Is Facebook a Black Hole Sending Social Startups to Oblivion?

Facebook is reportedly testing a new feature to auto-tweet a link to Twitter when you post pictures on Facebook. All Facebook sees this as a danger sign for TwitPic, while TheNextWeb hints that Facebook is aiming for

This is already becoming a trend. When giant Facebook introduces a new feature, some startups are going to feel the heat. Let’s look at the ground we have covered so far and what may lie in the future.

Startups For Conversation

In Aug 2009, Facebook acquired FriendFeed. We all know what happened since. When Facebook wants to be the place where you go for having conversations, what is the fate of startups focusing on FriendFeed-style conversations? Simler was hyped to some extent last year, and has shut down already. Two hold-outs in the conversation space are Cliqset and Amplify. Here are traffic stats for Cliqset, FriendFeed, and Amplify over the last year:

The graph doesn’t make sense if you include Facebook in it, as both Cliqset and Amplify are indistinguishable from the X-Axis. Both of them have had rave reviews from early-adopters and tech bloggers.

Facebook Groups may well be the nail in the coffin for startups aiming to be the place where you have conversations. Even the giant Google is still struggling with Google Buzz to establish it’s own conversation space independent of Facebook. I don’t see much conversation happening on Windows Live, except as a shell to Facebook.

Startups for Lifestreaming

In my view, the Facebook Newsfeed has effectively demolished the hype surrounding Lifestreaming. StoryTlr shut down in Oct 2009. continues to exist, providing a free way to own your own domain, content, and identity. Have you heard anything about it in the last six months?

The concept of having your own content on your own domain with your own identity appears to have died in the age of the social web, except in the hearts of a few digerati.

Social Commenting

Facebook has now introduced voting in its comments plugin. Once it becomes adequately feature-rich, it will be an attractive option for publishers wanting to capitalize on traffic from Facebook. This can be a direct threat to Disqus, Intense Debate, and Echo, as noted by RWW last month.

Why would Facebook be interested in comments? A comment is a stronger signal than “Like”. Users may “Like” content casually, but when they comment, it indicates true engagement.

None of these commenting startups have been able to capitalize on the social aspect of commenting, where you can follow where your friends have commented. Facebook has the wherewithal to do this and I would expect this to be a focus area for Facebook in the future.

Social Startup Funding

Last month, Kleiner Perkins announced the launch of the $250 million sFund, in partnership with Facebook, Amazon, and Zynga to encourage innovation in social. From the release:

Facebook will contribute access to its platform teams, beta APIs, and new programs, like Facebook Credits.

In other words, integrate and play nice with Facebook if you’re a social startup eyeing any of that money.

Is there room for startups in the social space independent of Facebook? Twitter has not exactly been kind to developers in its ecosystem, while the waiting game with Google continues. The Age of Facebook seems to have begun.

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  • Mahendra – This article outlines some possible opportunities for startups that are in the social space ecosystem and how they can try to identify niche opportunities and survive –

  • Great post Mahendra 😉

    The interesting thing is, Google, Yahoo and Microsoft have the pieces to the puzzle to combat Facebook or notes to the song sheet. They just need someone to arrange the pieces into a better puzzle.

    Gmail and Yahoomail for example could potentially threaten Facebook if they wanted. All Google and Yahoo (and Microsoft) have to do is convert these spaces into real time engagement environments. Why can’t they aggregate or simplify everything that Facebook is doing? photos, Picasa and Flickr do better. chat, gChat and YMessenger do well. Status updates/Newsfeeds…pretty simply addition one would think. Innovate on the newsfeed and they bypass Facebook’s patent on the newsfeed. Partner with Skype and Twitter and you have a nice comms tool.

    What do you think?

  • Atul,

    Thanks! Yes, niche networks was on my mind initially, but missed it while actually writing the post. 🙂 Semil builds on Dave’s thoughts nicely.

    Appreciate the input.

  • Hi,Microsoft is already doing aggregation with Windows Live. Google is already trying it with Buzz, integrated with Gmail to a great extent. Arranging the pieces seems to be the most challenging aspect, having discrete building blocks has obviously not helped.

    Thanks for your comment!

  • I think the only way facebook can fail is people become bored of facebook. I wonder if that will ever happen. Gotta wait and see. Might never happen, facebook might become a network effect monopoly ie people are forced to join facebook because all of there friends are already on facebook 🙂

  • you never know, 5 years down the line, government might try to break facebook like how they tried with microsoft or how they did succesfully with AT&T

  • But have they integrated these services into the GMail or Windows Live windows? Facebook and especially Twitter are showing the way IMHO.

    Reduce the click friction, improve the integration astronomically and they’ll be on their way.

    The future is ours to see as they say 😉

    Thank you!

  • great post mahendra.

    The question is whether any of these startups are truly businesses or are they merely features?

    If facebook acquires company X and shuts it down so company Xs customers not longer receive a service, then if company X was economically viable,another entrepreneur would step in to meet the need.

    The fact that they don’t tells us something about the viability of those businesses.

    And the fact that the founders sell tells us something about how the person best able to gauge the return from company X views the real and present offer from Facebook.

  • Very valid points, Azeem. Thanks for sharing your thoughts.

    I think the sheer size of FB is what makes acquiring a critical mass for startups so difficult. Economic viability would otherwise have been a different equation, with a smaller critical mass sufficing.

    But I agree with you, in that differentiation between a true business model and just a set of features is crucial.

  • Hey Mahendra
    You know I think could be a good case study for us. They had just announced 10m file drops. And their multimedia press release product (presslift) was being well receveid by distributors and commercial partners–it came up more than once in conversations I was having in the UK.

    So I would argue that by most metrics has reached critical mass. They were also backed by $7m in venture capital – so had adequate firepower to keep moving forward and develop a business.

    I guess my point is one about information. The entrepreneur has the data –his (overoptimisic view) of his own prospects set against the reality of his view of the cash on the table and Facebook stock. You make a reasonable choice at this juncture.

    It would be interesting to understand the calculus.

    Zynga shows that Facebook can help not hinder achieving critical mass. And Twitter distribution is showing the same sorts of dynamics.

    The question is whether you are really filling a market need or not. Or whether you had an ephemeral position based on an early read of the market that subsequently turned out not to be the case. If the latter, then your job is to pivot and pivot fast.

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  • Again, agree with you, and afraid we can’t place ourselves in their shoes and look at their value-judgments., HotPotato were recent “acqhires” where Facebook didn’t really care about incorporating features but were interested only in the people.

    These examples are a bit off the mark as their features didn’t trespass Facebook’s core ‘social territory’, which was the key thrust of my post. For startups like, where feature-set is ephemeral, there are others like Dropbox who’re still active in the same space.

    Zynga leverages FB’s social platform and is ideally suited for it. Question I’m raising is can any startup in the social space afford to ignore FB’s social platform?

  • It is very informative blog.

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