Book Review: The Social Network Business Plan: 18 Strategies That Will Create Great WealthPosted: March 20, 2011
First, the author:
David Silver is a VC who has funded over a dozen social networks like onsite.com, iboats.com and collarfree.com. He also provided the early stage capital for ActMedia, Cognition Technologies, Frontier Telecommunications, Intelepeer, and TIE Communications among many others. He wrote this book based on what he has learned over the years to help others make successful online communities, but really it was probably just to make some more money for himself.
The title is a bit of a misnomer. The book doesn’t give any real business plan or any suggestions for how to go about writing a business plan for a successful social network. That is not the book’s purpose. The purpose of the book is to help readers learn various ways to make money from a start-up social network.
If I can break down all of his suggestions into one sentence, it is this: Make a “recommender” online community. These are the communities where users can comment, rate and like/dislike user posts and content on the site. In a very broad term, a social network like Yelp. These he says are the wave of the future in terms of social networks. He believes that these will redefine how brands source their marketing and how they learn about their customers.
He suggests making communities for things that do not already exist but should. Duh, you may be thinking, but let me explain. His example is rodeos. Rodeos are a huge sport in the US. However, there is no real online community for rodeo fans. He says, on a social network for rodeo fans, members might see upcoming events, buy products, talk about riders/events/rodeo in general or anything else they so please. He even goes so far as to suggest a site, rodeochicks.com as an example (which is currently owned on GoDaddy and is just a squatter site). Here the female riders can have their profile pages and fans can interact directly with them; pages can be sponsored by companies like Ford, Dodge and makers of pick-up trucks since rodeo-goers are their target demographic. It is finding the small niches that will make start-up communities successful. Another example he gives is a social network for high-level high school athletes who want to be recruited by colleges (he suggests that the reader go ahead and make it). The only problem is that I don’t think I’m the only one who has read this book.
The aforementioned example is not a “recommender” community. An example of a recommender community that he gives is one of discussing which credit cards you use/enjoy/have/give the best benefits. People can complain freely, interact, comment, like, etc. on cards, posts and topics. To monetize, this information can be reformatted and sold back to the credit card companies as field research. He talks about having a “tip jar” where users give money to the website (if so inclined) for the helpfulness of the site. Essentially…you guessed it… a tip jar. He talks about ideas of company credit cards, giveaways, user recognition and other ways to build user loyalty.
My only gripe is that this book is a very “in a perfect world, this would be the case.” Not every credit card company is willing to pay $10k a quarter for a report from a website. It’s not always as easy as he makes it sound. I mean his concepts make sense, but they don’t necessarily make dollars (shout-out to Ludacris for the pun). And I mean that literally. In theory, yes, a credit card company would love to use that information you have towards learning about their customers. But in actuality, will they really pay for it? I believe that remains to be seen.
It’s worth a read. It will help you think about some things and learn about how recommender communities make money. It will help you think about monetizing sooner rather than later and it will help get you thinking clearly if (hopefully) you have the opportunity to sell your company (like don’t pass on the first opportunity to sell just because it’s the first opportunity to sell).
I give it 3.5 stars out of 5.