Brad Feld

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Another View on Vertical Social Networks

Jul 05, 2007
Category Technology

Once again, David Cohen has “encouraged” (euphamism for “hey Brad, c’mon and write that post already”) me to respond to his post titled Big or Bullshit – Vertical Social NetworksDavid called bullshit – he thinks “the aggregators and toolsets that emerge around identity” will be big.

I’m a horizontal guy.  When I look at where I’ve made money as an investor, it’s mostly in things that cut horizontally across a domain, rather than a narrowly targeted vertical activity.  That’s where my bias lies.

But I also like to think that I’m a flexible thinker that is always willing to learn.  I only really learn by doing, so I’ve made a few angel investments in vertical stuff, including Wallstrip (bought by CBS), Dogster (dogs and cats), Shelfari (book lovers), New West (online magazine about the New West), and The Enthusiast Group (for – er – enthusiasts – stuff like YourRunning and YourMTB.)

I’ve learned a lot.  Dogster has blown me away with their success – who would have thought dogs would have more friends than a typical MySpace or Facebook dude.  Some of this is Ted Rheingold and his teams obsessive focus on their business while some of it is the amazing power of a compelling vertical network.  But the real magic is the traffic numbers and the corresponding revenue generated by escalating traffic and a high eCPM due to tight targeting.

Not surprisingly, generating organic traffic is the biggest challenge for a vertical social network.  The second biggest challenge is stickiness – once you get the user, what do you do for the user to keep her using the site.  Primary content generators – like Wallstrip and New West – aren’t really social networks – yet.  But you can see how they could evolve toward that with a little elbow grease (and a squint.)  The others rely on regular usage – and this is where the concept of vertical social network starts to stall.

I woke up one day and had 2,741 logins to different social networks where I had “friends.”  That’s 2,740 too many (some of you might argue that it’s 2,741 too many.)  I’ve got the same friends on multiple services, but there is no integration between them.  Aha – the need for a social operating system, ala what Facebook announced with the Facebook Platform.

But living in a single platform doesn’t work, unless it does everything I want and Facebook has a very long way to go.  I doubt I’ll shift my various blogs to Facebook (even if I republish them there) so suddenly I have my own Vertical Social Network – people that read my blog (and the blogs in my blogroll.)  We are right back to horizontal land – ala Lijit, MyBlogLog, and Me.dium.

I have three conclusions from all of this.

  1. Vertical Social Networks don’t need a lot of cash to get to an interesting point.  None of the companies I have invested in have raised over $1m and it’ll be clear before they get through the $1m whether or not they are on to something.
  2. All Vertical Social Networks need to be creative about both generating traffic and keeping traffic.  Aha – the value of widgets.
  3. If I hear another person with a plan to be “the MySpace for <category X>” (now people are saying “the Facebook for <category X>”) I’ll puke (not really, but this isn’t an effective way to get my attention.)

I don’t know whether Vertical Social Networks are going to be big or bullshit.  However, I do know that I’m going to continue to hang out in horizontal land.