"Social Rank" will bring a new wave of disruptive web companies

Very successful web companies were created in the  early days of search when Google perfected the page rank algorithm, amassed huge traffic as the start page for an internet journey, and then directed this traffic to sites that ranked high.  These sites (primarily content related) were easily readable by google, had unique/original content, and were first movers – they generated 10s of millions of visits per month from google.   Multi hundred million dollar revenue companies like About.com and TripAdvisor were formed with very little marketing cost – making them very profitable (we’re talking 40-50% EBITDA margins).    Other hot companies such as Yelp, Fixya and even Wikipedia can attribute early mover in “SEO” as a key success factor.

We are now in a new era of social media where I believe Facebook will have similar “kingmaking” power and will result in a whole new crop of vertical sites that are socially driven.  Why?  Now over 500M people have exposed their digital identity and social graph via facebook for the rest of the web to use.  This will only grow to billions as it will be a requirement to have “digital identity” in order to be seen, heard, and transact in the real world – and facebook seems to be the platform of choice globally (I will leave it to the pundits on whether it will be an open platform or remain closed).   The recent product enhancements of facebook allow their “social widgets/signals” to be embedded all over the web to provide the hooks for these new sites to get weaved into the social graph and also appear high in facebook’s “social rank”.  As facebook will enter the search space, this will be even more powerful. The difference vs Google’s page rank is that the important sites and web pages are determined by real people, their actions, and the strength of their connections.   This will drive not only a key aspect of search (better answers to research-related vs navigational queries) but also enable “discovery” of new content – when a consumer isn’t sure what they want, they will get socially driven recommendations at sites that cater to the verticals (e.g. travel, entertainment, shopping).   Most verticals will be impacted and many new companies will be created that drive tremendous free traffic from facebook feeds, embeds, comments, links, etc.  This is what Zuckerberg wants – to be the new nexus of information and applications all across the web (and mobile).

I’m particularly interested in funding companies in high value verticals that will take a 100% social approach from ground up.  Yes, some web 1.0 companies will rank well due to their brand and quality of content (e.g. New York Times, CNN) and because they will integrate social widgets but there will be many other new brands created – in Travel, Real Estate, Education, Finance, and Shopping (just to name a few) that are solely focused on being the best nodes on the social graph.

If you’ve got a company that you believe will take advantage if this new disruption, I want to hear from you!

Comments

[Jay]

Raj, what do you think Facebook will do in the search space? I understand Bing just released "social search" of Facebook status updates and Twitter posts, but I wonder if there's an opportunity to build a search engine that finds and orders destination websites using SocialRank instead of PageRank. Is this something Facebook is working on?

[Raj]

I think facebook will likely launch search - they already have a search input but its primarily for people. Mark Z claimed at the D8 conference they are getting search queries on an order of magnitude of google already.

[Jeremy]

It is the virality, Zynga became successful compared to Slide, because they worked hard and built deeper engagement. I think you are making it sound more complicated than what it is, facebook sexy term for virality is social graph. Moral of the story fb is no panacea, one has to earn it if you look at zynga and slide.

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Interesting observation. If this happens, search relevancy factors would be socially driven. Great post!

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