This video is great isn’t it? Certainly pumps one up that social media is here to stay and continue to thrive. But putting aside hype, there is real business value to be captured with social leverage.
I mention this because I’m speaking today at Defrag, a conference out in Denver that delves into a wide variety of social media aspects ranging from consumer to business issues. The topic of the panel I am on is titled, “Is ‘Social Leverage’ the next big thing for VCs?” Fred Wilson, Brad Feld, Roger Ehrenberg and Howard Lindzon are on the panel as well, all great investors and innovators in the social category.
As I thought about the panel topic, the basic conclusion I came to after mapping out Trinity Ventures’ portfolio as it relates to social leverage (see below), is that social leverage is powerful as a business model. It struck me how universal this model can be as it can apply to both business oriented services as well as the more obvious applications we see clearly on the consumer side. It can create broad mass market businesses as well as thriving vertical, more private and focused communities (as Roger also pointed in the latter half of his blog post about today’s panel here).
The business model of Social Leverage enables lower cost of customer acquisition (viral in consumer ala PhotoBucket for photo sharing and botttoms up trial and adoption in enterprise ala CubeTree for a next gen intranet) as well as lower cost of content acquisition and content management (users contribute content, rate content, moderate content ala Care.com in consumer to help find a babysitter and LoopNet in enterprise for commercial real estate listings).
I’ll have more to say on this during the panel and I look forward to hearing how Fred, Roger, Brad and Howard define Social Leverage and to get your input.
2 Comments
November 12, 2009 at 11:11 am
I wish I could be there to hear the panelists talk as this is clearly an area with huge growth potential. The head of a company called SocialLeverage will be there so is there really an argument against it being a business model.
I’d like to see more of your slides after the talk. After looking at your slide above I’m not sure your map is static over the long term and I think these shifts are interesting. Twitter is going to float more to the middle of your social leverage map. Business will pay to get access to what consumers are saying about their products and services and I think it will be a major revenue component for Twitter in the long term. They have built a very open platform that doesn’t lend itself well to the typical advertising in social media but does give them a wealth of information that business will pay lots of money to see.
Please post more after the panel is over.
January 8, 2010 at 2:31 pm
Chris, thx for the comment and very sorry for the super tardy reply (got sucked into closing some new investments in Nov/Dec and then the holidays but now I’m back to update the blog:) ) Yes, the 2×2 slide is just a snapshot, not meant to be a static representation so you are correct that the placement of these players will shift over time. I also agree that there is an opportunity for businesses to take advantage of with respect to customer retention and new customer acquisition around Twitter. No investments in this segment yet but I continue to be interested in this area for 2010. Happy New Year!