Facebook Fallout: Social Media Start-Ups Try to Stand Out
Social media start-ups find it harder to stand out.
PORTLAND, Ore., Sept. 24, 2011 -- As publicity stunts go, this one's in the vein of Jack Kerouac-meets-fellow-foodies in a social-media setting.
Executives of Bizzy, an online check-in service primarily for restaurants, are traversing the Pacific Northwest, getting in front of customers at local restaurants and bars to introduce themselves and get feedback. The jaunt through Oregon and Washington is an abbreviated sequel to a trek in July that took Bizzy execs from Silicon Valley across the Southwest and Texas and up to Washington, D.C.
The eye-catching publicity swings, while time-consuming, speak to the lengths some social-media start-ups are willing to go to gain traction in a marketplace larded with competition.
After a quick powwow with folks at the Portland Incubator Experiment which nutures new businesses, Bizzy's Ryan Kuder and founder Gadi Shamia host a dinner for foodies, followed by free beer at a popular tap room. About 25 customers and would-be Bizzy users show up for brews — either through Facebook notifications, tweets or old-fashioned word of mouth.
"This is prospecting for us," says Kuder, a former Yahoo marketing executive.
"We want to meet real people using our app, listen to what they want, and create buzz," Kuder says.
Doniree Walker, a food and lifestyle blogger in Portland, is an early advocate because she's been able to "discover great restaurants."
Bizzy's stab at customer development is similar to the sort of barn-storming tour that baseball stars such as Babe Ruth and Willie Mays did in the 20th century to take their wares directly to people amid so many entertainment options.
Indeed, with the economy potentially teetering on the brink of another recession, and a roiling stock market, the pressure is on companies to make a mark — any mark — while dodging a potential bloodletting of social-media players amid the latest Internet bubble.
"There are way too many social and ad networks," says SugarCRM CEO Larry Augustin, who took VA Linux through a $1 billion initial public offering during the tech IPO boom of December 1999. He points to more than a dozen social-networking companies bigger than Google+. "They can't all survive. Some will be bought. Some will fail."
Economic uncertainty and too many social-media companies is a toxic combination, says Adam Goldstein, CEO of online travel service Hipmunk. The rising cost of commercial real estate in the San Francisco Bay Area and slumping consumer purchases could be a death sentence for some businesses, Goldstein says.
Hundreds of domestic companies are focusing their efforts on social technology in pursuit of billions of dollars from businesses and consumers, says Brian Solis, a social-media analyst at market researcher Altimeter Group and author of The End of Business As Usual. Online ad spending in the USA alone is expected to soar 20% to $31.3 billion this year, up from $26 billion in 2010, eMarketer estimates.
"There is money to be made and calculated risks to take," says Alesya Opelt, founder of website Alesya Bags in Charleston, S.C.
There are thousands of social-media-related companies, if you include elements of gaming, mobile applications and online advertising. And they are sprouting — especially in the hotbeds of San Francisco, New York and Los Angeles, says Mark Jensen, managing partner at National Venture Capital Services for Deloitte.
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