Social networks

New Pew Internet data–Twitter growing, but Facebook still teens’ favourite

By | Social networks | 2 Comments

Market share of social media sites

As you can see from the latest Pew Internet research Facebook is still used by far more teenagers than any other social sites, and that they were used by more teenagers in 2012 than in 2011. It is of course possible that more teenagers are using Facebook, but they are doing so less frequently, but from this data it doesn’t appear that Facebook is losing the battle for young users.

Also of note is the rapid growth in the popularity of Twitter amongst teenagers. It’s great to see they are getting use out of the platform and interesting that young people are flocking to a social media site that was first popular with adults. Usually it’s the other way round.

Note that the percentages in the table are percentages of social media using teenagers, which is only 81% of the total number of teenagers.

Finally, Pew also looked at how teenagers’ sharing habits have changed since 2006. They found that they are sharing more personal data, but that they are careful about what they share and who they share it with. That was pleasing to read as I like to think we are headed towards a more open world where people share more information, but do so in a considered and responsible manner.

There is more detail on the sure

Even the oldies are on Facebook now…

By | Social networks | No Comments

ofcom social networking dataThis chart from recent Ofcom research is up on Techcrunch today. It shows pretty clearly that an increasing number of people are social networking across all ages, with an especially large increase amongst those age 55+. I imagine this activity is largely on Facebook, with maybe a little on Twitter.

One intesesting thing to note is the length of time it takes older folks to pick up on tech trends that are popular with kids. Facebook was founded in 2004 and at that point social networking was already pretty widespread amongst students, so in this case it took eight years for the new technology to reach 25%+ penetration across all age groups.

State of the internet: Mobile and social still big growth drivers

By | Mobile, Social networks, Startup general interest | 2 Comments

Earlier this week Mary Meeker published an update to her by now legendary internet trends presentation and Nielsen published their Social Media Report 2012. Taken together they tell us clearly that mobile and social are still growing very fast. As you can see from the charts below the mobile share of internet traffic share is up over 3x in under a year and time spent on social media is up 37% year on year to 121.1bn minutes in the month of July – I think that is a US figure.

Some highlights from the detail:

  • Pinterest’s unique visitors grew a whopping 1,047% to 27m, Google+ was the next fastest growing 80% to 26m
  • 17% of consumers’ PC time is spent on Facebook
  • Mobile apps are used nearly five times as much as mobile websites
  • 26-35% of people using their tablets as a second screen are engaging in activity related to what they’re watching – that’s much higher than I’ve seen reported in other surveys
  • 47% of social media users seek customer service over social media – predominantly via Facebook (good news for our portfolio company Conversocial)
  • 29% of US adults own a tablet/eReader, up from 2% three years ago
  • 48% of American kids want an iPad for Christmas….
  • 24% of online shopping on Black Friday 2012 was mobile (incl. tablets) with iOS dominating
  • Microsoft’s market share of operating systems is 35%, down from 96% in 1998-2005


  • Mobile will continue to grow very fast with opportunities for new apps, commerce and advertising
  • Earlier predictions (including mine) that social is getting saturated haven’t been born out – yet…..
  • First thought, build apps, not HTML5, although some HTML5 sites doing well, e.g. Pinterest which has three times as many users for its HTML5 site as its mobile app


Screen shot 2012-12-03 at 8.10.57 PM


Social media demands a change in the way we judge people-case study of US politician

By | Social networks | 3 Comments

The Republican Party of Maine has been attacking Democratic State Senate candidate Colleen Lachowicz for playing World of Warcraft and for saying on user forums that she enjoyed the violence of the game.

Ars Technica have written up the whole affair and the flow of their article brilliantly exposes the challenges that social media bring to our assessment of people. The first part of the article reprints Colleen’s violent quotes (“I love poisoning and stabbing! It is fun.” and “I can kill stuff without going to jail. There are some days when this is more necessary than others”) which made me wonder if she really should be running for Senate. Then they have an update with a comment from a Republican Party spokesman making the point that she probably spent 22 hours+ a week playing World of Warcraft and questioning her work ethic, making things sound worse still for Colleen. But then the article shifted to focus on Colleen’s defence, pointing out that many American’s spend 22 hours+ a week watching TV or playing golf without having their work ethic questioned and giving the last word to Colleen in which she (reasonably) attacks the Republicans for targeting her for her hobbies rather than talking about policy and their record in government.

Based on the totality of the article Colleen doesn’t sound like a bad person, but anyone who only read the first part of the article, or only saw the Republican Party leaflet could easily have come to a different conclusion. That’s dangerous for Colleen and dangerous for society as a whole.

This new danger comes on the one hand from people being open about what they do and think on user forums and social networks and on the other hand from unscrupulous opponents going through what they’ve written and selectively publicising anything that might be damaging. These attacks work because we (the general public) learned to form our perceptions of people in a world where very little information was available and jumping to conclusions was our only real option. I think there is also an assumption that people, particularly politicians, work hard to suppress any information that might be damaging and that if anything does come to light it is therefore most likely just the tip of the iceberg.

I hope and expect that the media and general public will come to understand that we live in (or are moving to, depending on your generation) a world where information about everybody is abundant and we can all do much better than make snap judgements. It requires a little investment of time, but in this new world we are able to look at the totality of somebody’s online presence and make much better judgements about them than we were able to before. An online presence is built up over years and increasingly covers all aspects of a person’s life, making it very hard to fake. This stands in contrast to making judgements after meeting people for an hour or two, a short period of time during which it is much easier to hide things. This logic applies to any assessment of new people, including whether we should vote for them, employ them, have them as friends or go out with them.

Companies in the tech industry already often look at the blogs of potential employees to assess their passion and knowledge, and some interpret the absence of a blog as a bad sign. There is analogous information to be gained about candidates’ social skills and networks from their presence on Twitter and maybe Facebook. This is not a bad thing so long as employers understand that people’s whole lives are on show and being caught on camera once isn’t a sign that the candidate is a multiple offender.

This change in attitude and/or perception has a lot of promise, but won’t be easy. I’m talking about a shift away from a simple world where we only knew about the good things that most people did to a world where we are asked to accept them warts and all from the beginning. There will of course be some losers too – those people who have more warts than goodness will be cruelly exposed. That’s not necessarily a bad thing though, and over time standards of behaviour will improve as a result.

If we don’t get this shift then people will simply stop sharing on social media for fear of being on the receiving end of the sort of attack that Colleen suffered and we will return to the old world where we simply know much less about people. This is a realistic possibility, and if it happens I think we will all be poorer for it. But I’m optimistic, I think that collectively we are smart enough to understand the benefits of greater open-ness and make the adjustments necessary to ensure it is here to stay.

Analytics for Pinterest–what will the data show?

By | Advertising, Social networks | 2 Comments

Things have gone a little quiet on Pinterest, after all the hype at the beginning of year and their $1.5bn valuation in May, but they are the third most popular social network (according to Experian) and according to AddThis Pinterest referral traffic across its network of 14m domains was 30% higher than Twitter for the month of May. This data echoes what we see across our portfolio and hear anecdotally.

Site owners are naturally keen to understand and optimise this new source of traffic and unsurprisingly there is now a bunch of startups that specialise in Pinterest analytics. These companies will help brands to figure out what their Pinterest traffic is worth, which will in turn determine how much the brands want to invest in the platform going forward, and ultimately whether Pinterest will find it easy or difficult to build a large revenue stream. Put differently, we will soon learn whether Pinterest’s economics will look like Facebook’s or Twitter’s.

Given the sheer scale of the referral traffic and that many of the items pinned are purchasable, my bet is that they will look more like Facebook.

What do you think?

On social network transience and profitability

By | Consumer Internet, Exits, Social networks | 13 Comments

Consider this piece of logic from Derek Powazek:

The flow, as I see it, works like this.

  1. We want to be a social network. The more people in it, the more “value” it has, so we need everyone to join. Because we want everyone to join, we cannot put up a pay barrier, so we have to make money another way. Let’s say advertising. (Note: Most never make it this far.)
  2. Our advertisers want as much data about, and contact with, our users as possible. We want to only allow limited engagement. Either advertiser interest wanes (Flickr), or we coast on our investment (Twitter, Tumblr), or we give in and let the advertisers run the show (pretty much everyone else).
  3. Members become angry at us because we’re selling them out. The exodus begins. There’s always somewhere else to go (see Friendster, MySpace). Go back to step 1.

See it? The bigger you go, the harder the road.

And a similar idea put differently by Maciej:

Were you a big Gowalla fan? Did you like Dodgeball? Did you think (gasp!) was better than Pinboard? Did you make a lot of contributions to Nextstop? Do you miss Aardvark andEtherPad? Did "I Want Sandy" change your life?

These projects are all very different, but the dynamic is the same. Someone builds a cool, free product, it gets popular, and that popularity attracts a buyer. The new owner shuts the product down and the founders issue a glowing press release about how excited they are about synergies going forward. They are never heard from again.

Whether or not this is done in good faith, in practice this kind of ‘exit event’ is a pump-and-dump scheme. The very popularity that attracts a buyer also makes the project financially unsustainable.

I think there is something in this. Facebook and LinkedIn are highly profitable free social networks, but I can’t think of any others. I can however think of many that are very popular, but not making money – Twitter, Tumblr, and Pinterest spring to mind. Four or five years ago the list of free social networks that were popular but not making money was equally long, but totally different. Back then I might have listed Bebo, Myspace, and Friendster. Of these three, two sold out for what seemed like big headline prices at the time before going into terminal decline and the third (Friendster) slowly faded into insignificance. The most common explanation for this is that they were fads, but maybe the tension between user experience and profitability had more to do with it.

From Flickr to Instagram, over the last ten years building large but unprofitable social networks and selling them to large corporates has been a lucrative business for entrepreneurs and their VCs, but it hasn’t usually worked out well for the acquirers, or more accurately their shareholders. This imbalance won’t continue forever. I think the two ingredients for change are acquirers getting smarter about assessing whether their target has the magic to be one of the very few that monetises like Facebook or LinkedIn, and reduced valuations on the public markets for acquirers (high dollar value acquisitions look cheap to CEOs of companies with highly valued stock). The first of these ingredients isn’t far away, and may even be in place already. The second is harder to predict.

The implications of this analysis, which I’m not yet wholly sold on, is that the odds of winning the ‘get big really fast’ lottery are in decline. This is a bit counter-intuitive given recent successes at Instagram and Pinterest, but it is important to remember the large numbers of Pinterest wannabees and avoid being deceived by selective reporting and success bias.

Bonus extra: When he’s not writing about social networks Derek Powazek edits a quarterly book of true stories and original art called Fray. It’s rather good.

New study–percentage of population interacting with brands via social media doubles in eight months

By | Social networks, Social software | No Comments

The rise and rise of social media has been the biggest story in the startup world over the last decade, and one of the biggest stories globally full stop. I think that over the next ten years the story will shift from the rise of social media platforms themselves to how we use them to our advantage in just about every area of our personal and business lives. This belief underpins our strategy of investing in companies that help enterprises leverage social media which has led to investments in Conversocial (customers service over social media) and RadiumOne (social advertising).

That investment strategy received a boost this morning from new research from Fishburn Hedges which found that 36% of UK consumers have interacted with companies through social media, up from 19% eight months ago. This tells me that social media is rapidly becoming more pervasive and that there is still significant room for growth.

The research also found that 65% of the people who used social media to interact with brands believe it works better than call centres, and 40% of us believe that social media improves customer service.

They did sound a cautionary note though. Eva Keogan, head of innovation at Fishburn Hedges said:

Many people are currently enjoying the VIP treatment from brands on social media. As millions more catch on to this great route into traditional customer service channels, the challenge for brands will be maintaining the same level of service. Over the coming years, will Twitter become the next call centre? We are urging brands to think about this now, as there are some clear and simple ways to use these new customer service channels to great effect.

2,000 people took part in the research.

I wish people wouldn’t take liberties with my social network

By | Advertising, Social networks | 2 Comments

I spent some time yesterday updating the background on my Twitter page. I was looking for something that was a little edgy and subtly indicated London, and I like where I ended up. It’s from a picture by London graffiti artist Banksy of a girl losing her heart shape balloon. Go take a look and let me know what you think.

The journey to get there wasn’t so good though.

It started fine. I found a surprisingly large number of sites offering free Twitter backgrounds, and better still they connected directly with Twitter putting up my choice of new background via the Twitter API. I found one background I liked, put that up, but discovered that it render well with some screens having a blank white space down the right hand side. So I searched some more before finding the Banksy that I went with in the end.

At this point I was very happy.

Then I switched focus to crunch some email and saw notifications that a bunch of people had retweeted Tweets from me promoting the sites which I had used to get the two new Twitter backgrounds described above. I had authorised them to connect with Twitter so they could put my new backgrounds up and they had sent Tweets on my behalf without asking me if I was ok with that. I’ve embedded one example below.

Aside from not asking my permission before Tweeting this is bad because it advertises the comapny’s freelance design service not the Twitter background service I used them for, and worse still, it almost begs my followers to ReTweet. (And now I’ve reproduced their spam ad again…)

I guess I should have known this might happen and I will be more careful in future. But I also think that Twitter could have done more to protect me.

My experience yesterday seems to be getting more and more common. Last week I tweeted a link to this great list of annoying ways that people’s social networks get abused.

I understand that folks are providing services for free and looking to get a bit of value in return. That’s fine so long as the exchange is explicit and permission is given. What isn’t fine is when someone gives me something and then takes something back without asking. That’s not cool, and I predict a backlash.

Pinterest – a case study in capital efficiency

By | Social networks, Startup general interest | 6 Comments

Pinterest is an awe inspiring example of how much can be achieved with minimal investment in tech and people these days. As most of you will know, the enablers are cloud computing and open source software. What is interesting in this case is the power of those enablers.

I just read the following numbers on the High Scalability blog. Pinterest now supports 18m users with growth running at 50% per month with the following:

  • Amazon costs are around $39k for S3 and $30k for EC2 (I assume per month)
  • Traffic costs them $52 an hour during peak times, down to $15 during the night
  • They have 31 employees, up from 12 in December.

The geeks amongst you will be interested in the following details:

  • Pinterest has 80 million objects stored in S3 with 410 terabytes of data
  • They have 275 EC2 instances
  • 70 master databases
  • Written in Python and Django

This is an amazing story, but it isn’t unique. Instagram had similar efficiencies, and we will see more and more startups aspire to and beat these benchmarks and try to emulate Instagram’s $1bn exit or Pinterest’s $1.5bn valuation.

LinkedIn harnesses the power of intent in a social network

By | Social networks | 4 Comments

imageSearch advertising is generally thought to be more powerful than display advertising because when a user searches for something they often have an intent to buy it. Social networks (along with email and other communications services) are amongst the worst places for display advertising on this measure as most users are there to talk with their friends and are not thinking about buying anything. As a result advertisers are only willing to buy ads on these sites at low rates and the general thrust in the industry, led by Facebook, has been to drive up these rates by targeting the ads based on data about the users, and even make them more effective by using information from people’s friends in the ads.

LinkedIn, however, is a little different. As the Financial Times pointed out this morning:

users come to the LinkedIn site with an eye to completing a transaction. They are potential sellers of a good (their professional services) for which buyers (employers) may pay a lot of money.

i.e. they come with intent.

That is why LinkedIn’s first quarter results were so strong. Revenues at $189m were up 101% on the year ago quarter, and net income net income was up 138% at $5m (that’s still low in percentage terms).

I’ve said before I think that sites which leverage social to help us do the things we already do more efficiently will be interesting investments over the next year or two. I stand by that, but would now hold LinkedIn up as an example of a company which has already had success and which fits that investment thesis. I am also refining the thesis to note that some community sites are strong on intent to purchase, which will likely result in superior monetisation.