Can a Big Public Company Develop an Interesting Social Network?

Much has been made about Yahoo and Google’s attempts at next generation social networks.  In addition, companies like News Corp and NBC/Universal are trying to build a YouTube competitor.  Despite having good funding sources, I’m pretty skeptical about these companies (especially the News Corp/NBC video site) ability to create a truly popular and innovative social network.

First, you have the Innovator’s Dilemma (any current or potential entrepreneur NEEDS to read this book) problem; big companies are great at producing evolutionary improvements to technology, but have a really, really hard time creating innovative products.  This stems from a couple of factors including:

  1. Great Expectations Lead to a Fear of Failure— Google is expected to release great products.  If they try to release an innovative social network and it bombs, just think of the newspaper headlines.  “A Real Google Bomb” .  “Google Losing the Magic Touch”.  Everything has to be damn near perfect before you can go into a public beta.  Also, the application has to be comprehensive from day one.  Myspace.com had the luxury of focusing on making a product useful for bands to self-promote before being a place for any idiot to create a site.  Facebook.com could focus on making a place to try to scope out cute chicks before becoming a development platform.  A Yahoo or Google would not have the luxury of having those growing pains.
  2. Competing Priorities — Think about the now famous Peanut Butter Memo at Yahoo.  Even at a large company, there are only so many projects that can be a priority for development, marketing, corporate, and operations.  To justify the investment costs across the company for a major new innovative product is often too risky.  For the News Corp/NBC Universal video company, the competing priorities that the focus is trying to maintain a legacy business model (television sponsored by advertising) as opposed to a better user experience.
  3. Legacy Systems — Both Yahoo and Google have social networks already.  How do they put something new out there without pissing off legacy customers?  Very, very hard (maybe impossible) to do.
  4. Bureaucracy  — At any company, the bigger it gets, the more approvals it takes to make any kind of product or release.  These take time and make it harder to respond to customer needs.  The impact when trying to build a community site is gigantic.  Unless you can be nimble enough to quickly respond to the community, you may never reach critical mass.
  5. Too Many Cooks — I think this could be a huge issue for the News Corp./NBC Universal site, but it is a factor with any big company.  When too many people feel that they need to add their input about product direction, it tends to slow down development cycles and reduce innovation potential.

If a next generation social network is to be built, my bet would be on Google/Yahoo acquiring it (a la YouTube) rather than building it themselves.