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5 things social networking sites can learn from Salesforce.com April 12, 2007

Posted by Daniel Gardner in Business Thoughts, Fox, Internet, MySpace, salesforce.com.

After my post about Photobucket being banned from MySpace today I was thinking about the amount of people who say that companies built on the back of a large website are destined for failure, I tend to disagree, hundreds of widget companies have come out offerings add-on’s that add to the user experience on these websites and have raised plenty of venture capital and are moving towards profitability such as Slide and RockYou though without a clear channel for distribution and monetization of there products (as well as the uncertainty of if your widget will be available tomorrow *cough* MySpace*) many potential entrepreneurs and investors are scared of the prospect of creating a widget company.

In order to open up the doors to these entrepreneurs and investors I think Social Networking sites should adopt a model similar to that of the Salesforce.com Appexchange which allows companies to build products that sit on top of there platform in a controlled environment, by looking at salesforce.com I can see 5 key things that every social networking site should do in order to ensure both themselves and there widget companies prosper from a widget ecosystem:
1. Create a portal
Create a portal for companies to showcase there widgets they have built, these widgets should be free to post, view and try, possibly adding a voting or popularity feature to ensure the best widgets bubble up to the top to ensure users don’t need to dig around to find the best widgets
2. Create a development platform
By creating a development platform with site specific functionality companies can ensure widget providers will want to create widgets for there site as it is easy, code is easily manageable by the site owners and so that they can create a lock-in for there widget providers that cannot get the same functionality elsewhere.
3. Create a solid terms of use agreement
To ensure that widget providers don’t create something that violates copyright or infringes on a feature the site wishes to keep to themselves, a solid terms of use agreement should be decided upon so that widget providers know where they stand.
4. Acquire
Successfull widget companies that can enhance the companies platform should be acquired as is required, regular acquisitions will mean that budding entrepreneurs will spend there time and resources creating useful widgets in the hope they will be acquired.
5. Profit!
For companies that are not suitable for acquisition both the widget provider and the site can monetize there widgets, the site takes a cut off every sale and the widget provider takes the rest, this is direct profit and is not varied based on advertising.

“We are like dwarfs sitting on the shoulders of giants. We see more than they do, indeed even farther; but not because our sight is better than theirs or because we are taller than they. Our sight is enhanced because they raise us up and increase our stature by their enormous height”
Bernard of Chartres – 12th Century Philosopher


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