As a writer about all things technology, I am inundated with information about social networking: Did you hear about Project X that was launched today? Which new social game is taking over Facebook (News - Alert)? Twitter did what? How many users does Pinterest have, again? How much creepier is Foursquare getting? Zynga bought who?
Yet it became clear today at the Business Insider’s Startup 2012 event at the New World Stages in Manhattan that social media is not in overdrive without reason, nor is it simply valuable for gaining new customers or retaining existing ones. It has become the very basis for many startups’ business models.
The startup owners themselves propagate this concept. Jason Goldberg, CEO of Fab.com, the wildly successful design-based website, told the audience that his business “would not be where it is today without social.” Fifty percent of Fab.com’s business has grown from social.
Facebook and Pinterest are the largest contributors of business for Fab.com. Goldberg noted that since the company launched its mobile app on October 15, 2011, mobile traffic now accounts for 35 – 40 percent of the site’s overall traffic, with iOS-based devices swallowing the lion’s share of that user base at 95 percent.
As other companies with different business models, such as The Huffington Post (News - Alert), breed their own versions of social by encouraging public engagement right on their own blogs, Fab.com had no choice but to acknowledge the overwhelming participation of social contribution. “iPhone (News - Alert) and iPad users are incredibly useful and valuable,” Goldberg said. “We have to plan for growing mobile use.”
We continued to see, throughout the day’s event, that many startups are wholly basing their business models on the importance of social technology. Candace Klein, CEO of SoMoLend, told a panel of critics that her lender/borrower-based company has a competitive advantage over others in that it is “social, mobile, and local.” As a peer-to-peer company, SoMoLend takes the essential functionality that Klein sees as inescapable in our mobile-driven lives to the level of productive business partnering.
Peter Vogel described his business, Plink, to the panel of critics and revealed its wholly Facebook-based approach. Through a business model that forms a triangle amongst Plink, the Facebook user, and local restaurants, Plink connects 33,000 business locations to Facebook users, yet is entirely dependent on the Facebook user’s penchant for gaming through social games such as Words With Friends or Farmville.
And Sean Duffy from Omada Health expressed the value of social networking as the basis for his startup company that brings together pre-diabetic patients with the expressed purpose of undergoing a 16-week program with each other in order to reduce the risk of developing diabetes in coming years.
Ultimately, as much as the influx of social content can seem overwhelming, no one is more overwhelmed than those in the startup market today. The value of social media and the role it has yet to play in the success and failure of blossoming businesses is revealing itself daily.