At NEA, we spend a good part of every year talking to dozens of Fortune 500 CIOs about their greatest technology challenges. We talk about the transition from client / server to cloud computing. We talk about how Apple and Google phones are invading the workplace. And we talk about one of the most exciting and overwhelming opportunities of the last decade…Facebook. Yes, that’s right, Facebook…
In 2012, Facebook will surpass 1 billion users and will likely have one of the largest tech IPOs in history. Yet in spite of this widespread consumer adoption, Corporate America has been relatively slow to embrace Facebook as a platform FOR BUSINESS. This is about to change, in a very dramatic way.
We are seeing an important transition in the adoption of Facebook by large enterprises. We think every business and industry will go through phases of Facebook adoption:
The first phase of adoption, which has been ongoing for the past 2 years, we characterize as “business experimentation.” Most Fortune 1000 companies today have a Facebook page, and millions of dollars have been spent dollars chasing “likes” and “fans”. This phase has yielded some measurable results in brand advertising, but has not delivered significant ROI.
The second phase we characterize as “business transformation.” Every C-level executive today is (or should be) asking how Facebook can be incorporated into their core strategy and business. In several industries, we are seeing fundamental changes in how Facebook is being used to improve sales, marketing, operations, and customer support. These investments are yielding clear and measurable ROI today.
The third phase we characterize as “business disruption.” Over the next several years, we believe that companies, both new and established, will be able to disrupt industries entirely by leveraging the competitive advantage of Facebook and the social graph. It is too early to call the winners and losers (we have some of our favorites), but the disruption is inevitable.
What will happen in 2012? We believe this is the year when businesses will rapidly cross the chasm from just experimenting with Facebook to truly embracing Facebook as a core strategic platform. NEA’s portfolio companies are rapidly enabling this transition. Some examples of their success include:
Hearsay Social – enables sales reps in financial services, insurance, and retail companies to integrate Facebook into their CRM systems. Top performing reps are now selling 80% of their new business through Facebook.
Lithium –enables global brands, such as consumer products manufacturers and telecom carriers, to integrate Facebook into their online customer support experience. Customers are now able to talk to “friends” online to get their questions answered, saving millions of dollars in call center costs.
New Brand Analytics – enables restaurants, hotels, and retail chains to monitor customer feedback across local Facebook pages. Companies can improve business operations and service delivery in real-time by listening to fans on Facebook.
Omada Health – enables large healthcare providers to run health and wellness communities online with Facebook. Insurers save as much as 70% per patient by using social communities to improve disease conditions as opposed to doctor and hospital visits.
Opower – enables utilities to communicate with customers with Facebook to reduce their energy footprint. Consumers are saving millions of dollars by seeing how their “friends” are lowering their energy bills every month.
Sprout Social – helps businesses build relationships and retain customers using Facebook and other social media sites. From corner coffee shops to global brands, Sprout's robust platform lets merchants drive loyalty, referrals and increased sales through social interaction.
What is most exciting to us about this list is the breadth and depth of the transformation at hand. Insurance Companies, Restaurant Chains, Healthcare Providers, and Utilities, are NOT industries that you would traditionally associate with “The Facebook Era” (a term originally coined by social media pioneer and Hearsay Social CEO, Clara Shih). But all of these organizations are seeing real results and competitive advantage from their early investment in Facebook which is a foreshadowing of the tidal wave of transformation that is to come.
Jon’s perspectives on VC and entrepreneurship can be found at www.oneblockoffsandhillroad.com or on Twitter @jonsakoda.