There is no lack of services that leverage Facebook, Blogs, iPhones and Twitter. Though, is there a limit to how large and how much revenue a service can generate when based on these platforms? In the biological world, parasites are inherently limited in size. As soon as they become too large they could start to have negative impacts on the host.
Does this same relationship apply to application developers? If so, and these applications are limited in size (and revenue) does that mean that these companies won’t work for Angel and Venture Capital investment?
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I don’t think it’s possible to make Google/Facebook type money off other platforms, but I’m sure the creators knew this when they started. In regards to the size, I completely agree that by building off another platform you risk the chance of growing too big. Maybe nowadays that means getting acquired by the “host”.
It seems that most startups nowadays are not willing to solve big problems. Like making an OS (Microsoft), building a revolution computer (Apple), or developing unique software at scale (Intuit & Adobe & Electronic Arts). All the apps and widgets living inside Social Media platforms (channels) are only solving small problems at a limited scale. If social media platforms can become as large as the MS Windows platform, these startups probably can earn SERIOUS money. Yet I don’t think that’s going to happen.
In order to do that, you need to have a dominance standard platform in place like Windows. So a lot of startups can build on that specific platform and grow big.
It’s true that these apps and widgets startups can earn good money by making different apps all the time based on the fast changing taste of the users. But it’s almost impossible for them to build a killer product for their companies. Like Windows, MS Office, Turbo Tax, Photoshop or iTunes.
Building services/products based on social networks can be good businesses but probably not GREAT businesses. At the end of the day, people change their entertainment preference fast. Very Fast. From friendster to MySpace to Facebook. The reality has already proved that there is not much network effect for these sites. If a new social networking site can create a compelling advantage, people will change the ship immediately.
@Vincent Even worse is that many VCs are only funding small problems. Madrona is starting a “Twitter business” that is looking to make money by siphoning off value from Twitter. When VC money is going to these small opportunities, you know things are bad.