Friday, December 5, 2008

Social Media: why VC's and Angels should jump even harder!

Those of us who regularly haunt services like Next2Friends, Twitter, and a few other social sites out there already know how much fun they are and the power of the connections you can make on them. Every day, everything from important, world changing ideas to what we're making for dinner (complete with live demonstrations) are discussed on these sites and friends that may very well last a lifetime are discovered. There are some absolutely fantastic social media sites out there but, unfortunately, with the recession sitting firmly in place, venture and angel money for such services seem to be quickly drying up and many of these sites could very well face shutting down if they can't pay the bills.

I'd like to put forward that investing in social media even in a recession is one of the best investments a firm can make and smart firms will be investing more into social media as times get tougher instead of less.

As our financial belts tighten, we have a natural desire to connect strongly with other. We're not comfortable suffering in silence and we long to reach out to others for validation, confirmation that we're not alone, and just plain old companionship. I think that's one of the reasons movie going skyrocketed during the great depression. People don't want to be alone when they are in crisis.

Unfortunately, the 1920's and 1930's had a much smaller population who's friends and acquaintances were much less geographically spread out than we do today. Today, it's not uncommon for an ordinary person to have friends in five or six foreign countries and maintain regular contact with them all. I know I've personally stayed up extra late just to chat with friends in remote areas of the world and I'll bet you have to. It's the nature of wanting a human connection.

So, as the worldwide financial crisis tightens, people are going to be looking for ways to, not only keep in touch with their friends, but deepen those relationships and create new ones. Travel will become more and more costly so the average person won't be able to simply jump on a plane and fly from Kansas City to Mumbai just to attend a party or spend a week with a new friend. This, I believe is where social media; particularly services like Qik and Next2Friends are going to come in.

Last Thursday, a friend in Pakistan invited me to his wedding. I was very sad that I couldn't attend because this is someone who I consider a good friend. We began discussing ways I could get a video tape and then we hit upon the idea of using a video broadcasting service like Next2Friends to stream it live over the internet to remote friends and family. In the end, I, and nearly 100 of his other friends and family, were able to attend his wedding via his live Qik stream (which was archived so others can enjoy it too).

My point is that there is a huge untapped market in social media. As people are forced to make decisions between travel or rent, they're not going to simply abandon their friends and pay the rent. They're going to look for new ways to interact. Social media, in particular live broadcasting and interactive chat, is going to quickly become the de facto solution chosen by an intimacy hungry world. I could easily see services like Next2Friends, Qik, and even Seesmic (which isn't live) become the next internet darlings, pulling in insane amounts of VC money and posting sky high valuations.

VC's and Angel's out there: now is the time to get in the game and really pour some money into these services. Entrepreneurs, now is the time to think big and create something huge. Don't limit your thinking. Create something that connects people or makes their already existing connections more real.

In the end, the sky will be the limit.
And, really, wouldn't we all like to learn to fly?

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