Complexity and Social Networks Blog

Guestpost by former PNG fellow Thomas Langenberg and Jana Thiel who recently founded Halalati, a social media start-up for do-it-yourself social media marketing tools, with others.

Today, anybody can get Twitter followers. Even without a strategy. But what happens when following certain goals, perhaps even marketing objectives, becomes mission critical? How should a B2B start-up design its Twitter strategy? And how should one actually measure success? This blog post reports about the experience we made while starting a Twitter channel for Halalati.

From a corporate perspective, Twitter can be used either as a valuable part of driving the business model or as communication channel. Alternatively, both together can be use. However, we found this combination to have consequences for our communication work. One of the basic questions for us was: who actually follows our Twitter stream and are these Followers we aspire to have? Quickly one realizes that none of the widespread and highly praised Twitter statistics tools really help. The information one obtains is the following:

Beautiful! Graphically at least. Most likely we send our Tweets on Friday afternoon, we have an average of three new followers per day, and our daily Tweet peak is located just after noon ...

Most of these tools are nice, maybe even cool, but ultimately only "vanity tools". While the number of Tweets is maybe satisfying our ego, they cannot identify who exactly hides behind all our followers. But this is exactly what we are interested in from a marketing perspective. Our success can be measured by

(a) the number of followers we attract and by
(b) the number and quality of interactions we have with our Followers.

Tools such as Hootsuite and bit.ly make it after all. They trace clicks on our links and count the number of clicks and their geographical distribution. But from which population and what are the ideas and thoughts driving our followers? Unfortunately, there is no automated evaluation available. As long as it comes to numbers in the lower three-digit area, one can indeed find the time to manually evaluate one's Twitter crowd. For this post, I ventured off to take a look at our followers and classification.

Apart from the spammers, we are quite satisfied. More than half of our followers are generally interested in Halalati--some are even social media professionals. This comes from our Tweets' "design". With our Tweets we participate in discussions around social media, social media marketing, and online contests. As many other B2B companies do, it is important for us, to contribute in our community's information exchange.

This is the "Twitter as a communication channel" model. That leaves the model "Twitter as part of the business model" open for discussion.

On dealing with stakeholder groups
As provider of social media marketing tools, we help our customers interact with their customers. Hence, we must also think of these customers as our customers---also on Twitter. This is an integral part of our business. But how does one address the balancing act between Twitter for one's own community, and Twitter for the community of one's customers?

We found that the middle way leads into nothing. The perfect message mix for all stakeholders does not exist. At least not if the various interest groups are not completely interested in the same content. The only thing we figured that helps is crafting various Twitter channels. But as a start-up with limited time and resources, how do we manage such a situation?

We will try it out! As of March 8th we have opened up a second Twitter channel, namely @contests4you in which we raise a whole new audience, namely those who are interested in competitions and contests per se. And, since we love competitions, we decided to enter our own little contest. Its our ambitious goal to surpass our company's Twitter channel @halalati in followers within the first month of the introduction of theTwitter channel. We will keep you updated on our progress. Stay tuned!

Posted by Alexander Schellong at 2:51 AM | Permalink | Comments (0)

In a relatively recent New York Times OP-ED, Thomas Friedman (http://www.nytimes.com/2010/01/24/opinion/24friedman.html) argues that: "Obama should make the centerpiece of his presidency mobilizing a million new start-up companies [...]." Friedman then argues that if: "[y]ou want more good jobs, spawn more Steve Jobs."

This emphasis on innovation and entrepreneurship is well placed. A substantial body of research going back to Adam Smith, Max Weber, and Joseph Schumpeter has demonstrated how innovation and/or entrepreneurship are associated with prevailing social and economic conditions. However, Friedman's emphasis on "spawning" more Steve Jobs is somewhat misplaced. Rater, as former Secretary of Labor Robert Reich noted in a 1987 Harvard Business Review article, it is often the entrepreneurial team that is the hero. Indeed, even Apple was initially founded by a team of entrepreneurs: Steve Jobs, Steve Wozniak, and Ronald Wayne.

More generally, research generally finds that entrepreneurial teams tend to outperform solo ventures. And research suggests that including "weak ties" or social connections that can access distinct factor or knowledge markets may be key to novel (re)combination that is the essence of "Schumpeterian entrepreneurship" as novel combination. However, research by Ruef, Aldrich, and Carter (which appeared in the American Sociological Review) finds that very few founding teams include such ties. This implies that at their founding most ventures (in a representative sample of would-be US entrepreneurs) do not have the "social DNA" that is best suited to creating truly innovative products or services.

This finding presents unique challenges for those creating public policy intended to foster entrepreneurship. (It should be noted that some researchers believe that entrepreneurship implies innovation whereas others do not.) While tax policy may be important for entrepreneurship generally defined, serious consideration should also be devoted to issues concerning intellectual property and structural features--including social networks--that can be harnessed to create the conditions for innovation.

Posted by Jason Greenberg at 8:36 PM | Permalink | Comments (11)

by Bill Heil and Mikolaj Piskorski

Twitter has attracted tremendous attention from the media and celebrities, but there is much uncertainty about Twitter's purpose. Is Twitter a communications service for friends and groups, a means of expressing yourself freely, or simply a marketing tool?

We examined the activity of a random sample of 300,000 Twitter users in May 2009 to find out how people are using the service. We then compared our findings to activity on other social networks and online content production venues. Our findings are very surprising.

Of our sample (300,542 users, collected in May 2009), 80% are followed by or follow at least one user. By comparison, only 60 to 65% of other online social networks' members had at least one friend (when these networks were at a similar level of development). This suggests that actual users (as opposed to the media at large) understand how Twitter works.

Although men and women follow a similar number of Twitter users, men have 15% more followers than women. Men also have more reciprocated relationships, in which two users follow each other. This "follower split" suggests that women are driven less by followers than men, or have more stringent thresholds for reciprocating relationships. This is intriguing, especially given that females hold a slight majority on Twitter: we found that men comprise 45% of Twitter users, while women represent 55%. To get this figure, we cross-referenced users' "real names" against a database of 40,000 strongly gendered names.

Even more interesting is who follows whom. We found that an average man is almost twice more likely to follow another man than a woman. Similarly, an average woman is 25% more likely to follow a man than a woman. Finally, an average man is 40% more likely to be followed by another man than by a woman. These results cannot be explained by different tweeting activity - both men and women tweet at the same rate.

These results are stunning given what previous research has found in the context of online social networks. On a typical online social network, most of the activity is focused around women - men follow content produced by women they do and do not know, and women follow content produced by women they know. Generally, men receive comparatively little attention from other men or from women. We wonder to what extent this pattern of results arises because men and women find the content produced by other men on Twitter more compelling than on a typical social network, and men find the content produced by women less compelling (because of a lack of photo sharing, detailed biographies, etc.).

Twitter's usage patterns are also very different from a typical on-line social network. A typical Twitter user contributes very rarely. Among Twitter users, the median number of lifetime tweets per user is one. This translates into over half of Twitter users tweeting less than once every 74 days.

At the same time there is a small contingent of users who are very active. Specifically, the top 10% of prolific Twitter users accounted for over 90% of tweets. On a typical online social network, the top 10% of users account for 30% of all production. To put Twitter in perspective, consider an unlikely analogue - Wikipedia. There, the top 15% of the most prolific editors account for 90% of Wikipedia's edits ii. In other words, the pattern of contributions on Twitter is more concentrated among the few top users than is the case on Wikipedia, even though Wikipedia is clearly not a communications tool. This implies that Twitter's resembles more of a one-way, one-to-many publishing service more than a two-way, peer-to-peer communication network.

Bill Heil is a graduating MBA student at Harvard Business School, and will start at Adobe Systems as a Product Manager in the fall. Mikolaj Jan Piskorski is an Assistant Professor of Strategy at HBS who teaches a Second Year elective entitled Competing with Social Networks. Bill undertook research for parts of this article in the context of that class.

i Piskorski, Mikolaj Jan. "Networks as covers: Evidence from an on-line social network." Working Paper, Harvard Business School.
ii Piskorski, Mikolaj Jan and Andreea Gorbatai, "Social structure of collaboration on Wikipedia." Working Paper, Harvard Business School.

Crosspost. Original version published as "New Research: Men Follow Men and Nobody Tweets" on 6/1/09 @ (c) Harvard Business Publishing

Posted by Alexander Schellong at 3:06 PM | Permalink

This hardly comes as a surprise: Corporations are increasingly tapping into the social capital of networks such as Facebook and MySpace, as reported in this NY Times article by Laurie J. Flynn today. From a theoretical standpoint, it makes a lot of sense: The ties in these online social networks reflect several layers of homophily (friendship, common interests, membership in various groups, partially self-selected affiliation, etc.) in addition to what usually applies to even the best organizational communities of practice. Several companies are now integrating business intelligence applications with the social Web and the Internet. Such "interrelated pools of information" bring value to business, says Flynn, mainly by fostering communication among employees, but also by better identifying job candidates and target customers. Let's just hope that Facebook will react to this development and allow the creation of different profiles for the various personae we represent on the Internet.

The article appeared in a special section of the New York Times today called "Tech Innovation". The section is filled to the brim with exciting and innovative ideas - one of these coming from the ever resourceful Bernardo Huberman of HP Labs. Together with his team he developed the prediction markets tool "Brain" (Behaviorally Robust Aggregation of Information in Networks), which can be employed to predict the demand of a new service, such as Internet television. I loved Huberman's quote a propos his brainchild: "We want to reduce the wisdom of crowds to the wisdom of 12 or 13 people." Hopefully the right ones.

Posted by Maria Binz-Scharf at 9:57 AM | Permalink

I have come up with a new format for our blog. In the next couple of months I will post interviews with leading Internet entrepreneurs and venture capitalists who can share their insider knowledge on the current state and future of social software/Web 2.0. Hopefully this is inspiring to those with entrepreneurial ambitions in the area as well as interesting to researchers who want to work on the "next big thing".

Dear Thorsten, you have been involved in various internet ventures either as part of the management team (21Publish, kinkaa, Newtron, Creative Weblogging) or as investor. We are very happy that you are taking the time to answer our questions.

Please tell us about your latest activities.

Hehe - that is a broad question - I did run my first marathon, saw my first two kids born and I do continue to bootstrap two startups - Kinkaa (a meta travel search engine for Europe) and Creative Weblogging (a blog media network).

Will the social software industry be affected by the economic downturn? Have you recognized or experienced a change in entrepreneurial or investor activity within the last couple of months?

People are certainly more cautious as everyone is trying to figure out what the impacts could be (less marketing spend, less advertising). However its just psychology so far - I haven't seen any early stage deals fall apart (as it happened with many private equity deals). Overall it seems that early stage deals show a healthy consolidation but its hard to forecast this further for me.

Let's say someone would like to start a social networking venture today. What would be your recommendations? Do you believe that the ideas are still of interest to Angel investors or VC's?

They are - just look at a Hamburg (Germany) based social network for classic car ('oldtimer') lovers. It just raised funds in the end of last year. Social networks must have a convincing organic growth and should target a certain specific demographic. If there is a good business model or good idea to make money besides running ads that can indeed be an enticing mix for investors.

Google executives recently said that it is harder than expected to generate revenue from online social networks. What is your opinion on the potential revenue models for social networks?

CPMs (price per 1000 impressions) will continue to be below average compared to other internet services. Nevertheless social networks market themselves mostly and can claim enormous amounts of users with very little marketing needed. So most will break even eventually.

Many social networking platforms have made it easier for companies to mine their user data for marketing purposes. Do you think this is the right move or will the internet community strike back?

I feel it's not a good idea to move into that direction. It was felt like going 'under your skin' as a user. Most initiatives have backtracked already from their former stance.

A follow-up question. Aren't you tired of keeping your profile up to date in all those social networks. Wouldn't it be the best way to create a single XML type online identity?

Absolutely - but remember each social network has a (slightly) different purpose - my identity in LinkedIn and MySpace may never be the same.

Merging data from social software with the real world has been discussed in the past under the name of "location based services". Though we have yet to see applications and devices that are available and used by a majority of users. When and how could this change?

It must become ubiquitous - all (or most) phones need GPS. Data plans must be included into a normal mobile phone subscription. Mobile phone displays and UI must improve so that even your grandma can login to Facebook from her mobile phone. Seems a coupe of years off - judging from my grandma who has yet to buy a mobile phone...

As a pan-european investor you are seeing and hearing about trends before they emerge. Is there an area of social software that we should be aware of in the near future? Will we be seeing more crowd based business concepts such as the trend to allow users to share almost anything?

I like the idea of Amazon Mechnical Turk a lot - it's basically an API for the human mind. It's still a lot of theory and only so much practice, but social networks with all the user data could eventually build their business on a similar platform. Social networks as an API to knowledge and human services?
...
I kept it short - hope it still helps. Please let me know if you have any more questions.
Best, TJ

Torsten Jacobi or 'TJ' is a serial entrepreneur and investor with experience in the software and media industry in the U.S. and Europe. He lives close to Silicon Valley with his family.

Posted by Alexander Schellong at 11:15 AM | Permalink

Today's WSJ reports that Google executives said the company was having a harder time than it expected generating ad revenue on social-networking sites. In particular, this would put Microsoft's evaluation of Facebook under scrutiny. Around the world, other OSN ventures such as Facebook recently introduced new terms of business to make it easier to utilize the user information for marketing purposes. Many members complained about the move, some even left. Therefore, privacy is still of importance to many users and strategies discussed in Relationship Marketing (see also permission marketing) might be the right move for OSN ventures.

Posted by Alexander Schellong at 7:48 AM | Permalink