Why Google Plus (still) Might Win the Social War

You probably know this, but just in case: Google+ (pronounced “Google Plus”) is Google’s answer to facebook. It’s a social network that also serves to integrate all of Google’s other “stuff” (products, services, etc.).

Initially, the primary differentiator between Google+ and facebook was Google’s “Circles,” a tool which requires* you to group your connections into specific lists, such as “college buddies,” “people I don’t like,” or however you want to label them. You can then choose which of these lists you share your updates or other info with. *The word “required” should be noted, because Circles are a feature that is front and center on G+ and you have to use it anytime you add a new connection. This was an interesting move by Google that exposed facebook’s primary weakness: due to its massive size, many people have hundreds or thousands of “friends,” and they don’t necessarily want to share their updates with all of them or see what each of them ate for lunch today. While you could group your friends into lists on facebook, it was not required, and wasn’t something that many people utilized. The result for the average facebook user: cluttered, disorganized friends all lumped into a single bucket.

Google+ had meteoric growth during and after beta, but facebook responded well. They implemented new, more favorable privacy features (to compete with Google’s), they made it a requirement to put new connections into a list to force better social organization, and implemented a host of other iterative rollouts like “timeline” that brought people back into the facebook fold. Google Plus’ usage rates dropped pretty substantially as it started to feel like “just another facebook with less people.” First round: Google Plus entered the ring, got some new fans, landed a few good blows to the chin of facebook, but facebook (the reigning champ) fought back. We’ll call it a draw.

While the feature wars between these two titans and the technologies undergirding them will have an impact on long-term growth and user retention, I’m wondering if something “softer” will ultimately determine the market leader in 5-10 years. Humans are social organisms. Many of our individual and collective behaviors can be understood, predicted, and mapped, but many or our behaviors cannot (as the mathematicians who modeled Credit Default Swaps for Wall Street firms found out, painfully).

The primary competitive advantages that any large, free social network has are:

1. Switching Costs – you (the user) invested time and energy into the network and it would be very time-consuming/difficult for you to start over somewhere else.
2. Network Effect – the more people that are on the service, the more useful/valuable the service is to you (if you were the only person with a cell phone, it wouldn’t be a very useful tool to contact your friends with).

However, taking a look at Google Plus’ user demographics shows something very interesting happening that confirm things we’ve heard from some friends of ours who are parents of teenagers and college students. Lots of young people are using Google+ instead of facebook. When you’re young, your primary motivation for using a social network is to be social with your other young friends, not to attract new business/clients, see what the old people are doing, etc. The last thing you want to do is hang out with old people- especially your parents. You want your own place just for you and your friends. In this case, switching costs and network effect (#1 and #2 above) actually serve to work AGAINST facebook, and FOR Google+ when it comes to a younger demographic. Facebook’s success has made it a mainstream app that’s great for “old people” (over 24), but that success concurrently turns off young people (and techies obsessed with what’s next, but that’s a different blog post altogether).

What does this mean? Time will tell, but If the trends above continue, it could mean that Google+ eventually upends facebook over the long-haul. If there is anything that Friendster and MySpace (and their predecessors) have taught us, it’s the reality that the “social wars” are certain to be an ongoing battle, and many of tomorrow’s contenders are wearing diapers today. Being the reigning champ is a tenuous position, and is not an indication of what the landscape will look like in another 5-10 years.

In the meantime, we hope you get a big bounce on your stock in the facebook IPO.