The Brooks Corollary of Social Networking Theory
Several months ago, around the time that Mixx launched, I remember reading an article floating around on Sphinn entitled “The Importance of Being an Early Adopter.” The article focused on Twitter, describing the tangible benefits for social media marketers of building their brand in a smaller community, a brand that will gain significant importance as the sphere of that particular site grows larger and larger.
“Of course, there are exceptions to the rule, but usually early adopters tend to exert greater and greater influence on the network over time. Which means it’s like a little social pyramid scheme: if you’re late, you’re screwed.”
Largely without knowing it, David Brooks, my second-favorite columnist behind Thomas Friedman, authored an incredibly insightful corollary to Mashable’s theory, encouraging me to put together a hodgepodge of thoughts I’ve meant to get down in writing for some time now.
The Cachet of Being an Early Discarder
I’ll try to sum up Brooks’ terrific piece in just a few lines:
“In the first place, …[m]aximum status goes to the Gladwellian heroes who occupy the convergence points of the Internet infosystem — Web sites like Pitchfork for music, Gizmodo for gadgets, Bookforum for ideas, etc. “
“Second, in order to cement your status in the cultural elite, you want to be already sick of everything no one else has even heard of.”
If you know Brooks, you’ll know his style is often outrageously tongue-in-cheek, as above. But frequently, the reason his tongue there in the first place is to feel around the oversized grain of truth embedded in his cheek.
Even Google Isn’t Above the Brooks Corollary
Pure online companies seem to me to be qualitatively different from offline companies that dominated the 20th century. Companies like GE, GM, and P&G spent billions on advertising to establish themselves as trusted brands over the last hundred years. Their revenues were, and still are, largely based on recurring purchases from customers who visit the store and continued to spend money on their products because they were familiar with them.
By comparison, in the 21st Century, Big G has simply built the best mousetrap. Google, like the other successful offline companies, has spent pennies on branding compared to successful offline companies. And its revenues aren’t based on a consumer “product;” rather, on its ever-increasing share of searches.
Then there’s the social aspect of Google. Remember when Google first came out, back in the late 1990’s? I was a freshman in college, still using a conglomeration of AltaVista, Yahoo, and HotBot to do my searching. All of a sudden I heard about this new site called Google from one of my friends. I felt like a loser for never having heard of it, and my buddy Daniel got a little high from enlightening a rube like myself on the wonders of that fantastically plain search interface. Brooks is spot-on with thesis #1 about the status bump of knowing about something cool that your peers don’t.
In the 21st century, all that branding and familiarity just aren’t that important. In fact, it’s more than a little thrilling to try out a brand new website or a brand new service that our web-savvy peers are talking about.
So what’s the difference between the offline business model and the online business model? Online revenue models are predominantly based on either subscriptions or advertising—neither of which requires any substantial investment from consumers. Apart from e-commerce, the largest consumer “spending” in most web financial models isn’t money—it’s time.
The userbase is of critical importance—the more people invest into a particular app or a particular network, the less likely they are to leave. Google clearly recognizes this; it’s why they have their hands in so many unprofitable, user-oriented cookie jars (Calendar, Gmail, Reader, etc.)—bundling services like these keeps users addicted to their search service as their default homepage.
Frankly, Google still owns the rights to the best mousetrap. But that doesn’t stop people from trying out new services; look no further than the hype around Cuil just in the last month. Now of course Cuil is in some ways a terrible example because it was such a phenomenal let-down. But imagine if it HAD been able to return decent results? Even with ALL of my commitment to Google products (all three of the above, and many, many more), I’d have switched in a heartbeat, for my search needs at least, to stay ahead of the “cool” curve.
In summary, it was far more costly for traditional offline companies to establish themselves as a trusted brand in the 20th century, but they stood far less risk of being discarded for an unknown upstart.
A Cautionary Tale for Mark Zuckerberg, Biz Stone and Others
I’ve had several discussions with friends about why Mark Zuckerberg refused to sell Facebook, even at a gaudy billion-dollar valuation. My friends’ arguments usually run along the lines of the following: Mark feels he has created the next Google, with an idea that only comes around once in a lifetime (and that may very well be the case).
My “advice” to Zuckerberg has always been to take the money and run.
Why? In our increasingly ADD world, the marketers and the folks who are so critical to the growth in popularity of a particular website are often the first to leave it. As Brooks would say, not only is there incredible cachet for the web’s elite to dismiss Facebook as “SOOOO 2007″ but as Mashable would say, there is the importance of being at the rise of the next wave, rather than at its crest. Even social networking zealots only have so much time to devote to one particular interest, or at most a handful of platforms.
One thing hasn’t changed since the original dot-com bubble burst in 2000. It’s hard to grow, and even maintain, a userbase once you’ve reached a certain level. The web is a graveyard of ill-fated plays in a high-stakes, web 2.0 game of Scrabble. “Akimbo.” “Kiko.” “Friendster.” Heck, even Scrabulous lost a huge chunk of its user base after being acquired by a more corporate entity!
I have a lot of friends on Facebook, so I still use it occasionally. But if even 15 or 20% of them all of a sudden find some new hot service, as with Google, I’ll switch in a snap. I said earlier that time investment in a particular platform is critical. In comparison to the commitment to something like a Gmail address or a Google Calendar, the commitment to a Facebook profile is minuscule—what does it take to setup, maybe 45 minutes?
I want to get on that next wave, not ride the existing one. I barely made it onto the crest of the Twitter wave, and I won’t make that mistake again when “the next big one” comes along.
Speaking of Twitter, it remains to be seen whether that platform will be able to keep pace with competitors and quasi-competitors like Plurk, Pownce, and Friendfeed, among others. Perhaps it will innovate beyond its current utility. Even though it pales in comparison to Facebook’s multi-billion-dollar payoff, $100 million is an awful lot of money. Especially when your service hasn’t been a model of reliability to-date and you haven’t made a nickel in profits yet.
Zuckerberg, Stone, all of these high-level web entrepreneurs are brilliant. I have no doubt they could come up with even more amazing ideas in the next few years. And frankly, serial entrepreneurship matches the serial mindset of the web generation far better than the big brand mentality of previous generations.
So Mark, Biz, know that I’m rooting for both of your platforms. I think they’re incredibly rich and fun to use today. But don’t complain when my friends and I find something else to gush over in 2009.