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The Social Web Economy: Distribution Companies (Platforms) Posted: 29 Sep 2008 10:00 AM CDT This is a continuation in the series “The Social Web Economy“ On the social web, widget companies and application platforms are the primary distribution companies. Facebook, MySpace, Clearspring and Gigya are all examples. These companies strive to expand their reach either through partnerships or through sheer force. Facebook for instance has enough momentum that they can grow virally. Widget platforms on the other hand are forced to sign agreements with large product organizations and media companies to expand their reach and incentivize developers to build on their platforms. Just as there is tension between product and distribution companies, so too are there tensions between widget platforms and broad social platforms. The reason is that they are all battling for developer attention as well as the attention of large product companies. This is an extremely challenging role because not only do they need the developers and product companies (which are essentially large teams of developers), but they also need to attract the attention of advertisers. The benefit of this position is that attracting advertisers is as easy as calling them. Most brands managers will pick up the phone if somebody from Facebook calls. The problem that many of these companies are running into is that the product companies who are building reach through the platforms are now undercutting their run rates on advertisements. Whoops! This isn’t completely horrible though as a side-effect is that it is in everybody’s best interest to work together to try to increase the overall run rates (cost per thousand impressions (CPM), etc) across the board. Unfortunately there are some substantial hurdles to get past before this happens. One other interesting note about distribution companies/platforms is that these are the companies that attract the largest investment dollars. Investors are looking to put their money in platforms for the most part, not product companies. That’s not to say that product companies don’t get funding, it’s just that they don’t receive as much funding. That’s because platforms will always be larger (at least they should be). Next Post: “The Social Web Economy: Social Web Agencies”

Now is the Time to Start! Posted: 28 Sep 2008 02:29 PM CDT With all the banks going under (or at least getting acquired) and Congress preparing to write a check for $700 billion to bail out the economy there is a lot to be pessimistic about. Honestly though there is always a reason to be pessimistic. I’m Angry & Confused Too It’s hard not to be a little angry (if not very angry) that a bunch of people that participated in making bad decisions are ultimately getting bailed out. It’s also hard to make sense of all the chaos when it’s going down. I spent all day Friday trying to figure out what exactly happened, why we got here and what’s being done (here’s what I’m reading on the issue). I’ve felt the same emotions many times over the past 8 years though (September 11, the war in Iraq and more … go here to get your dose of negativity). The only thing that has ever worked for me is to read about it, be aware of what’s going on, and then get over it and press on. There’s really not much I can do and while it’s important to be educated on the issues, it’s kind of hard when there is little transparency about what’s taking place behind closed doors. Now is the Best Time to Start! I’m a little disappointed in Jason Calacanis who took what is ultimately a leadership position and gave everyone something to cry about. Negative sensationalism works though. Jason at least has a few positive notes, none of which were this: now is the best time to start. Ask any entrepreneur and if you can build a business (which means a company with revenue) now, then you will be able to thrive during the good times. This morning I reached out to a few of investors that I look up to (including Howard Lindzon and Brad Feld) to hear what their thoughts are on the economy and start-ups. So far the response has been positive. One of the investors has already funded eight start-ups in the past two months and four more closing next month. While there may be a recession, there is a massive opportunity to build something now. I don’t remember who said it, but there is a phrase that is along the lines of “The bigger the hole that you dig, the greater the opportunity that you have at building something many times greater.” In essence every seed for failure comes with a greater seed of opportunity. Is the economy looking bad? Build a business! Your business will be much better prepared to thrive during the great times. What Are You Building? So now that we all know now is the best time to start a business, the only thing left is to figure out what you are building. What are you going to build? One important factor when building a business during these times is focusing on revenue generating activities. While investing in long-term and working on building value is important (through re-investing in your business), it’s important that a solid portion of that investment is in sales. Aside from that, there is not much else to say! After spending a few days reading one negative article after the other, I’ve had enough. It’s time to get back to business and build something that’s valuable. There’s nothing else I’d choose to do … You should do the same thing too!

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