The New Internet Gamble. Venture capitalist have poured $100 million into the social software space, according to this story. One scenario has on-line social networks evolving into places for buyers and sellers to connect directly. [PaidContent.org]
Social networking software is all the rage, just like the Internet was in 1999. Will it turn out to be another bust? You can learn something from this renewed capital interest in business relationships-- especially now that they have the interest of venture capitalists.
In this wave of capital financing most venture capitalists are requiring clear means of generating revenue, some are refusing to cover operational costs and only covering the technology. This is good, because it forces social software networks to create meaningful revenue. It may also help the technology be better developed and more flexible in application.
If you are not already using social networks to advance your business (or at least encouraged new sales and marketing folks without their own inner circles), you should take a look at what is available. Social networking software can improve your ability to track relationships, while the jury is still out on their value for creating meaningful relationships.
Social software will work for those people who know how to use it, but will be a holding of useless relationships for those who do not. The most important factor is your understanding of building profitable business relationships. Right now, social networking software provides a vast network of people looking for something with a select few actually getting it.
If you are reading this weblog it's likely you already understand how to get something out of these networks. You've probably already updated your profiles, then went back to building those relationships already close to your business. This is good, but many don't have the tools you've been given.
For executives in business you must look beyond what software can provide. Younger staff may benefit from social software, but many will spend hours entering names and numbers into a system. Meanwhile, you'll be out shaking hands with people who make a difference to your business.
Build your own inner circle and let software be your slave to track the complex needs of people in these relationships. Software is also useful for verifying information. The real power comes to those who make meaningful connections with those people they already have an investment.
Let's avoid jumping to the next big thing when what you have isn't properly cultivated. Social networking software will have its place at is improves customer relationship management or supports data verification. However, at this time, use these networks to let people know who you are, what you can do, what you need, and as tools to connect with others offline.
The fact is, you already know the customers and employees that will take your business to the next level. If you are distracted by looking "out there" you'll miss these valuable diamonds right under your feet. With software licensing fees for social networking software so high, a simple customer relationship management package can provide the same benefits while keeping your data secure in-house.
If there is one thing to learn from the way venture capitalists move, it is that they are part of their own network that tends to move together. You'll always make more money off of three people in the same industry than you will with just one. There is a culture to take an idea, expand it by creating competition, commercialize it, and turn it over quickly.
Should there be a crash, you would have generated enough revenue with relationship based marketing activities to buy any technology you like at it's future discounted price. You don't have to be on the bleeding edge, you won't miss anything if you're providing for the needs of the customers you already have (and those just like them.)
Venture capitalists know how to use the media to share their message, so avoid the hype by asking critical questions of this new technology. Right now many are attracted to social networking software because it seems like a novel idea, while it's nothing new. Remember, individuals of meager means have created vast business empires without even telephones-- it's you not the technology that will advance business relationships.
/ b2b-websites |?social-networking /
By Justin Hitt at January 1, 2004 4:45 PM Subscribe in a reader