The Blueprint for Social Startups From Now On

The Blueprint for Social Startups From Now On

When Twitter announced that they would be buying/producing clients for mobile phones and looking to advance their own web platform in attempt to crush other clients, many people started to wonder whether working with the Twitter API was a good idea (I was one of them).  Around that time, Fred Wilson, an investor in Twitter, basically told people to stop whining and build a “killer app.”  His point was that simple extensions of Twitter functionality (clients mostly) were things that Twitter itself needed to get right, the API wasn’t intended for them.  What the API was intended for was people who build novel things “on top” of Twitter, aka “killer apps”.

I’ve been thinking about this development a lot lately.  Mostly, I’ve been considering what that meens for social media as a business.  My conclusion: Social Media companies from now on will be more “market-driven” then “product-driven”.  A market-driven venture is a company that finds an under-served niche (market) and sells something that fulfills that market.  A product-driven venture is a company that develops a new product that no one knows they need yet.  They promote that product and, once people understand what it can do for them, it creates its own market.

Let’s consider two recent successful examples.  Cupidtino is about as purely a market-driven venture as you will ever find.  The website is a dating site for mac owners only.  The entrepreneurs behind Cupidtino didn’t invent dating sites, they didn’t even really advance dating sites.  What they did, was found a market segment (niche) that needed a dating site and brought it to them.  FourSquare on the other hand is a product-driven venture.  Few people were sitting around thinking, “I want to be able to check in to places.”  Instead, FourSquare developed a technology they thought would be novel and then, through promotion, built a market for it.

My theory is that this second type of company (product-driven) will continue to become less and less common in social media as the concept matures.  However, now that the concept is fairly mature there are many many many underserved niches where it can be applied.  Of the next 100 successful startups in social media, 95+% will be market-driven.