Growth vs. Value

You’ve got to be careful not to confuse growth with value.”

The recent growth of startups like Viddy and Socialcam are nothing short of astounding. The recent hockey stick growth both of these companies have received is noteworthy for a couple of reasons. FIrst, what happened that triggered the huge spike in growth and second, does that growth actually translate into real value? Also, is this growth sustainable?

Let’s take a look at the growth and unpack things a bit further. Starting April 24, Socialcam starts seeing a rocket-like growth trajectory, after months of pretty much non-existent growth. What happened? Facebook integration. This allowed Socialcam users to generate newsfeed stories that would get pushed to their networks’ newsfeeds on a regular basis. This gave Socialcam a huge amount of exposure through brand new customer signups through Facebook connect.

Sounds great doesn’t it? Well, we will need to check back in a few months to see if these new users actually stick around for the long haul. Just because they’ve signed up, doesn’t mean they actually do anything, let alone do anything that generates value for the company.

But just as Facebook integration can fuel growth, the removal of it can cause the reverse. Case in point – look at Pinterest’s growth after Facebook disabled autosharing from Pinterest users.

Clearly, the lack of deep Facebook integration has harmed Pinterest pretty significantly. We should also keep an eye on this to see how things develop.

The bottom line is, investors and brands alike need to look beyond the big growth numbers before participating with startups and see what value they actually bring to the table. In the case of Socialcam, it’s really unclear as to whether the massive user growth are actually quality users who actually want to participate in a campaign or program. They are often fickle and will sign up just to get access to their friends’ content. Signing up by no means guarantees participation or engagement. Dig deep to see what’s really going on.

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