⚠️Time for Vertical Social?
In our first deep dive, we take a look into something that's brought us a lot of fun and a lot of grief: social platforms
What are we talking about this month and why?
We wanted to start off with an easy, approachable and new segment: Social Platforms.
Okay, that might be a stretch. Easy, yes. Approachable, kind of. New… Orkut was founded almost twenty years ago, and we’ve all heard of MySpace, so maybe new-ish makes more sense. The original stalwarts are either long gone, or have changed so much that they’re indistinguishable from what they were in the beginning - after all, Instagram was just for photos back in the day - and they all had to be square too.
When it comes to social platforms, and more specifically its branches of social media and social networks, nothing has been more pivotal in the last few decades. Consumer social was an obvious first choice to delve into.
Social Media v.s. Social Networks
When we talk about consumer social in general, there’s a variety of terms that get thrown around. Social media and social networks are two key ones and we wanted to differentiate between the two.
We want to consider social media as more of where we’re meant to create and share content. Think of the original mission behind YouTube or Twitter. On the other hand, social networks enable us to communicate with one another by posting. This would be the original iteration of platforms like Facebook and Snapchat.
Admittedly, there are weak differences between the two. It’s certain that we’ve used both terms interchangeably, but one thing’s for sure, and that’s consumer social isn’t exactly what it used to be. We’ll largely refer to the companies we talk about as “social platforms,” a blanket term.
Everything, everywhere, all at once
In business-to-business software, we talk about something being a “point solution,” i.e. a means to an end for a singular problem versus a platform with a variety of features and extensibility. Consumer social in the 2020s is no different, with every platform having myriad abilities in contrast to the “point solution” social networks they were a decade prior.
Twitter recently added video and voice calling features; Youtube has short form video now; Instagram and Tiktok have stores; Whatsapp has stories and developing community features. It is unclear what any of these are at this point, hence the blend or even transition from what we considered a traditional social network to a full-blown media platform. Everyone is trying to do everything, and while it might be confusing, it usually ends up with every app becoming addictive in its own way.
Ad-driven Behemoths
Instagram, Facebook, Twitter, Tiktok and Youtube are all ad-driven businesses. They live or die by user engagement, all competing to have the most successful habit-forming product that can retain users for the longest and have the best network effects.
Beyond ads, they are all also working on helping creators convert influence into decisions, developing interactive storefront and better targeting their audience (no matter how creepy it might seem sometimes!)
TikTok’s advent has shown that the social space can still be shaken up, doing to short-form video what Instagram did to photo. The question here is what could be next.
One thing which comes to mind is gaming companies. From the Minecraft surge of the past to the present popularity of Roblox, internet traffic these days is dominated by games. Creating social experiences for gamers could be the next social platform turned behemoth.
Alternatively, maybe the next wave of social will be driven by hardware, coming off the development of AR/VR devices. This is truly the tip of the iceberg; who knows what could be next?
Scale: A Hard Problem
Scale is the biggest wall consumer social startups hit. While mob mentality, bandwagoning, whatever you want to call it, does succeed, it takes a while for that effect to take place. In an ideal world, these network effects result in a flywheel of sorts.
Network effects determine the value of a social platform, as most platforms need to start by targeting a small niche. After the initial foothold, they expand further. Once they reach a certain scale, they are able to monetize their network effects.
Vertical Social Platforms
There are issues also with scaling up a social platform’s user base. Increasing numbers and growing usage eventually leaves people wanting the sense of community and connection that originally drove them to a Facebook or YouTube. As such, we’ve seen the resurgence of social platforms that serve niche needs well a.k.a. “vertical social.”
Even before the World Wide Web, specific communities of people were sharing programs, game mods and experiences on a variety of online bulletin boards. With time, came AOL chat rooms and MySpace. And then there was the snowball of social-as-a-platform we discussed.
Tools with Social Aspects
Strava and Stack Overflow are examples of tools used by specific users that have social platforms built into them. Tools like this have a total addressable market that’s niche enough to attain the majority, if not the entirety of users. There are also many spaces that would benefit from such a model, as we’re seeing with restaurant ranking/reviewing apps like Beli or the newest iteration of Yelp. With this model, network effects would enable a large space in an underserved market, creating revenue streams we wouldn’t have encountered before.
Social-First Tools
Social-first tools include platforms like Beli and Goodreads which are built around a niche community. While most of these aren’t ad-driven, there’s scope for them to eventually become so. In some ways, these platforms serve as the precursor to ad-driven social vehicles.
Coming up next…
In our next piece on consumer social, we wanted to take our learnings from our industry deep dive and explore how founders would build within the space, specifically a vertical social product. More to come!