 million and I could moonlight on the startup and be forced to optimize my resources.
    Just my 2 cents.

  5. mark,
    i’ve been asking the same question for months – and the only answer is adsense, which does not strike me as a pillar for a viable business. that said, many of these web 2.0 companies do not require much capital to develop or distribute so they may not have to generate a lot of revenue to cover their costs. as for creating a business to do an IPO or attracting an acquirer, that’s another issue.

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