Seems relatively easy to start a social network doesn’t it? Get a bunch of users on your network and then slap some ads up on the site and let the profits roll in right? I mean that is what Facebook did right?
I recently read an article by Lili Balfour published on the Huffington Post that said it took Facebook six years and $280 million dollars to reach profitability. And Facebook is by far the most successful social network of all time right?
So how does one start a social network these days, and how can you reach profitability before burning through over a quarter billion dollars?
I think there are 3 keys to starting a social network that has the potential to reach profitability:
1. Choose a Niche – It is going to be very, very difficult to displace a Facebook or a Google or a Twitter, so you may as well forget looking to have mass market appeal, and go after a niche market instead. Here is an article with 7 successful, targeted social networks that have found success without the need to reach half a billion people. There are many niche social networks that are developed that never get traction, but it certainly can help improve your chances of success.
2. Passion – Obviously you need to have a passion for the topic you are developing a social network around, but more importantly many others must be passionate as well. Again, if you look at the 7 examples from the aforementioned HubSpot article, many are built around causes or topics that people are passionate about including:
- “Going Green”
- “Being a Mom”
- “Athletes/Exercise”
Social networks seem to work best when there is a core group that is passionate about the topic at hand.
3. Early Revenue – Finally, I believe it is important to generate revenue early in almost every circumstance. If you watched the movie “The Social Network” you will remember the battle between Mark Zuckerberg and his partner over advertising. Mark wanted to focus solely on growing the number of users and worrying about revenue later, while his partner wanted to start advertising early. In the case of Facebook, it was best to focus on user growth, but Facebook is the exception, not the rule. Your startup social network is not going to be the next Facebook, and you are not going to be able to raise hundreds of millions of dollars to fund your growth before you start generating meaningful revenue. So I encourage you to start working on generating revenue sooner rather than later. This will help you to fund growth, and it should help you secure additional investment to grow the business.
At the end of the day it is not impossible to create a profitable social network, but it is hard. Do you know of any other examples of social network startups that are niche-focused, have a passionate user base, and actually have a meaningful way to generate revenue? Leave some examples in the comments section below.