Who are benefiting from social networking companies?

There was a debate why the West Coast, especially the Bay Area, took the crown of high tech industry from other regional tech hubs. Widely quoted reasons are, first, the leading position was obtained by larger young workers supply from numerous highest calibre universities in the nation. Second, a handful of successful venture capitals helped quickly commercialize academic researches into profitable products. Third, maybe diversified culture play a critical role to inspire talents.

All these are partially true. Counter examples are that many regions have their funding mechanisms and good schools but never achieved such height. There is a research report on how and where small startups are more likely be successful. The conclusion is surprisingly unrelated to the above reasons. The main factor of successful companies is the density of population. In other works, if in some area, more people of the like squeeze in higher density, new ideas are more likely to flow and more companies are likely to succeed. The research predicted that next high tech hubs could be in New York City where many youths are cobbling for the next big thing. The other likely candidate is Israel because many young soldiers are forced to service the nation. Such environment is good to nurture future development, especially they have the needs. That seems reasonable because when people have closer communication and relationship, they can work together better and inspire each other. One of previous posts on why Standford is so successful illustrated this indirectly. Therefore, this conclusion has some footing.

So, would social networking companies help to fill geographical gap to bring people closer? The answer seems unlikely. The most successful social networking companies are in the Bay Area. If following the thesis, the reason of their current success is because the founders have great connections, then the handing social networking tools to vast audience and area won't stop this fact. Only physical and efficient connections matter in business world. So social networking companies do provide ways to acquittance people. Without noticing emotions, body language, tone and volume of voice and speed of movement, it is hard to develop personal awareness. What currently is missing is real emotional sharing, which by far can't be physically substituted by online communication. Anyway, more people in the network only benefits the already insiders, not the everyone in the network. In a sense, online social networking may not improve our social skill but weaken it because we have less time to actually face people to read them and interact with them.

A most insight to social networking company business model is summarized as companies provide platforms to get more membership while the biggest winners are the companies themselves.