By Reid Rosefelt
Social Media networks go through phases in their lives, just as we do in ours.
Most of us go through periods of adjustment which we handle with varying degrees of success. Many of us don’t climb very high up the ladder of success, and it’s a rare few that become superstars like Justin Timberlake, Jennifer Lawrence, Facebook or Twitter.
Of course, I realize there is not much history to back up what I’m writing here. The list of social networks that are successful enough to have an IPO is not very long, but the point I want to make is:
It’s very difficult to finesse the transition from a company that provides a popular product that loses billions of dollars into a product that is profitable but continues to make its users happy. For me, the IPO is the turning point that epitomizes that challenge.
For those of us who want to leverage social media networks for our marketing efforts, it’s instructive to think about them from the perspective of the people who have labored so hard to create them–giving countless people a wonderful gift–and are endeavoring to make them succeed over the long term. Most of us only see a social media network’s life cycle from our selfish perspective: taking what is helpful to us as a given, and complaining when changes come that don’t go our way.
Perhaps it isn’t right to be upset by the ways Facebook and Twitter are evolving. Maybe it’s just life. Maybe it’s just becoming mature. Maybe it’s properly fulfilling the requirements and responsibilities of the time of their lives.
Perhaps a better way of reacting would be to think about the advantages of getting involved with a network in its early days, like Pinterest and Google+ today, when the limitations are few and the promise is infinite. Wouldn’t it have been nice to get on board with Twitter in its early months?
Imagine yourself as the creator of a social media network. Here are the stages you and your dream may pass through:
Create: The social media network comes into being with your idea for something you believe mass numbers of people will want to use to interact online.
Launch: You offer it for free and it catches on like wildfire. (Alas, the life of many social networks ends before it gets here.)
Grow: With a hundred million followers and counting, your network has attracted the attention of Wall Street.
Worry: As the user base increases to many hundreds of millions, the yearly cost of operating the network is $1 billion, whereas the revenue is 0 cents.
Monetize: Wall Street needs to see some positive cash flow. You must find revenue-generating ideas, and make changes. But will this be enough to persuade the Wolves of Wall Street?
IPO: You bet it is! You are now worth $1.5 Zillion dollars.
Stress: The network isn’t making enough money to satisfy your new investors and so the time has come for you to tinker with the original winning formula to increase profits. Unfortunately some of your alterations displease the original users and confuse the new ones. Growth slows, which spooks Wall Street. To make matters worse, some new networks have appeared on the scene.
This is where the path diverges.
You may fall into a Panic cycle, where events spiral out of control and the stock price plummets. You declare Chapter 11 and it’s RIP.com. But that’s just finances. People still love the site, somebody else buys it, and the process begins anew.
On the other hand, maybe you will figure out how to Evolve and weather the storm. If so, enjoy your success.
Still, like most tech entrepreneurs, you will eventually feel the call to build something new. In fact you may have jumped ship much earlier in the cycle. For true tech visionaries, it’s not about the money, it’s about dreaming up things that change the world.
Reid Rosefelt blogs and coaches filmmakers & artists about how to market their films using social media, and lectures frequently on the topic. His credits as a film publicist include “Stranger Than Paradise,” “Crouching Tiger, Hidden Dragon, and “Precious.”
His blog is reidrosefelt.com and his Pinterest Page Social Media for Filmmakers was named first on IndieWire’s list of “10 Pinterest Boards Filmmakers Should be Following.”
