Tag Archives: technology adoption

Tiger Blood + F/18 + Rock Star = A Special Milestone for Twitter

charlie_sheen_140pxYesterday Charlie Sheen created a new account on Twitter (@CharlieSheen). As of now, he is closing in on attracting 1 million followers within 24 hours (and 13 Tweet)—very likely a new speed record others will endeavour to break. This is much, much shorter than the time it took other big-named celebrity took to achieve this:

Does this mean anything? Or is it just another crazy social media statistic?

What this means to Twitter

While I love ‘Two and a Half Men,” I must insist that few would argue that Mr. Sheen has 30x the star power of Ms. Winfrey. Something else is going on here: Twitter is now in the mainstream. It is no longer an odd technology for Early Adopters; it is now something for everyone. This is really good for Twitter. It positions it as mainstream channel—something useful for negotiating advertising and brand development deals (and building even more valuation).

What this means to Mr. Sheen

This is a big demonstration of star power—and negotiating power—that is easily measurable. One of the breakthroughs of social media is that it provides a means to measure interest numerically—and at speeds never before imagined. Mr. Sheen is taking advantage, at a time when it can provide much leverage.

What this means for ‘Big Brands’

This provides a simple message to big, established brands: Twitter is an established channel to reach out to and communicate with everyday customers. If you are not on Twitter, it is time to join. (Hopefully, your brand has not already been hijacked).

What this means for small brands

Twitter still remains a place where smaller brands and non-celebrities can have a large voice. However, this is not as true as it used to be (even one year ago, let alone two of three). Everyone is going to have to work harder, and share more interesting insights more frequently, to stand out.

It will be interesting to see what Mr Sheen does as he breaks through 1 million Followers. It may be more enlightening to see what he does later, during May sweeps and next season’s renewal review period.

For interest: Accounts on Twitter with the most followers.

Why Groupon is worth 100x more than MySpace

groupon_morethan_myspace-200px_highMySpace—founded in 2003—was one of the “original” big social media players. Its purchase by News Corp for US $580 million in 2005 launched a social media “gold rush.” Six years, later it is on the sales block for $50 million to $200 million (even though if has more than 42 million active unique monthly visitors). Meanwhile, Groupon—launched in 2008—is already floating the idea of a US $15 billion IPO with Goldman Sachs.

How did a company like Groupon create 100x the investor value so quickly? It was not simply second-mover advantage (i.e., building a better network). Instead it focuses on social networks as a “means” to creating value, not an “end” in itself.

Moving social networks from an ‘end’ to a ‘means’ of doing business

When talking about social networking, social media, Web 2.0, etc., a lot of people fall into the trap of citing Metcalfe’s Law, that the value of the network is proportional to the square of the number of connected members. Under this assumption, a social network with 42 million active monthly users (e.g., MySpace) would be roughly 7x more valuable than one with 16 million (e.g., Groupon).

Obviously, this assumption does not hold. The reason why is simple: the value of all network connections is not the same. On the top line, a connection that drives commerce purchases generates much more revenue than one that simply increases advertising click-thrus. On the bottom line, a connection that only communicates 140 text characters costs much less to deliver than one that streams video.

Thinking about this from the start

This provides a valuable lesson when using social media to create value:

  1. Don’t just focus on the number of members (or connections between them)
  2. Instead, focus on maximizing the net value of the connection between members: not just your revenue minus cost, but also the value your members perceive of the connection vs. the effort required to maintain it
  3. If you do this, your members (and partners) will organically grow (because they value your network)

Combined, “large numbers of connections” X “large value per connection” = “large network value”.

This is why Groupon created so much value so quickly. It is also a lesson to those who will take through social media the next stage of the technology adoption life cycle: focus on using social media as a means to connect and create value, not just an end in itself.