Back To Reality: Services That Make Instead Of Bleed Money

Why does everything suck, one of my favorite blogs, has a great read about the paradigm shift that’s happening right now because of the current implosion of the economy. He states something to the effect of, “Now it’s time to focus on the productivity of our lives instead of the connectivity of our lives,” refering to social networking.

True. True. Guess it’s time to get away from the business plan in five pages approach (which is much better than business plan on one napkin approach), and get back to basics. That means there’s going to be another shakeout, but at least this time around it doesn’t look like it’s going to be as bad as 2001.

But the reality is that for the world of social networking, they’re running out of users to sign up: we saw this back when I watched the adoption of broadband, there’s always a segment that feels that dial-up is fast enough; the opinion of some of my friends is that one or two social networks are enough, more than that is overkill, and those astronomical growth charts of MySpace and Facebook aren’t going to happen for a while, and if there is a new service, it’s going to steal eyeballs from something existing, which isn’t going to happen unless there’s a very real value proposition.

I think it goes back to an event I went to in March: I was talking with a friend of mine, and the conversations we were having with the startup people were a lot like 2000: looking for money for a project that had very little value to the end user other than, “ain’t this cool?”, and took more time than I wanted to spend because my 24 hours a day are already booked by more valuable pursuits, like drinking.

In the end, productivity is always king.

The other point is that if you are willing to pay for a service, then there’s value. Most people aren’t willing to pay for Twitter, but some are willing to pay for the extended features of LinkedIn, so there’s value. Would you be willing to pay for Facebook? MySpace? Some social networking sites, like do have a subscription model, but have to spam to get there. Is that real value?

If you show businesses and consumers ways to save time (and sometimes money), they’ll pay for it. Everything doesn’t have to be advertising-based, and if you look at some of the major productivity tools, the most successful ones charge for their services. They aren’t going to depend on some kind of crazy advertising-based model, because that requires tremendous scale i.e. it’s better to hit a double sometimes than go for a home run. It might be free to the end users, but it’s never really free.

We focus on this in the consulting world: building tools so they can be more productive in the long run, whether it’s an intranet that stores video for everyone to watch and comment, or an extranet to communicate with their partners, or an internet site that communicates information to end users and in the end limits phone calls to government employees, all real projects that return significant investment value to our clients. If there are ways to use technology where users can be social and more productive, clients and users will march hand over fist to that product.

Isn’t that is what it’s all about, providing value?