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My idle thoughts on tech startups

Social Networks developed by big companies

Lee Hower
September 16, 2008 · 2  min.

Reading Time: 2 minutes

Yesterday Techcrunch reported on the demise of Wallop, a social network originally developed by Microsoft and then later spun off.

The track record of consumer social networking properties developed within large web companies remains fairly grim. I distinguish true consumer SNS from enterprise efforts focused largely on internal use within companies (Microsoft’s TownSquare, Sharepoint, etc). I’m probably missing some here, but to rehash efforts by the big guys:

Microsoft – Wallop, Windows Live Spaces (fka MSN Spaces)
AOL – AOL Hometown, AOL People Connection, Buzznet (music focused)
Google – Orkut
Yahoo! – Yahoo 360, Mash, Mixd (mobile SNS)

Of these arguably only Windows Live Spaces and Orkut can be considered successes for their corporate parents, though neither without caveats. Live Spaces now has approximately 100M registered users (thanks to leverage from IE, MSN, Live Search, etc), though monthly uniques are a fraction of that though still apparently growing. MSN Spaces was originally conceived as a true SNS to compete directly with MySpace et al, though it’s been rebranded and over time has morphed essentially into a hosted blogging platform (i.e. more analogous to Blogger, WordPress, and Typepad). Orkut has seen significant growth, though virtually all has been outside the US where Google still generates half its revenue.

The others range from current mediocrity to outright failures. AOL’s Hometown and People Connection had been contracting for the better part of a year and ultimately the company made it’s big bet on SNS via acquisition of Bebo. Google has hedged its bets with the launch of the OpenSocial API framework and the exclusive ad deal w/ MySpace. Yahoo! wins the SNS shut down award with all three canned thus far amid it’s own strategic challenges in the search business and the MSFT merger drama. And of course Microsoft struck its own ad deal and equity investment with Facebook in the valuation shot hit round the world.

I don’t mean to pick on the big guys per se. Innovating within large companies is never easy, particularly with projects that at the time might have seemed to be a distraction from core revenue opportunities. And it hopefully bodes well for other SNS startups that the large web companies (as well as other media big guys) have seemingly had the best success through partnerships and acquisitions. But it’s remarkable nonetheless how many of the internally developed SNS efforts have fallen by the wayside…

Lee Hower
Lee is a co-founder and Partner at NextView Ventures. He has spent his entire career as an entrepreneur and investor in early-stage software and internet startups.