Creating a successful social network

Yesterday, I discussed some reasons why I thought we would not see another bust on the internet comparable to that of the dot-com bust (at least in this Web 2.0 era). Via the blog of my first commenter, I discovered two interesting articles on why social networks can succeed and why others do not. A quick summary:

Why social networks can succeed

1. Viral Nature. People want to expand their networks, so they invite their friends.
2. Online Identity. People want a place to call home on the web. Ever see people link to their MySpace profile on forums? Additionally, people want to be able to customize their profile.
3. Enhanced Knowledge.
4. Basic human need to share. People like to share their thoughts, opinions, and experiences. Obviously why many networks allow users to have blogs.
5. Basic human need to connect. People need to connect, and people love to expand their “network” of connections.

Why social networks fail

1. Privacy concerns. Turn on CNN. I am sure if you watch it for an hour you will see something about websites online collecting your data, selling it, and sending you truckloads of spam. But then again, remember that many social networks ask for data much more personal than just your email!
2. No real reward or penalty system. Not all “connections” are created equal. I may have 500 friends, but really, how good of a friend to me are the Red Hot Chili Peppers? A social network should reward people for quality connections.
3. Not granular enough. As noted in #2, all relationships are not equal. But there are also different types of relationships. Jim is my friend, Sally is my co-worker, and the Red Hot Chili Peppers are my idol.
4. Not integrated with other apps. Well gee, knowing that I have 500 “friends” is pretty darn cool, but now what? The author of this article suggests that social networks should take their integration a step further to make them more useful. LinkedIn is a good example. You don’t create a network for the fun of it, you do it to create a network of people which ultimately could lead to your next job.
5. Walled gardens. Share information with other social network sites, don’t keep it all for yourself. If the larger social networks shared information with the smaller ones, people could easily go to their niche-specific social networks for their unique fix, and yet still have access to all of their friends and contacts.

Web 2.0: Waiting to burst?

As someone who is currently developing a “Web 2.0 application” (as if we know what that means anymore), whether or not Web 2.0 is another bubble is a question quite central to me. Some people believe that the more important question is whether or not Web 2.0 is relevant to the public. I don’t think that is really an issue. There are undoubtedly more people online now than ever and with sites like MySpace and Flickr receiving attention world-wide, I don’t see how Web 2.0’s relevance to the public could be a valid concern. Sure, 99% of the the new Web 2.0 contenders have not yet been “discovered” by the general public (and probably an equal percentage of websites actually will be discovered), but that doesn’t mean that Web 2.0 hasn’t already had an enormous impact on us already!

But the fundamental question remains: is the so-called “Web 2.0″ just another bubble waiting to burst? Personally, I don’t think it is a bubble in the traditional sense. As one startup C.E.O. in Techcrunch’s 24-minute Web 2.0 Documentary states, a lot of modern Web 2.0 companies are seeing acquisition as an easy get out of jail free-card. The reality is, only a handful of the hundreds of Web 2.0 companies will actually be bought-out. Del.icio.us and Flickr quickly come to mind, but I really believe that their situation will never be the norm.

I do, however, believe that in perhaps as little as a two to three years you will see a large fall-out of Web 2.0 companies. There just isn’t enough room for everyone. There can be perhaps two or maybe even three major competitors, but after that, there is just not enough room. I think we will start to see a lot of failing Web 2.0 businesses drop out of the market because of the saturation, not because their products are necessarily inferior. That said, I don’t believe it isn’t going to completely kill the core concepts backing Web 2.0, such as simplicity, enhanced user interaction through desktop-like features, RSS, and so on.