Generated Transcript

David Hornik

[00:00:00]
Welcome to the 280 south edition of VentureCast. I am driving back down from the city having spent some time talking with a friend about the resurgence of social networking. So I thought I might just comment on it for a few seconds. In fact, I actually have had a number of inquiries or press inquiries from folks writing new articles on social networking and as many listening I’m sure recall, there was this period of time, it was probably a year or even more than a year ago, when social networking, pure social networking, was all the rage. And there were repeated panels and discussions and conferences and it all began with Friendster and tribe and LinkedIn.

[00:00:49]
And so there was this first wave of social networking discussions that had everybody very excited about the applications in the enterprise, things like spoke and consumer space for just individuals. And so I suppose it’s not surprising that as we get to sort of the second generation of these social networks, that people are increasingly interested because you have outcomes like the MySpace sale for hundreds of millions of dollars in what in some respect is a pure friendster like social network, although I would argue is a much broader application than that. And you have the folks over at Facebook who’ve created this compelling social network like experience for college age students. And that has become an important part of college student interactions. And so there have been these, the latest, what I would call the second round of conversations about social networks.

[00:01:53]
And so I thought I would share sort of my thinking about social networks in this as it has evolved and the sorts of things that I’ve been saying to the press when they call and ask me, do venture capitalists still care about social networks or not? And my answer is a resounding yes, of course social networks are important. But the thing that I think we have all learned, the lesson we’ve all learned about social networks from the first instantiation of those networks to now is that the networks are not in fact the thing that’s of interest. What’s of interest are the applications that live on top of the networks themselves. And that the things that are meaningful now are meaningful web experiences and meaningful consumer experiences that are informed by your social network rather than the experience being the network itself.

[00:02:46]
And I would actually argue that that’s not new. I mean, I think that we’ve, we, over a long period of time in the web, we’ve seen this to be the case. I look back to things like egroups and Evite and you know, the ofotos of this world companies, all of which were focused ultimately on a social network of sorts, but they provided an application that was broader than Ophoto was photo delivery and photo printing. But the thing that was compelling about the photo sharing piece is that you could define groups and very easily upload photos and share them with your family, or share them with your friends, or share them with your kids. Soccer team and egroups was just that a collection of people around a particular topic could have been a particular club or an organization or a relationship, whatever it was, but then the communication was the thing that was meaningful, not that relationship in and of itself.

[00:03:43]
So I think that we’re really just building on that tradition, a tradition that has been important in the web since the outset. And I think to the degree that we got off track in the first generation of these pure play social networks that we didn’t recognize, you know, clearly enough that it wasn’t about finding out who was a friend of a friend, it wasn’t about recognizing that, hey, I’m six degrees away from Kevin Bacon. It was, hey, you know, there’s some interesting application here that would be meaningful if I could connect with Kevin Bacon or your field equivalent of Kevin Bacon, whatever that may be. So, yeah, I think that the thing that’s interesting, that’s interesting to the venture community, that’s interesting to me, as I continue to look at lots and lots of social networking companies, broadly speaking, is that the experience has evolved in an interesting and meaningful way. And now companies have figured out how to use social networking as the backbone to really great consumer experiences.

[00:04:49]
And if there’s anything we’ve learned over the last decade, it is that there is a lot of money to be made in compelling consumer experiences. And as a venture investor who spends a lot of time looking at consumer related technologies, that is the thing that’s of interest to me. The question is, how can you create a valuable experience for the end user? And then if you have created that valuable experience for the end user, there’s no question in my mind that you’ll be able to monetize it in some interesting way. And each of those experiences will have a unique way in which you can monetize it.

[00:05:27]
But first you have to create the compelling experience. And ultimately, I think the message of some of the early attempts at social networking for social networking’s sake was that after a period of time of discovering who your friend’s friends were and the friends of your friends friends were, you then realized, hey, this isn’t that exciting any longer. I’ve run of interesting things to do. Whereas the myspaces of this world focused around sharing interesting new music and dating and those sorts of things. And Facebook around all the things that make communications for college students interesting.

[00:06:09]
Those companies have created this compelling experience that makes people come back on a daily basis, on a weekly basis, spend a lot of time and get a lot of value out of the network. So as I continue to look at social networks and continue to evaluate businesses that either describe themselves as social networks or are built upon the underpinnings of social networks, that will be the thing that is most interesting to me, most intriguing and the thing that I will find most compelling are those experiences that are really great consumer web experiences that only gain additional velocity and gain additional value from the social network aspect of those businesses. There you have a few thoughts, a few random thoughts on social networking. And if folks are building social networks, I look forward to happening upon them and seeing the next generation of this stuff because it’s pretty exciting.