Polygraph Media Blog

What Will Win in the 2nd Great Tech Boom

I spent a lot of part I of my thoughts on 2011 & beyond in our industry focusing on what I don't think will work.  This blog post will be markedly more positive, at least for those companies that I think are going to make it after all.  Thinking about it, though, I think some commonalities are emerging.

But let's step back and review some concepts from Part I.  I spent a lot of time on the concept of economic viability as judged by two simple concepts -- customer acquisition costs and lifetime value (LTV).  Simply put, if your LTV after churn exceeds your fully loaded customer acquisition costs, you're a moneymaker.  If not, you're a failure.  There are lots of ways to analyze businesses, but if you comprehensively and accurately know marketing costs and LTV in what is of course an uncertain business environment, you're doing better than most.  That's easier said than done.

Now hold that thought for a moment.

I would argue to you that there is overwhelming evidence that we're in a mini-bubble, a lower-rent, better justified version of the first one (1997-2000).  There are a lot of sure signs -- new businesses getting huge valuations even in public markets, investors in those businesses trying to convince people that those valuations are indeed rational, the huddled masses listening in violent agreement (amazingly enough), venture capital raising huge new funds, and billions of dollars going into startups worldwide again.

And to repeat before I go too far, I don't think this is a terrible or irrational thing.  Social media, location services, smartphones, tablets, local/SMB services, and other sectors are getting turned on their heads a bit -- and the uncertainty/disruption creates opportunity for investors.  So please don't put words into my mouth that I'm opposed to what is happening or think it's insane, because I am decidedly *not* there.  I'm discerning, and that's fair.

Anyway, as we are at least in a mini-bubble, a lot of businesses have been created in a short period of time.  All have one thing in common: they are fighting like hell for market share.  They're fighting for attention alongside others in the startup community.  Enterprise startups need enterprise validation -- and fight for enterprises and/or agencies to adopt, promote, and pitch their products and services to decision makers.

And so what that creates is hypercompetitive frenzy, where there are probably at least 1-2 startups and often more for any opportunity you may perceive to exist in the world.  Tech is one of the most competitive markets in the world because barriers to entry are relatively low (no PP&E in the era of Amazon Web Services) and you can win with your brains, a good idea, and great sales execution.  Thus, the market is incredibly efficient at finding every glimmer of opportunity and taking advantage of it.  So you get a ton of startups seeking attention.

These startups fall into three categories in my mind, and I'm sure there are more.

• Destinations -- places that consumers and businesses are expected to visit repeatedly. Branding is critical, otherwise you're out of sight/out of mind.  Think modernized traditional media (Mashable, ReadWriteWeb, Techcrunch, Huffington Post) but also the hundreds of thousands of applications on the iPhone and Android (Gowalla, 4sq), game publishers, daily deals providers (currently), apps like Pandora, etc.  If you're a destination, you're only as good as your branding + your last trick.  Don't rest, because you can't.
• Service businesses -- organizations that provide human capital to solve specific problems for clients.  What's critical in these is to not be a commodity.  If you are providing a commodity service, you're racing to $0 margin.  If you have some competency that makes you among the best in the world, you're probably OK.
• Enablers -- groups that deliver a product, service, or data that fundamentally makes people more productive.  This can be a tangible time savings benefit, a cost savings benefit, or ideally both.  It can also be a "data benefit" -- removing barriers to data can be a huge enabler.  Think of Amazon Web Services -- it's a genius bet on the need for developers to quickly conjure processing and storage cycles to develop, run, and scale applications.  Same goes for the Apple App Store, Windows Azure, Facebook with social plug-ins that have now become ubiquitous and of course the Facebook APIs, LinkedIn for resumes and employment/employee data, arguably Twitter for media publishing and content discovery, local Austin startups Infochimps (data) and Famigo (publishing child-friendly content), and my favorite new startup, Twine.  All of these companies, in their own way and perhaps by accident, enable people to conduct business and be more efficient.

Not that all the destination business examples I listed are fads, but a vast majority will be nothing more than that because they're currently capitalizing on something that is presently *hot*.  Mashable is great and a must-read, but would it get 20m+ monthly unique visitors if tech was not hot?  We just saw Gowalla deadpool because it took advantage of the hot LBS market, but could not expand beyond that.  Arguably Groupon has cooled off because daily deals just stopped being compelling, and now as a result, they're dealing with the customer acquisition cost/LTV problem albeit as a public company.  Ouch.  Destination businesses have to grow rapidly and find ways to be essential and build brand, or they're ultimately dead.  The ones that go the VC route therefore raise a ton of cash but they're a lot more uncertain than they appear and are under a ton of pressure.

I'll defer a broader discussion of service businesses to 1Q 2012 for now.  My point today is more about disruptive technology providers anyhow.

Enablers, in my view, are where I'd focus dollars if I were an investor.  First of all, they're differentiated by their ambitions.  They are not trying to change the world, but rather to provide a useful service that other people can some way build upon -- be it technology, revenue, knowledge, data.    Ergo, their bet is on the opportunities they see more broadly.  They focus their efforts on the utility of and the benefits of the product/service they're offering *to other people*.  Some of those will win, some will lose.  But enough will win to make access and all the hard work that entails a worthwhile pursuit.  There is less direct interaction with the end customers, but rather tons of interaction with modern-day "channel partners" who can offer products and services to hundreds, thousands, or more end customers.  But the Enabler is not invested in any one per se -- it's a "portfolio theory" approach.

The one thing I think winners will ultimately have in common in the 2nd Great Tech Boom is precisely what winners of other eras have realized.  Infrastructure stands a greater chance of winning than apps, destinations, and other properties that are by definition perhaps more "opportunity" plays than "sector" plays.  It's not to say that all Destinations will fail and all Enablers will succeed.  But I'd make a pretty big bet that we'll think of Destinations fondly as relics of a past gone by, and that Enablers will as a group have much more lasting power.

The Dot-com bubble, the 2nd Great Tech Boom & Economic Viability

I suppose we are three years into the boom of this cycle in tech, and 2011 has finally given us a few IPOs -- Groupon, Zynga, Pandora, Angie's List, and LinkedIn.  Others like Facebook, Twitter, and Yelp reportedly intend to go public in 2012.  Investment continues to pour into startups, although there are signs that early stage investments are dropping slightly in favor of Series B and Series C investments into companies that are scaling to grow and eventually reach a liquidity event of their own.  Some startups like Gowalla have hit the deadpool.  Others like Hunch and ReadWriteWeb have modestly exited.  And a wide array of others are fighting for their place in the world.

If you've read this blog for awhile or seen some of my posts on Mashable and other publications, you know that I've been critical of a vast majority of new products and services that have been invented in this cycle.  But it isn't because I don't like the companies or their founders.  Quite the contrary -- I've interacted with many and like just about all of them personally.

The problem is that they all face the same underlying economic problem -- for many, customer acquisition costs are significant but there is little/no lockin.  At the end of the day, all of these businesses will have to face that core economic reality.  If it looks like there is not a chance these business can overcome the customer acquisition problem and become economically viable, I get skeptical.

Interestingly, almost all the local/SMB plays have heinous customer acquisition metrics as reported by their S-1s and other financial statements.  It's why Wall Street has not been kind to Groupon, Angie's List, et al.

As it happens in every boom cycle, a vast majority of us get intoxicated by the possibilities for both startups and newly-minted, publicly traded companies.  But those very possibilities dominate our thinking -- and we underestimate the risks and/or the costs associated with building audiences of loyal customers who won't migrate.  From a purely economic standpoint, the migration/churn problem is just as bad as the acquisition problem.

I had an exchange with Robert Scoble yesterday on Google+ where we briefly debated this very issue.  Robert is one of the better pundits out there, but in my view he's a tad optimistic because he thinks of the possibilities far more than the risks, alternatives, and customer acquisition costs.

I am perhaps the opposite -- I think in economic terms and am influenced by the last tech bubble.  People said the same thing about Priceline, vertical web sites like Pets.com and Living.com, Webvan, eBay, Amazon, etc.  The economically viable ones survived.  Those that were not died.  Optimists and pessimists were both correct, as I'm sure they are now.

When projecting ahead and thinking of the survivors of this cycle, ask yourselves which properties are truly economically viable in the long-term.  That's the only filter that matters.

It's why I continue to be bullish on Facebook -- they're mainstream and habitual.  Can they screw up?  Of course.  But the collective community of friends on Facebook makes it a part of our lives that is more or less impossible for us to leave.  Path can challenge Facebook as it is more about "close friends", but they still have an uphill battle to climb to gain mass mainstream adoption.

In the 2nd part of this blog post, which I'll release in a few days, I'll talk about other winners I foresee... and the thing that I think all will have in common when it's all over.

Polygraph Media - Adventures in Big Social Data

Sorry we've been so quiet lately - have been hard at work taking a product to the marketplace.  We are jumping into the big social data business feet first.  You can sign up for our private beta at http://www.polygraphmedia.com.

In addition, Tommy Perkins (who traveled with me to Denver) made some great observations in his blog post yesterday.  I encourage you to check it out.

All told, we are very excited about these new opportunities and we see a lot of potential in big social data.

Google+, the shiny new thing, and the perils of business process innovation

We're all captivated by bright, shiny new things.  In the tech business, we've had a lot of them in a short period of time.   Some (like the iPod) shut off entrepreneurial activity and brought all the value of a number of industries (music/video marketplaces, DRM, MP3 players, etc.) more or less to a single company -- Apple.  Others (like the iPhone and iPod) create a ton of economic value as companies look to engage with customers better.  Consider also, the world of "self-publishing" has been unleashed with Twitter and YouTube.  Social context has been unleashed with Facebook.  Our resumes and business relationships have been captured by LinkedIn.  And the potential of local business services has kinda been unlocked by Groupon, LivingSocial, and location-based services.

If it all ended tomorrow, we will have lived through one hell of a run over the last 7 years.  We've come a long way in a short period of time.  I don't think it's over by any means, but let's call it for what it is.  It's great to be in tech right now.

Now there's another shiny thing, Google+, which from my vantage point appears to be a less functional version of Facebook with a good UI for putting people into Circles.  It has attracted a large audience of people in the tech industry, but the masses can't help but ask the question:

"Why should I use both this and Facebook?"

Google+ solves a problem that power users of social networks have -- easy ways to differentiate friends and to put them into groups easily.  The resulting data set that emerges from this would be rich.  But, of course, it has to scale beyond people in the tech industry.  And the everyday person has to see & understand the value in it to make someone migrate from Facebook primarily to Google+.  I haven't even mentioned the challenge of moving your entire social graph as well.  Social networks are a lot less interesting when your friends are not there.  I already see this phenomenon on Google+ -- pretty much the most active people there are folks in my Twitter stream, not people in my Facebook News Feed.

It's ambitious of Google to go after this market.  I think they originally wanted to unseat Facebook, but Google+ may end up being a bigger competitor for Twitter.  The audiences right now are almost identical.  The use cases are also -- I use both to listen, not so much to participate.

If Facebook truly feels a threat, I'm sure they'll introduce a slightly modified Circles equivalent and knock the legs out from under Google+.  That's the trouble with business process innovations -- they're so easily copied.  You have to have more than business process innovation to last.  You need a technical edge and a visionary roadmap to compete today, in addition to a world-class user experience for whatever it is that you are selling.

The bigger question this begs for me right now is really why Twitter has not innovated much.  And are they planning to do so anywhere other than ads?  Heck, it may not even matter.  As stale as Twitter may look these days, it's all over mass media and it remains the best way for average people to keep up with their favorite celebrities.  Those are two huge advantages.

Square and Facebook... two no-brainer disruptors

Sometimes, I do a better job making a point when (instead of sitting at my keyboard) I engage in a deep conversation with a colleague about things I see in the marketplace.  The give and take of conversation can't be matched IMO -- and I'm a visual thinker/learner.

I had a conversation recently about the current social media phase we are in with startups.  I sortof bucket companies in a few tiers:

• no-brainers -- companies that will exit for a massive amount of money & will have staying power.  The ones that totally redefine markets in/near them -- although their evolution could drastically change what/who they are.
• tweeners -- those that may exit for a massive amount of money, but could very well go extinct because they either don't execute well or they don't ever achieve *real* traction outside of what is fed to you by the PR engine.
• the DOA -- those that enjoy hype early but are doomed because market or economic forces will overtake them.  These are also companies that are perhaps too visionary as they are skating to where the puck will likely be in the next cycle or beyond.

I think there are two no-brainers right now -- Facebook and Square.  Facebook has been a no-brainer for a long time.  I include Square here because they have nailed product simplicity/elegance and nobody right now really threatens their ability to sign up thousands of local businesses daily.

I'd include LinkedIn with the no-brainers, but 1) they've already exited and 2) I am concerned about their lack of product innovation over the years.  They just don't have the best track record although LNKD could be significantly different as a publicly traded company.  Then again, if there is a quarterly revenue target, you may see less innovation and more quarter to quarter revenue/profit focus.

Twitter may evolve into no-brainer status with their Apple integration -- that was certainly a great move for them.  However, without that deal they were a classic "tweener" company by my definition.  Twitter has not graduated to mainstream usage, although every major media outlet mentions Twitter in an attempt to relate to younger audiences.  I also suppose you can get tweets from just about any celebrity today.  But Twitter otherwise is not a no-brainer deal -- something that appeals to the mass market and is used regularly by the mass market.  It's a high bar, I admit.

All of the location-based services are "tweeners" to me or worse, although I like recent moves made by the market leaders.  None of them have proved repeated usage, but if they do, they're golden.

You'll have to talk to me privately about "DOA" companies -- I simply won't mention any here in the Notice Technologies blog. ;-)

How do you evaluate what is truly interesting and what is hype?  For me, it's pretty easy at the moment.

Status Updates, Social Data Mining, and Intelligence

Techcrunch ran an article yesterday on the Twitterer who unwittingly, unknowingly live tweeted the raid on Osama bin Laden's compound.  I thought it was a particularly interesting case that underscores a few things about social data mining -- an area where we've worked in earnest for about six months and where we are starting to make some real progress.

But first, a quick sidebar:

I've said numerous times that the "social" phenomenon of the present day is really a few things -- mapping of the social graph *and* the revolution in real-time/self-published data.

They are inherently different, although all the major social nets (Facebook, Twitter, LinkedIn, and YouTube) do both.

Twitter has mastered real-time data (for now).  As long as they don't freeze developers out of using the data stream, they'll be OK.  If they get too cute, they'll kill the golden goose and developers will innovate around Facebook's status updates and/or a Twitter competitor will emerge.

Facebook is the winner of the social graph (for now).  Similarly, if they just execute their plan and not freeze developers out of the social graph, they'll too be OK.  

So whether or not you like Facebook and Twitter, both are undeniably capturing a record of history like no other entity that ha scome before it.  Historians will have a field day poring over records of Tweets and Facebook updates to recount history as told and experienced by normal people.

Speed and transparency to relevant information are being redefined.  Tech-savvy observers of the bin Laden story knew that the best way to get the latest information was to run a search on http://search.twitter.com -- not to listen to the live broadcast of your favorite news outlet.

We discovered that 15 years ago at STRATFOR when we mined Lexis Nexis for relevant data and information as traditional news outlets relied upon tried & true methods of gathering news.  Lexis Nexis was just a digitized collection of articles -- certainly higher quality than the public stream of consciousness but more or less conceptually the same.

And even 15 years later, mining the Internet and real-time data is still the name of the game.  Facebook and Twitter users are people who (for their own reasons) talk about things they experience every day.  They do so in the open yet in relative anonymity because of the volume of the stream.  Decision makers who can pull out the intelligent nuggets from amidst the noise will beat other people who rely on others to tell them what is important, and there are implications in a variety of industries.  Consider the following:

• The aforementionied Twitter user who live tweeted the operation in Abottabad to find & kill Osama bin Laden -- that data was in the open hours before any news organization reported it.  News organizations can integrate the wisdom of the crowd into the newsroom like never before.
• Investors in a particular market or equity can find out about supply disruptions or can mine social networks for information on how employees of a company feel about business prospects.  They similarly can use the global feed or parts of it to monitor sentiment
• Companies in a competitive market can mine social networks for information on customers, leads, and people with purchase intent.  They can identify specific targets and understand their likes/dislikes.  They can also map influencers of that person, people that person influences, and more or less what makes them tick.

But despite all of the possibilities and all the advances in self-publishing and the Internet, collectively we have not gotten better at getting smarter, faster.  The news organizations, investors, and leading companies of the next decade will be people who learn how to mine real-time data -- both what is being said, by whom, and by the additional context that qualifies just how important the information is.

Brands and the valid hype around Social Commerce

A few weeks ago, I was honored to be asked to share my thoughts in The Future of Marketing's 2nd virtual conference.  They interviewed 60 experts worldwide on where things in marketing are heading, specifically as it relates to personalization.  The event took place today, so you can listen to the 60 minute event by visiting the link above.

Naturally, Facebook is leading the way in personalization because profile data is so rich and relatively accurate.  Sure, some people lie in their profiles, but the vast majority of Facebook profile data is accurate and most Facebook users are real. 

Targeting users based on personal data has been the golden goose of advertising for a long time. Magazines and other publications with highly concentrated audiences have always fetched a high CPM relative to publications targeting a broad audience.  Facebook allows brands to tap into these demographics in ways that very few Internet properties have delivered.

As large enterprises and brands start to rationalize the expenses associated with maintaining and managing social assets, there will be increasing pressure to monetize them directly.  Facebook is leading the charge as the platform of choice for social commerce.  It has a massive lead in audience and targeting capability because profile data is the centerpiece of the technology.

More to come on this as certainly our business is focusing in coming months on social commerce for brands and large companies.

AOL, the Huffington Post, and the assault on local

Today is a watershed day in new media, whatever it is that we're calling it in 2011.  Why?  Because AOL is now truly doing something interesting in the content business by buying one of this cycle's best content properties, the Huffington Post, for $315 million.

Sure, AOL spent 40% of its available cash on the property.  Yes, there will be a culture clash as HuffPo is integrated into AOL.  And of course, we've heard of issues with AOL's integration of TechCrunch.  

But this isn't the same AOL that distributed tons  of these discs via mail for more than a decade.  It's a company led by someone with experience at a market leader who has a vision for the future.  That vision requires that AOL repeatedly produce profitable content -- something that old media has certainly struggled to do lately.

The TechCrunch and now HuffPo acquisitions, however, tell me that AOL has determined that it is a better strategy to buy great properties than to build them.  Why?  I'd posit three reasons:  1) these are properties that have discovered how to create quality content sustainably, 2) these properties make money, 3) AOL's experiments with Patch and Seed likely have not succeeded as they've hoped.

But the last reason isn't necessarily a criticism of AOL.  If you look at business across the United States, one megatrend that we're seeing is that big, relatively antiseptic brands are winning the war for $$ and mindshare against local businesses with local/regional flair.  Like it or not, eyeballs and attention flock to Chili's, the HuffPo, and the NFL instead of Billy Bob's Bar & Grill, the Smalltown Gazette, and high school football.  The American experience is homogenizing right before our very eyes, and as such brands that specialize in products with mass appeal will likely win in the long-term over local providers that struggle to effectively reach a local audience.  Niche businesses will survive, but a vast majority of local businesses are going to continue to suffer as the local experience gets more corporate.

I'd argue that these trends are driving the content business and will continue to do so.

We will see what happens with AOL's play -- one that puts it in Demand Media's neighborhood and clarifies competition with old media.  It's on.  I think the early advantage is in companies like AOL & Demand who are driven by the unit economics of creating content far more than old media as a generalized whole.

Old media has two other distinct disadvantages: 1) significant overhead, and 2) traditional "journalistic" standards.  But as an industry it is much, much larger than AOL or Demand Media and can still compete if meaningful changes are forthcoming.  And you can argue that neither AOL nor Demand Media have quite yet figured out how to scalably create great content for profit.  It will be an interesting battle to watch in coming years.  Consider also that of the major tech players only Apple, Yahoo, and Amazon have made major content plays.  Are Google, Facebook, and Microsoft next to jump in?

It's possible that as old media continues to be disrupted, that content is the next bubble.  We'll see how the industry responds.

Analyzing eMarketer SMB stats on useful social marketing tools

Those of you who have followed this blog for awhile and some of the guest posts we've written on Mashable, ReadWriteWeb, Forbes, and other places know two things about me:  1) I'm a data junkie, and 2) I don't really have a lot of respect for "spin" in the startup world.

It's why I questioned the utility of location-based services last year and asked for meaningful metrics (which we still haven't gotten).  It's also how yesterday's guest post on Mashable came about -- we're seeing metrics that indicate that although group purchasing as a sector is alive & well, it has peaked for individual providers and certainly local businesses.

I am not naturally a curmudgeon.  I just think that if you really want to know what is happening, you have to look at where the numbers are and how they are trending.  Metrics trump all -- the coolest technology, the best PR team, the best venture capitalist.  All win and lose most of the time based on numbers.

So I was interested to see some great numbers from eMarketer this morning on what small businesses  think of different marketing outlets.  Here's the chart in case you missed it.

This is great data.  I'd prefer a slightly larger sample size than 752, but it is good enough to draw inferences.

I think the way the data is presented is a little misleading -- so I did some basic number crunching of my own.

Specifically, I wanted to understand just what local businesses really think of each one.  For every person who likes each service, how many dislike it or find it ineffective.  I also wanted to correlate the numbers other criteria -- specifically what the service provides a small business, whether or not they sell directly to the small business or have a low-touch model, how large the audiences are, etc.  All of these things play into something that local businesses can regard as good opportunities for advertising/marketing dollars and attention.

First, I wanted to 
determine awareness/usage.  To do so, I'm making an assumption that anyone who comments one way or another on the utility of a platform for marketing is definitely aware of the core features of each platform, probably has tried the platform, and has *possibly* used it in a business context.  These numbers pretty much make sense to me, although I was surprised to see that people have an opinion of foursquare almost as much as Yelp or Groupon.  That isn't a stab at foursquare, but LBS adoption overall (foursquare + competitors) is something like 5% worldwide, yet 26%+ of local businesses feel qualified to opine on its usefulness for marketing.  So the concept of LBS is known more than adoption at the moment.

Next I wanted to understand what's known in quant research/customer satisfaction parlance as "the top two boxes"... i.e. what are the % of folks who think that something is either excellent or very good.  In this case, it's "very beneficial" or "somewhat beneficial."  See below for the results.  Column E is the % of all polled SMBs who regard each platform in the top two boxes.

But that isn't the end of the story.  These web services cluster into 3 groups when you look at the percentage of people who aren't users.  Facebook is more or less ubiquitous, but still almost 1 in 3 SMB owner/operators have not used it.  Roughly half SMBs have not used Twitter, YouTube, LinkedIn, and MySpace.  And roughly 3 in 4 SMBs have not used Groupon, Yelp, LivingSocial, or foursquare.  So we must normalize the data to give us a clearer picture of what the people who have used each tool actually think.

The chart above is really astonishing to me.  81.5% of SMB Facebook users think it is effective for marketing.  That's an amazing number.  On the opposite end of the spectrum, a little more than half of SMB users of Yelp, MySpace, Groupon, LivingSocial, and foursquare (in that order) think those products are effective for marketing.  Now let's look at the other end of the spectrum -- of SMBs that use all of these tools/services, which do SMBs think are relatively ineffective for marketing?  To assess that, we'll need to analyze the "Not Beneficial" numbers:

The "Not Beneficial" numbers in Column H all look similar across the various platforms -- but they have a hidden meaning when compared against the total % of respondents who have an opinion about each platform.  Of SMB users who responded to the eMarketer survey, almost half of the actual Users question the effectiveness of MySpace, Groupon, LivingSocial, and foursquare for helping them achieve their needs.

All in all, eMarketer's report was fascinating and gives us a good idea of what SMBs think.  Granted, SMB in and of itself is not a segment.  SMBs are in hundreds of types of businesses, many of which are not suited for individual local, social, or mobile platforms.  So the numbers don't necessarily tell the entire story.  But they do tell us who is winning so far and what constitutes a platform or platforms that SMBs should pay attention to.

One final note... it would be very interesting to compare these numbers to old media means of advertising:  yellow pages, billboards, newspapers, radio, television, etc.  I'd love to see how these "new media" services compare to old media.

Strengths and Weaknesses

It's funny how the greatest things in the world all have one thing in common -- their greatest strength begets their weakness. It's a pattern that repeats itself everywhere.

The United States' great strength is personal freedom, but that's also its greatest weakness in the age of terrorism.

Microsoft's great strength was creating great software for computers, but that thinking kept the company from innovations in the Web and mobile devices.

Google's strength in search helped to revolutionize the information age, but is now being threatened because the very algorithms it uses to determine search relevance are being gamed by content farms and people/consultants doing search engine optimization.

Twitter's strength is in simplicity, but that's also its weakness. Facebook is a comprehensive social graph, but I'd contend the reality of that will begin to get scary for a lot of users in 2011 and beyond.

And now we have Quora, which is the latest social media darling. It was built on several social platform weaknesses: the simplicity & 140 character limit of Twitter and the inability to effectively interact with people who have similar interests on Facebook.

It is way too early to know whether or not Quora will become mainstream -- or what its weaknesses are. But it does underscore the weakness of the Web 2.0 era, namely that most major players find a business process catch that encourages virality. It can work for a leader as much as it can work against it and allow competition to emerge overnight that can slay the beast.

Social successes are business process innovations -- it's the strength and weakness of this era.