This topic comes up constantly. Facebook has crossed the 300 million active member mark which is staggering but there is still some skepticism that they will flame out like Friendster or MySpace. However, what people don’t realize is how Facebook has differentiated themselves as a social networking site. Facebook has done an incredible job on focusing on real life relationships. Unlike other social networking sites, Facebook adheres to people sharing their real identity and connecting with others only if they are actually friends in real life. This positioning is quite different from sites like MySpace or even sites like the ones we created at Community Connect such as BlackPlanet.com. These sites became dominated by people meeting new people. How do I know this? Easy, look at most of the friends’ lists on these sites. Most people have friends of the opposite sex (for heterosexual members of course) and that is because men don’t go online to make new friends with other dudes. That’s not cool. The problem is that it it opens itself to lower competitive barriers and some might argue to a naturally “trendy” lifecycle. If the core experience is meeting new people, the site is more susceptible to lose to the “cooler” place because switching costs are low and past connections don’t have that much value. Think of it this way, sites like MySpace are like night clubs in that they get popular but eventually lose their buzz as other sites come in and offer a new experience for people to meet new people. The switching costs are not high and therefore allow competitors to gain share quickly. Facebook on the other hand has a major advantage. By focusing on existing relationships and the social graph, they now established real switching costs. Going to a new site and having to re-establish all of those relationships is real work. On sites where my “friends” are more superficial and transient, the switching costs are really low. Someone asked me why BlackPlanet.com didn’t completely flame out and that answer is simple – No one opened up another good black online night club.
Mark Zuckerberg was brilliant to take Facebook and make it more niche than sites like MySpace. Think about it, he wanted to make Facebook bigger than MySpace and the key to that goal was to have Facebook narrow down the focus of what MySpace was doing. MySpace wanted you to do both – meet new people and connect with real life friends. He realized that to truly serve those that wanted to connect with real friends that he had to position his site to ignore those that want to meet new people. He realize that by focusing on that segment, he could actually become bigger than MySpace. It’s an example of how making a product more niche and focused actually make the market larger. Facebook is a much better position by focused on the social graph and I predict will be around for a long time.
Ah-ha 2.0 