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Summary:

I’ve been playing with Vox… the new social network-enabled blogging platform recently launched by Six Apart (also owners of TypePad, Moveable Type, and LiveJournal). Although I don’t do new product/service reviews, I will say that Vox is very well done and the new service could prove […]

I’ve been playing with Vox… the new social network-enabled blogging platform recently launched by Six Apart (also owners of TypePad, Moveable Type, and LiveJournal). Although I don’t do new product/service reviews, I will say that Vox is very well done and the new service could prove itself to be a vortex within a scattered social media marketplace.

I’m probably also one of the very few that felt Facebook made the absolute right decision when they opened up its social network. Their timing, in my opinion, could not have been better, particularly in terms of competitive positioning against MySpace. With the move, there is no doubt in my mind that Facebook has placed itself on a new growth curve… one that will benefit from the churn of members from competitors as well as newbies to social networks.

Having said that, let me qualify my thesis a bit. As I wrote in my last post, Facebook has a low “narcissism” ratio, relative to more “Hollywood-oriented” social media services… and it’s very important that it stay that way as it pulls back its velvet rope to the masses. But doing so puts Facebook on the same evolutionary path with Six Apart… at the conceptual level, both companies are ultimately aimed at becoming personalized portal platforms (what I’ve previously referred to as “consoles for consumer control“).

As such, it is increasingly likely that Facebook and Six Apart, given their new initiatives, will be competing for the same customers (both users and advertisers). And if I were running one or the other, I would immediately run a strategic/financial analysis to look at the costs and benefits of a merger. But I would do so with one very specific objective in mind… to see if a combination could flip into an IPO.

An IPO of a merged Six Apart/Facebook would represent the market’s first pure-play social media listing. Judging from the view of Wall Street analysts, and the stock market reaction, to previous deals like Rupert Murdoch’s purchase of MySpace and Google’s pending acquisition of YouTube (in addition to the street’s punishing of Viacom and Yahoo! for being too complacent), it’s pretty safe to say that a qualified pure-play social media IPO could easily become the next Nasdaq darling.

Of course, the combined company would need to be profitable (which I’m guessing they would be) and it would have to demonstrate meaningful revenues… I would guess the combined entity is currently generating over $150 million annually. That said, I would only go IPO if the underwriters priced the company at a bubble-like valuation of at least $2 billion. ;-)

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  1. This is a great idea– it may never happen, but I’m glad you’re writing interesting stuff like this. Om made a great decision by publishing your pieces!

  2. As someone ‘on the ground’ I think that everyone writing about Facebook–WSJ, NYT, but also just older people more outside its demographic, probably like you–are out of touch with its audience. Actually, I know that’s true. It is true. Moving on.

    I’m not going to prevaricate on about social networking trends in general, but I will say that when I talk to my friends, when I talk to our friends who are already in college, and when I talk to my sister who is three years younger than me (just now in high school) I see some interesting behavior when it comes to these social networking sites… sometimes things that would make me question a long-term investment in them, sometimes things that make me want to liquidate any savings and invest it into hypothetical facebook-dollars.

    MySpace, as many have been chattering about recently, has some shifting demographics when it comes to young people. Facebook doesn’t have the adult users that MySpace does, and it can’t merge demographics myspace-style without damaging and perverting much of its appeal to some people. It has already done that in many sectors. This year particularly I’ve seen a big shift at times in people using FB more for stalking and less for social networking.

    I really feel Facebook doesn’t consider its user experience enough. I think they’re on an ego-trip and they need to get back in touch, or they’re going to be in serious trouble.

    I feel a lot more confidence in SixApart than I do in Facebook. Facebook traffics personal information, first and foremost–that’s where its value lies. SixApart can do that and more. A few wrong turns in public opinion–a few more missteps, some tighter competition–and facebook could very quickly become dead weight on any such new animal. Then again the cash from the IPO could be used to resuscitate its corpse, or something, but still.

    My end-all point is that social networking anythings are about PEOPLE and USERS and all these business writers are FORGETTING that fact. So are some of the companies. It’s dangerous. Don’t tempt teenagers’ fickle natures.

  3. Ted,
    Thanks! It’s comments like yours that keeps me blogging :-)

    Sam,
    I’m sorry you think I’m already too old to “get it”. But I would encourage you to read some of my previous posts on social networks, especially this one http://gigaom.com/2006/05/29/social-networks-are-the-new-media/. I think you’ll conclude that we’re on the same page.

  4. FB is a desination brand with boatloads of internet traffic and a true network effect. Six Apart is a blogging tool – that is really or will eventually be all free. They have no brand outside of silicon valley blogger-types. Does Six Apart make awesome revenue? I dont think so, but I may be wrong. I don’t see the sustainable advantage for them.

    BTW, isn’t about time people remember 1999 and the bubble. Great companies are built by passionate, super-smart hard-driving entreprenuers. The Dotcom survivors where companies founded by Brin, Page, Yang etc. These are exceptional people who built exceptional places. So when I see mediocre 30year olds like the Digg founder who got lucky, on the cover of ever newspaper…i get “petopia” syndrome..

  5. I had read your old posts which was why I was a little surprised by the enthusiasm for such a hypothetical merger you expressed in this one. No need to be patronizing.

    I know you ‘get it’ generally–you understand how it works, how it should work, so forth. Here it’s just a matter of perspective. Social networking is part of a modern digital lifestyle that teens find intuitive. Do you have kids? It’s difficult to keep up with teenagers–not even teenagers can do so consistently.

    When Facebook debuted its ‘facebook blog,’ they didn’t have RSS. Huh? That’s what I’m talking about when I say disconnected from its user base. Little touches. I’m just saying facebook needs to tread carefully, is all–moreso than MySpace might.

    You’re not too old to get ‘it,’ whatever ‘it’ you mean. I don’t know if you are in a situation where you deal with huge numbers and penetration of facebook and sixapart product users, but I am… and I’m just saying that I see things differently from the analysts on wall street, and those analysts might want to look around a little bit before they start recommending anything. Wash-post piece of myspace attrition would have me worried. So would the people in my grade who have committed ‘facebook suicide’ –and the reasons they do so.

  6. Questionable Revenue Wednesday, November 1, 2006

    Any concrete evidence on that revenue number? Seems interesting to me that Facebook/Six Apart would be in the $150 million range. It wasn’t long ago that MySpace was puttering around with a mere 40-50 million registered users and $20 million in total annual revenue. Then came Uncle Rupert. We all know what happened there once Fox finally figured out that some of the 35 million people that watched American Idol were also on this thing called MySpace…

  7. Sam,

    Thanks…whew, for a minute there I was afraid I was over the hill…seriously though, and all patronizing aside…I appreciate your insightful input. You are clearly one smart guy, and your “on the ground” perspective is in many ways more important to me than that of business moguls or media giants.

    That said, social networking is a business, and must be looked at as such…at least by those who build and fund social networks. And all businesses are idiocynratic…none more so than those that involve a “cool” factor. Hence, I understand your concern that we tread carefully among the land mines of teenage fickleness.

    But what I wrote about is what I perceive as an opportunity for a true, pure-play “social media” entity to do something remarkable in a capitalist economy…go public/IPO. And that, to me, is a watershed event…because it will open the door for all the social media entreprenuers of the future and put to bed the notion that social media is a fad.

  8. SixApart/Vox offers nothing to Facebook. Facebook has a very uniquely organized, “clean” user community, and needs to be careful not to “pollute” it with frivolous deals and features. I really admire the discipline of the people at the company, who focus on doing a couple things and doing them extremely well – take a look at their photo traffic numbers, for example … Facebook is not focused on hyper-growth or feature bloat – they want to grow slow and steady, and emerge as one of the “survivors.” Think Google, circa 2001.

  9. dave at faceloop Wednesday, November 1, 2006

    All “social networking” sites are nothing more than AOL 2.0 (which comes after the current version of AOL). Myspace, Facebook, Orkut – they are nothing more than free, crappier web-based versions of AOL.

    If AOL would have changed to an advertising based revenue model 2 years ago – they would be able to buy Time Warner in an all stock deal!

  10. hmmm… while i agree they possibly compete for similar customers (some overlap, not exact tho), i don’t know if there’s a need for the 2 companies to merge. both have viability independently, so given no strong incentive to combine i don’t see a compelling reason for it to happen. while a better shot at an IPO might be a good reason, just don’t know if it’s enough. both probably think they can get there by themselves, and/or think an acquisition at a big # is doable in the near-term.

    that said, Yahoo should damn well buy one of the two — they have a very large audience and no substantial blogging / page creation products to throw at them… aside from YahooGroups (and while i’m a big fan of YG, they’ve done nothing with the product in 5 years). Yahoo could likely dramatically increase page views and user visits with a strong social networking and/or blogging platform, not to mention move their demographic a lot younger than they currently are.

    note that with a few slight twists, FB could very well start eating into YahooGroups market share. or if acquired, they could very easily become YahooGroups 2.0.

    definitely think Yahoo has to make a move here. Google might force the price higher than Yahoo would like, but if they don’t buy one of those 2 properties in the next 6-12 months i think they’re missing a big opportunity to move the needle.

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