Yesterday's big news in the social media business sphere was the Facebook acknowledgment that they turned a profit last quarter. That is absolutely great news and a tremendous indicator for the future of convergence that has been "coming" for years now.
Facebook and some analysts point to the low headcount as the reason for profitability despite the basic ad model and the fact that Facebook does not share in the revenue that application makers generate through their network. While running a lean business is essential, to me the lesson in this profitability turn is that an open strategy can work.
Before opening up its network to applications, Facebook would have probably had a very good run and then went the way of Friendster and MySpace...popular, but not monumental. The 'perfect storm' combination of an (1) open invitation to applications, (2) Facebook Connect to let users interact with friends outside of Facebook and (3) Facebook Mobile to let us all carry our friends wherever we go is the reason the service has exploded to 300 million members.
While 99% of the businesses out there will never reach that level of audience, those actions of openness are still relevant. The fact is that we, as consumers, no longer live in one place, interact with one community or remain loyal to one brand.
We are in the 'me' world, but not in an egotistical way, just in one that we seek to have our likes, passions, companions right at our fingertips. I had lunch with a friend of mine the other day who runs a company with a user base of well over 50 million and he said it well..."we need to give our customers the easiest path to 'me.com'.
Businesses that keep that fact in mind, regardless of the product, service or scale, will do well.
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