At that time, the whole idea of social networks was just emerging. MySpace, with a reverse timeline and networking centered around friends, was the dominant platform. The algorithm-driven content stream we came to know later because the Facebook News Feed was still years away — and the simple functionality Facebook offered back then had to be painstakingly handcrafted. The first iPhone has not been released yet.
Today, conditions are reversed. Technological advances have made creating a website and building basic social functions trivial. But the dominance and influence of major social media companies make it extremely difficult to break into and gain power, according to entrepreneurs and venture capitalists.
“There aren’t a lot of technical hurdles nowadays,” said Evan Burfield, angel investor and founder of 1776, a startup incubator based in Washington, DC, “You can go to Heroku for a platform as a service — Heroku on Amazon, or Microsoft Azure with a code from Github.” If I wanted to hire someone, I could have a reasonably feature-rich social network up and running in a couple of days. ”
Anyone who has used a social media app in the past five years knows what features to expect from the service. Posts, comments, a way to express approval or other feedback, and the ability to add photos and videos – by this point, they’re all standard offerings.
With current plug-and-play software, a bare-bones replica of Facebook might cost no more than $25,000 to build initially, according to Charlie O’Donnell, founder of Brooklyn Bridge Ventures, a New York-based venture capital firm. In place of engineers’ salaries, the bulk of the costs of the new social platform will now likely be recurring fees paid to cloud service providers. The more users a startup attracts, the higher this fee will be.
“If you build the next YouTube and people are now uploading videos, the bandwidth costs and storage costs that can quickly get out of control,” O’Donnell said.
A simple social networking platform with a small audience might cost just a few thousand dollars a month in recurring expenses, Burfield said. But anyone with aspirations for a much bigger platform will have to pay much more.
“If you end up with tens of millions of engaged users, you could easily be paying over $1 million per month for storage, bandwidth, and account,” Burfield said.
Amazon Web Services, which operates some of the Internet’s most popular websites, says early-stage startups don’t necessarily have to start paying right away; The company provides a “free tier” that allows some use at no charge. It also provides service credits to eligible startups that can help defray start-up and operating costs.
But even a bigger challenge than building a product is figuring out what product to offer and explaining why your social network is unique and deserves users to spend their rarest commodity — time — on.
All new companies face a version of this question. Who is the audience you are trying to reach? What is the unresolved problem? How can this innovation lower costs, or deliver a richer experience? What niche do you serve, and can that create the engagement you need to succeed?
For apps like Clubhouse, the answer lies in the access it provides to Silicon Valley’s elites — the investors and founders who pave the way for the next Facebook and Google.
“Clubhouse was not a left-wing phenomenon and it was very surprising,” O’Donnell said. “A lot of the first invitations to Clubhouse, similar to LinkedIn, went to venture capitalists and founders. Venture capital is now like little celebrities. Everyone wants to join the network that investors are in.”
However, just having a good idea and the support of influential investors does not necessarily lead to commercial success.
Facebook alone controls many of the best platforms in the world, including Instagram and WhatsApp. Facebook’s core product has more than 1.8 billion daily users; Twitter, a much smaller service by comparison, still has 192 million daily users. Any new startup, by definition, will start out with fewer, and will face the added hurdle of getting people to change their routines.
“Let’s say you ask someone to download your app,” Burfield said. “You literally have a second or two or three seconds in which you have something that piques their curiosity, or they’re bouncing off.” Compared to the industry’s early days, he said, “It’s a complete inverse. It’s very easy to build. It’s not necessarily difficult to attract people. It’s incredibly difficult to convince them to stay.”
Then there is still the issue of financial sustainability, and ultimately profitability.
Sites like Gab or Parler that describe themselves as a free speech alternative to heavily moderated platforms have a clearly defined value proposition – but are a much riskier path to monetization. Parler said its business model will ultimately revolve around advertising, but its controversial track record — particularly after launching from Amazon, Apple and Google platforms over what the companies said were numerous examples of violent content on Parler — could deter mainstream brands.
If he launches his own social network, Trump may discover the same, even with his powerful base.
“The challenge will not be to create a social network or even to get millions of people to listen to what he has to say,” Burfield said. “I think it’s very doubtful if he can build that into a profitable business.”