Leslie Walker has a column online today talking about whether social networking sites–the Friendsters, Tribes, LinkedIns, etc.–that are getting VC bucks can actually make money–ie do they have a viable business model?
Leslie says: “Venture capitalists…are throwing money at the startups as if one was destined to become the next EBay, even though it’s far from clear that any will be more profitable than e-mail, instant messaging or previous Internet communication tools. ” She goes on to outline all the social networking and community sites being developed and invested in by folks in the Valley, and quotes Sequoia Partners’ Mark Kvamme as saying, “We are in the process of inventing Internet 2.0.”
What’s interesting about this piece to me is that Leslie starts off being all business-y and reflective–as in is there a business model for these folks? And then ends up dropping the ‘can they make money’ question in favor of statements from social networking executives such as Mark Pincus and Reid Hoffman.
The truth is that–at the end of the day–these services need to find a way to make money, both to offset their costs, and to function as businesses. Aggregating users shows proof of concept, and then the next step is for the transactions, premiums and ad revenue to kick in.
Leslie Walker has a column online today talking about whether social networking sites–the Friendsters, Tribes, LinkedIns, etc.–that are getting VC bucks can actually make money–ie do they have a viable business model?
Leslie says: “Venture capitalists…are throwing money at the startups as if one was destined to become the next EBay, even though it’s far from clear that any will be more profitable than e-mail, instant messaging or previous Internet communication tools. ” She goes on to outline all the social networking and community sites being developed and invested in by folks in the Valley, and quotes Sequoia Partners’ Mark Kvamme as saying, “We are in the process of inventing Internet 2.0.”
What’s interesting about this piece to me is that Leslie starts off being all business-y and reflective–as in is there a business model for these folks? And then ends up dropping the ‘can they make money’ question in favor of statements from social networking executives such as Mark Pincus and Reid Hoffman.
The truth is that–at the end of the day–these services need to find a way to make money, both to offset their costs, and to function as businesses. Aggregating users shows proof of concept, and then the next step is for the transactions, premiums and ad revenue to kick in.