Social Diversification

Social Media Explained
In preparation for our conversation on The Bean Cast this week, I jotted down some thoughts on the state of social networks. Hence this post that is a bit outside my current explorations. But it is in line with the idea of making learning the center of our work lives — through experimentation, feedback, and through perceptual knowledge from exposure to successful examples.

What we discussed on the podcast

Recent news seem to indicate social is in trouble. Twitter is being attacked from all sides for missing earnings and struggling to attract buyers for new ad products. Yelp misses earnings as well. Secret closed its doors. And LinkedIn missed earnings, losing 20% of its value. 

Bob Knorpp:

Is the social juggernaut about to have a shake-out? Is this all about too much Wall Street pressure or is there something really wrong with the models? What does this do the future IPOs?

A lot has been said about unbridled silicon valley investment enthusiasm, but is that really a problem… are the bets still good ones? Why does Facebook remain seemingly immune from this? What do these social companies need to do to stay relevant?

My take on social diversification

Since the beginning, I've been an avid user of Twitter — and I use it to capture signal through hashtag, content search, people I follow, and lists.

When you find new people to follow, you should always check out who they follow for ideas on who else looks interesting, for example. Want to know what is going on at conferences? Check out my public list. I've written extensively about Twitter, how it's the most media-ready of all social networks, and you will find many posts aggregated in this 7-year anniversary post.

Twitter is the ideal tool for listening, but if I were a new user, I would not know where to start. I agree with Ben Thompson:

Were Twitter able to consistently capture this signal and deliver effective ad units that caught their user’s attention, they could command some of the highest average revenues per user on the Internet.

He says Twitter needs new leadership to regain some of its credibility internally, with developers, and with Wall Street.

Twitter active user growth is still too small compared to their current size. Long-er term users like me have found utility and value over time, growing with the service. Newer users have many more options with other social networks, so they would need specific reasons to sign up and remain active on Twitter based on their interests. As Thompson says:

Twitter could empower third-party developers to build these sorts of applications that feed back information into the Twitter interest graph. An application like Nuzzel, for example, which uses your Twitter graph to create a news app, has much more of a one-way relationship with the social network: Nuzzel is getting all the benefit, and not sending much information back to Twitter.

Twitter would be better off retooling their API and developer agreements to ensure they are learning from every application they interact with, and in return sharing their graph along with advertising in the form of their MoPub or Namo Media-derived offerings.

The advantage of this approach is that the imagination and ingenuity of a massive developer ecosystem will always be far faster and more innovative than anything any one company can do on its own — just ask Apple.

Twitter is facing the issue that it burned its bridges with developers in 2012 (and, two weeks ago, with its data providers.) Burning bridges is hardly ever a good idea. The wider range of outcomes we can achieve with technology calls for creative problem solving — learning with the developer ecosystem is a powerful form of collaboration.

Another recent decision by Twitter leadership prompted entrepreneur-turned-VC Mark Suster to comment on the question of whether you can build your business on someone else's platform. He says:

DataSift was selected as the topic data supplier for Facebook, which allows companies to analyze a data feed that is > 20x larger than the entire Twitter feed and creates privacy-safe insights from a network of 1.4 billion people.

We never built our product on one partner’s data platform but on many (20 primary data sources plus 100+ smaller ones) and Twitter’s move doesn’t “shut down DataSift” it simply takes 1,000+ customers who consume Twitter data through DataSift and makes their life more difficult.

[…] customers will have to do some technical work to migrate products and will lose DataSift functionality that Twitter / Gnip does not possess directly. They will of course try to plug these technical gaps over the next 24 months but with pressures on other parts of Twitter (ad monetization, ad syndication, UI improvements to stem customer churn) – business integration products will of course have to compete for scarce resources as happens with any company that is trying to serve consumers & businesses, ad products & data products as well as 3rd-party developers.

Twitter strategy has shifted. Suster offers some perspective on Twitter vs. Meerkat as well.

Analysts keep comparing Twitter to Facebook. But it is unfair to compare the two. In addition to having many multiples of users, Facebook's strategy to build a family of apps for messaging, news, specific events, etc. is paying off. WhatsApp has 700 million monthly active users, Messenger has 600 million monthly active users and Instagram has more than 300 million. At last reporting, Twitter has about 302 million monthly active users.

While Twitter is about brevity and news, Facebook is more personal, about people you know and their stories. On Facebook, brands can segment audiences better based on more granular criteria in terms of location and interests and plan for a global audience or a specific group. User size, product pipeline, and constant experimentation to improve its services are helping Facebook learn rapidly what works. Taking care of existing users is how Twitter first gained its base. Improving products and user experience on the platform should be the ongoing focus, not Wall Street demands for rapid growth in short times.

Social networks turned platforms should work on product diversification, collaboration with the developer ecosystem, and embrace a culture of experimentation.

In that respect, with 364 million total members, LinkedIn’s network is growing at a good rate (about 5% annually) thanks to diversification. Its new ad solutions, Network Display and Lead Accelerator, have been rolled out only to a limited number of advertisers.

However, advertising is just one part of its services. Talent Solutions makes up the bulk of its revenue, Premium memberships comes in third. The recent acquisition of, an already profitable ed-tech company makes strategic sense for LinkedIn. Analysts view the acquisition positively. Sramana Mitra says:

Analysts estimate the corporate training market to be a $130 billion industry and the content market to be a $20 billion industry.

[…] The move will not only help LinkedIn improve user engagement and content as professionals will now have access to good educational content, but it also will enable LinkedIn to help professionals improve their skills.

As for Yelp, CEO Jeremy Stoppelman said in the company's earnings call:

Given our focus on the consumer, we don't generally support those types of ad products.

Social may still by and large be ad-supported, and it is growing up. Product and service diversification is part of the answer. But no matter how people use a platform, the social network, the app, the tool needs something solid to survive. A business plan vs. a tactical Hail Mary or they’ll be burning money… and users. 


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