Monday, April 19, 2010

Social Media Gold Rush Reminiscent of Dot Com Era

This past week I had a flash back. I was transported back to the 90s.

Way back to the time when companies were trying to figure out how to build a web site for their company for the first time. If they did, they’d make more money for the business. They’d be more efficient selling with less overhead. They’d sell more products and services to more people all over the world. The new ebusiness start up ventures would do the same. Only they'd be working from a lap top from the beaches of Florida.

This was the time when new internet companies were coming out of the wood work. Development companies. eCommerce software companies. Hosting companies. Any eBusiness you could imagine. This was the time when venture capitalists were in love with anything internet. This was before Google and way before YouTube. This was before banner advertisements, SEO, PPC and even Flash. This was around 1994. Amazon just gave birth.

I was there. I am that old. I was one of those web developers. And I was one of those entrepreneurs. In the 90s I was with an established enterprise software company when friends of mine journeyed to New York to work for one of the first eCommerce shopping cart providers. I left the firm too. But I stayed behind preferring to make millions with my new venture. I was building my own eCommerce site.

As I created my business plan, I quickly learned HTML. I got connected to the web experts online. I connected to other developers. We shared code openly and freely. We collaborated. I was working towards early retirement via a fine art photography eCommerce web site. The plan was perfect. No overhead. Just a low cost web site with photography for sale produced by myself and my artist friends. No sweat. went up in 1995. went down in 1997. No sales. The market wasn’t ready. (Remember the part about no advertising costs?) Big lesson – it wasn’t that easy.

Remember any of these startup sites? Boo sold branded fashion apparel over the internet in 1998. The company spent $135 million in venture capital dollars in 18 months. The site, promoted by Whoopi Goldberg and started by iVillage founder Levitan, tried to create ‘internet currency” – similar to frequent flier miles. Flooz spent between $35 to $50 million in venture capital to get going before it fell. It's currency was worthless in the end. Sounded like selling dog food online was a great idea. But if you’re out of dog food, you need it right away, not days later. They raised $82 million in their IPO before they closed shop.

By March,2000 things had changed. The Dot Com bubble burst. The Federal Reserve had increased interest rates six times. The economy was losing speed. Only the fittest survived.

So where am I headed with this all? What’s the connection?
Social media to me is a lot like the early 90s. There’s a lot of noise right now. There are a lot of companies trying to figure out what to do and feeling behind in the process. There are a lot of start ups. There are a lot of experts. There are a lot of shiny new objects to play with. There's a lot of hype, a lot of speculation. And there are a lot of folks freely giving advice, sharing information, providing expertise and guidance. To me this is a lot like the 90s.

Social business is here to stay. There’s no turning back. If history repeats itself like the Dot Com era, not everyone will survive the gold digging though. Only the fittest survive.

This time around, I’m connecting with and banking on the experts and pioneers who’ve been down this road before. The ones who survived the Dot Com era. The seasoned ones. The ones approaching this disruptive technology from a solid business perspective.

I’m a huge fan of the team at the Dachis Group (@dachisgroup) – Jeff Dachis (@jeffdachis), Peter Kim (@peterkim), Kate Niederhoffer (@katenieder) and team. They are making smart moves. They are big thinkers with business savvy. Transparent. Collaborative. Humble. Fun. They are pushing through the noise and making headway. I’m also a fan of David Armano (@armano ) with Edelman Digital (ironically he was formerly with Dachis) - he gets and lives it. He shares. And I love the thinking of Jeremiah Owyang (@jowyang) and Charelen Li (@charleneli). Smart business.

Where are you placing your gold?