It seems to me that there are certain phases that every social media startup goes through in one form or another. Good or bad, how a company deals with these phases can ultimately determine their future.

Sometimes the issues raised in these phases lead to the development of technologies that push the industry forward. And other times companies find themselves hitting a dead end. Either way there are many lessons to be learned.

• You Get Hot - This is the phase when everyone is talking about you. You can’t scan a series of social media blog posts without someone gushing over your service. Life is good. I think that Second Life is currently on the back end of this phase. Digg has also been one of the hottest social services over the last six months as well. These are good times where anything seems possible.
• You Get Slow - The hype of hotness leads to many new users and plenty of performance challenges. Second Life is there now, with only 40 avatars able to be present of what island or whatever you call them. I hear people saying that MyBlogLog is there too with people starting to remove the MyBlogLog widgets from their sites due to performance problems. For a in 2005-2006 there was plenty of grumbling about TypePad slowing to a stop some days. I also hear that the very popular Amazon S3 (which could also be called Social Startup Storage) service has slowed considerably in recent weeks. These are tough times but still a good position to be in because a heavy load means that you’re popular.
• You Get Bought - This happens either by generous funding or direct sale of the company. Either way, someone lobs in a ton of cash. All the big names get here despite their performance issues. Google jumped in early with their purchase of Blogger. Flickr and Del.icio.us were early pickups by Yahoo. They also purchased MyBlogLog recently. Fox Interactive shocked everyone when they paid big dollars for the formerly sizzling hot MySpace.
  
• You Get Spammed - Users of the web based map app Frappr got caught by this last year. A sudden flood of spammers onto the maps prompted users to quickly configure moderation features. Blogger has long been a target for spammers via comments and creation of spam blogs, aka splogs. Wikipedia has similar issues related to the motivation of certain contributors. This phase is only real bad if you don’t have the features designed to protect your users. If the spammers want you then at least people know that your service is worth paying some attention too.
• You Get Silly - Once you deal with all the other phases it can be easy to forget what your core mission was all about in the first place. Sometimes the price of forgetting involves doing something absurd. Facebook got hit by a mini revolt after introducing new features that reduced the security of member profiles. Flickr recently announced a forced move to Yahoo! accounts and limits on friends and tags. Frappr! has switched site designs and map technologies much to the chagrin of it’s many users. WordPress.com switched on the much derided Snap feature by default on every single blog. This phase tends to occur after companies ‘get bought’ and become servants to new masters. Definitely not a good time but not necessarily curtains either.
• You Get Marginalized - Sometimes technology, features and hotness pass by quick. Friendster was an early social network that is still going but nowhere near the powerhouse it used to be. Odeo started with millions in funding and a huge cache but lacked a coherent strategy. The company founders bought out the VCs and are charting a new course. Google Video seemed certain to control the web video space for a long time to come. Then this upstart called YouTube turned GV into a second class social citizen. Google responded by pushing YouTube into the ‘you get bought’ phase much to the delight of YT investors.

I think the lesson here is that the process of building a social startup is rife with pitfalls as well as great opportunities. At any given time many social startups are dealing with one or more of these phases. And even startups that seem to have crested the mountain hit difficult snags. It is patently obvious that there are always lessons to be learned. Copius amounts of funding guarantees nothing but existence for a period of time and popularity can be a burden all its own.

[tags]Social Media, Startups, Pitfalls, Phases, Analysis[/tags]