THE RISE OF THE "SECOND INTERNET" AND WHAT IT MEANS

What is the thread that ties together the rapid rise of companies as different as Facebook, Zynga, Twitter, The Huffington Post and Quora?

Wedbush Securities, a brokerage firm that analyzes the valuations of private companies, says they are all players in what it calls the “Second Internet.” Wedbush says there are certain attributes that allow such players to grow and thrive while more traditional players — including some of the leaders from the early days of the Internet — fail to prosper and gradually recede into history. The most important of these attributes, the firm says, is an understanding of the value of the social web.


The social nature of this new wave of Internet companies is such a major factor that Wedbush also calls it the rise of the “Social Internet” in a new report on the sector, and says successful companies are powered by similar features, including:


• Platforms open their API to developers


• Continuous and rapid pace of innovation (see Facebook)


• The company/brand must listen to the dialogue and participate with customers


• Customer contribution is a large percent of the value/experience


• Every customer has a personalized experience


• Social graph connections drive discovery rather than search


The report looks at the value of Facebook — comparing the growth of the company to the growth of Google — as well as the rise of other key players such as Quora, The Huffington Post and Zynga, and how each of them effectively took over from a leader of what it calls the “First Internet.”


So by the brokerage firm’s reasoning, The Huffington Post took over from CNN, Quora took over from Yahoo Answers– which in turn took over from Encyclopædia Britannica — Zynga has taken over from MiniClip, which took the place of former leader Electronic Arts, and Jive Software has taken over (or is taking over) from Google Docs, which took over from Microsoft Office.
One of the few early Internet companies that seems to have what it takes to bridge this gap is LinkedIn, the firm says (although some might argue the opposite).



Mathew Ingram
Mar. 31, 2011