Obviously determining Market Size is a vital step in starting a business. With ecommerce or the sale of a product it seems to be a much more concrete process. On that note, does anyone have any advice as to how one would compute market size for a social networking site? Does anyone know how sites like facebook, linkedIn, Ning, etc. compare?
What about (non-sicial network) sites like StartUpToDo.com or 37Signals.com?
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Well 37signals is not a social network. They are however probably the only company that is profitable.
The market size of social networks are potentially limitless but even though it's fairly easy to make revenue it's very hard to be profitable.
First and foremost because most social networks are ecosystems and start out as free.
Second of all because it's very hard to get people to pay to work which is potentially what they do when they join a social network.
But you can work with the following parameters to determine potential market.
If you want to calculate the market size I would suggest you simply multiply number of users with the unit prizes for the above mentioned possible models.
I just listened to a podcast of a Stanford seminar with DHH. He said 37signals had 3 million users - but that data is over a year old.