Facebook wants to become the one-stop-shop for social networking.  They didn’t upset 94% of their users without good reason.  I was hoping someone would map out their potential path, and Robert Scoble did just that:

The 7 phases Facebook is going through:

Phase 1. Harvard only.
Phase 2. Harvard+Colleges only.
Phase 3. Harvard+Colleges+Geeks only.
Phase 4. All those above+All People (in the social graph).
Phase 5. All those above+People and businesses in the social graph. (Robert notes Facebook is moving into this phase now)
Phase 6. All those above+People, businesses, and well-known objects in the social graph.
Phase 7. All people, businesses, objects in the social graph.

(Interesting they are moving into phase 5 when there is still much wrong with the site as is, but perhaps this explains why they aren’t bothering to fix the little things – they’re focused on big picture.)

While Facebook tries to be all things to all people and Twitter enjoys the media spotlight, it’s worth highlighting a strategy many have been using successfully for years:  let the big players fight for the masses and quietly build something focused and specific.  Mainstream sites, products and apps can never be as compelling to niche groups as those with a specific focus.  Funny enough, the fact that Facebook was able to go mainstream is due entirely to this.

Niche evolves into mainstream

As someone who joined Facebook at phase 2, (5 or so years ago while in college) I’ll note it was a pretty special thing back then as a members only network.  You needed an active .edu address to sign up.  They were a walled garden with a purpose – connecting college students in one place.

Creating the college-only network The Facebook (it was called The Facebook at inception) was a huge idea and a perfect example of a viral product.  College students at the time were some of the most connected people on the planet – everyone had email, AIM, web access, and cell phones.  So when a private network was created just for them, it spread between students like wildfire.  It was such a sweeping phenomenon, it was as if one day it didn’t exist, and then overnight being on Facebook was the norm.

If you were a college student you had to have a Facebook page.  If you didn’t, you were viewed as an outsider – at that point in the network, there were outsiders, something necessary to make a network exclusive.  Creating a walled garden was actually a smart move for Facebook during the initial build.  It made students feel like they were a part of something only other students were a part of.

If Facebook had tried to start as the network they are now, it would never have caught on because they now appeal to everyone, which is actually appealing to no one (they can only do that now because they’re big).  Launching as a college-only network was interesting to a hyper-connected and specific group.  We were connected digitally in college before Facebook – but there was no consolidated place for college students as a group to gather on the web, just lots of fragmented destinations.  It was brilliant in it’s simplicity, and even better was the fact that its users were happy to market the network, since it became incrementally more useful with each new user (Metcalfe’s law).

Giving up ownership of a sought-after niche
After a very short period of time, Facebook had locked up the college demographic, there would have been no sense competing with them – everyone was on it.  It would have been extremely difficult if not impossible to create a groundswell large enough to shift those millions of students, globally, to a different network.  Besides, there was an unspoken respect for Mark – he had built something amazing “for” us, and he was also one of us.  But he has bigger dreams for Facebook than being a college-only network, and so it moves on in that fashion.

College students and younger demographic groups constantly seek things which define their generation.  It is ingrained in our society.  And, any time a site gives up niche for mainstream – especially in a situation with a demographic prone to rebellion, it creates a wide-open opportunity for a new, focused solution.  There is no network purely for college students any longer, at least one which has branded itself strongly enough to be referred to as such.  A few motivated kids with some programming knowledge and social ties could build and spread a new solution for their needs, positioning it for their generation.  Getting 20-somethings (or even better, 18-19 year olds) to rebel is simple enough.

General-interest networks are mildly interesting at best
As a mainstream network, Facebook isn’t really interesting anymore.  We’re all already networked on the open-web, and those little tools in Facebook are far better in product-specific platforms and apps.  Flickr is better for photos even though Facebook has a ton.  Email is better than their direct message feature.  FriendFeed is better at lifestreaming.  Many of the apps do not work consistently, especially the ones that are actually useful like RSS apps.  Twitter is more compelling than Facebook, especially when I see how far messages can go in that network (have any of you seen your messages ReTweeted in Facebook?).  I will take a tool box over a pocket knife any day – do one thing well.

Other samples of mainstream vs. niche

Social news

Digg started as a site for tech/geek news – it has evolved into far more than that and certainly has gone mainstream at 33 million visitors per month.  Many of the early users have stuck around because Digg offers something compelling for dedicated users:  power within the network.

Reddit has stayed small by comparison and the audience still feels more niche, even if the subject matter is diverse.  Also, it seems as if several Digg users have defected to this network, which is a natural occurance when things get too big – many prefer more intimiate communities.

Microblog/lifestream

Twitter started by appealing to early adopters/bloggers/ultra-connected individuals just by nature of the product, but is now catching on with all types of people.  It’s really useful and a great social experiment – I hope they can turn it into a good business.

FriendFeed appeals to everyone with a diversified web presence and is mainly used by early adopters/RSS lovers.  The clean, logical layout appeals to usability conscious people and social media power users.  This is a smart strategy because ultimately they’re the ones who will help catapult them into popularity (go join if you’re not there).  FriendFeed, at under 1 million VPM could be viewed as mainstream, but when compared to Twitter it still feels small.

Marketing industry

Advertising Age is is a great example of a mainstream publication that has also connected itself with hundreds of niche sites.  They chose to merge with ToddAnd’s Power150 list ranking the top marketing/media bloggers.  It’s a big win for them – good linkbait, positions them as an arbiter of the niche, and helps bridge their monolithic outlet with niche-specific content.  I am surprised PR Week has not done something similar for PR-focused blogs.

Max Kalehoff has a fantastic marketing blog where he shares insights and opinions from his unique perspective with thousands of marketers monthly.  As a subscriber, not only do I get all Max’s best thinking, but he goes the extra step and takes the time to respond to comments I leave, one of my favorite elements of niche blogs.

Tech industry

The Inquistr is a strong model.  Check out the site – they write on mainstream items and tech/web content.  Literally everyone blogs about the web industry and/or tech, the niche is insanely crowded.  But their strategy  is simple – mainstream content gets far more traffic than tech and they’re using that to their advantage to funnel subscribers.  And the tech content is actually quite good – they have Steven Hodson as a writer amongst others (kudos to Eric Friedman for noticing this).

Louis Gray on the other hand is really focused on speaking only to a specific audience – early adopters and those fluent in tech and communications.  Louis also has several smart people submitting guest content regularly, which benefits both the writer – exposure to a new audience – and Louis’ community (we get to interact with them).

Encyclopedia/reference

Wikipedia is the all-encompassing, human-powered Encyclopedia that is surprisingly as good as any professionally edited product.

Urban Dictionary is a niche product for slang terms – they could evolve it in any number of directions but have stayed focused and true to what they’re doing, and at nearly 3 million visitors per month, it’s a hit.

Music

MTV.com has music news for mainstream, mass audiences who want generic, formulaic music.  They write the same things as any pop-culture, or general interest magazine would about music.  If you’re a music fan, it’s safe to say you don’t read what’s on that site.

Filter27, an electronic music blog written by Sotek (who has an incredible ear for good music) provides news, links and samples to unique and compelling electronic music you otherwise might never have been exposed to.  He’s talking to a specific audience, doesn’t dull it down, and shares only the best stuff – unmissable to those into the art.

E-commerce

Amazon is the 800 pound gorilla for ordering just about anything under the sun.  They target lots of markets and sell a diverse selection of products.  But like Facebook, they started as a niche (selling books) and grew to the monster company they are now.

Think Geek only targets, you guessed it, geeks.  In their words:

ThinkGeek started as an idea. A simple idea to create and sell stuff that would appeal to the thousands of people out there who were on the front line and in the trenches as the Internet was forged. ThinkGeek started as a way to serve a market that was passionate about technology, from programmers, engineers, students, lovers of open source, to the masses that helped create the behind-the-scenes Internet culture.

Pros/cons of going mainstream vs. staying niche:

Pros for going mainstream/mass appeal

• Ad revenue
• Large scale influence on your industry
• Traffic/links
• Media exposure
• Sharing your product/community with a wider audience is good PR for the industry you are tagged to
• Lots of objective input from users possible via surveys
• A big player might buy you out (although if this is on your list as a reason to build a startup, don’t build it)

Cons for going mainstream/mass appeal

• Current user-base may revolt (isn’t the same network they signed up for initially)
• Focus of site is potentially lost
• Monetization other than ads is tricky
• Attracts spammers
• Addition of too many features ruins core use
• Risky – might not catch on
• Nimble competitors can pick at your herd
• Customer service does not scale
• Reliable subjective input becomes time consuming
• Can fall out of favor quickly

Pros for staying niche/focused

• Potential strong monetization due to highly relevant products/services tied to topic (pound for pound, good niche sites produce more revenue than unfocused)
• Tighter feeling of community – everyone knows each other
• More meaningful interactions
• Few spammers
• Difficult to sway users away from a good community
• Content is better
• Users can be actively involved in decisions, reliable subjective input is easy to get
• Search traffic that does find you is relevant
• Strong branding potential
• Ability to define yourself as an authority for something specific

Cons for staying niche/focused

• Less impressions to sell advertisers, however more relevant impressions should appeal to smart companies
• Smaller staff (or even single-person owned) means you wear lots of hats (IT, marketing, SEO, design, server admin)
• May or may not provide full-time income
• Growing traffic takes time
• Cutthroat competition (depending on niche)

Conclusion

If you’re dreaming of building a startup and dream big, study Facebook’s initial path:  an ultra-targeted product to a group of highly connected, vocal people.  But before you decide to go mainstream, remember you don’t have to in order to have a profitable or hit product, and there is potentially even more power in staying focused.  Having a passionate community of 100,000, 10,000 or even just 1,000 raving fans who you can learn from, interact with directly, and build relationships with is a more fulfilling position to be in than ruling a monolithic empire of mildly interested users.

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