namewise. blog.

in 2006 i wanted to invest into a germany social network. i called them and asked if they would be interested. we had a meeting and they told me what they think their valuation is. i was surprised and it reminded me of the bubble 99. they burn a lot of money and their aim is to grow, making money comes later. no need to tell here that i did not invest. a couple of weeks later i read that they found investors and a couple of month later, i heard that they sold the network nearly 15x times what their already astronomic valuation was!

everybody is keen on social networks and everybody expects that facebook and the rest are goldmines. not me. to operate a social network you need stuff, server, bandwidth and to make money out of people that just want to flirt or party is really tricky. even the smart guys from google figured the out that lesson already!

i just stumbeled upon this article that reflects my opinion.

i see the the real goldmine in small niche networks. look at xing.com. they have 500.000 paying members where each member pays 5 euro a month. thats a business model. members need a financial benefit otherwise they wont spend money for memberships.

Have a great day!

Namewise

This entry was posted on Montag, November 3rd, 2008 at 18:57 and is filed under Allgemein. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.