There are so many companies out involved in Social Media in one way or another that is pretty confusing to try and keep up and recommend the right companies to colleagues and clients.
The easy one to knock would be the social media sites themselves. How many can you name? How many do you think will be around in two years?
In May I was told by a very successful Bay area entrepreneur that he had bought shares directly off the Facebook founder. This story broke in business week today so I don’t feel that I am breaching confidence. That conversation in May immediately told me all I needed to know about what the founder felt about the inflated valuation of his company.
I’m sure that Facebook’s critical mass will carry it through the downdraft that is going to blow through this sector but I am hearing stories of companies reaching the bottom of their funding barrel before they can move into a cash flow positive situation.
We went through this with the dot com boom so it isn’t a new story, just part of the business cycle that keeps all of us guessing.
This is a good thing. When the dust settles, it becomes a lot clearer who the real players are and how to engage in a way that will not waste your time and client marketing cycles.
My recommendation is to look at the companies that you intend to use carefully because given the economic downturn, the boom will turn sharply.
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