The fast-followers continue; now Techdirt is running a story on the Social Networking bubble. There’s a couple of good links to coverage of the recent Social Networking panel at Stanford. I especially liked Ross Mayfield’s blow-by-blow.

Ross said something very interesting: “I actually like how cynical we have become these days. Anything with the slightest market traction or investor interest is immeadiately suspect. Keeps us in check.”

This kind of skepticism ends up benefiting all the parties–the original entrepreneurs have less competition (both Ross and CBS MarketWatch noted Jonathan’s attempts to discourage other people from starting Social Networking companies). The VCs get saved from overinvesting in something just because it shows a spark of like, and consumers aren’t forced to sort through hundreds of me-too services.

The problem with Social Networking is that it’s just so darn easy to create a service; it reminds me of the bad old days of advertising-supported Web sites, where everyone (including me) believed that you could always monetize traffic through DoubleClick. Now it’s even worse–people are getting into Social Networking without any good idea of where the money is going to come from. Unless VCs and entrepreneurs show some restraint, this bubblet could grow into a full-fledged bubble.

Leave a Reply

Your email address will not be published. Required fields are marked *