The Rise of the “Second Internet” and What It Means

What is the thread that ties together the rapid rise of companies as different as Facebook, Zynga, Twitter, The Huffington Post and Quora? Wedbush Securities, a brokerage firm that analyzes the valuations of private companies, says they are all players in what it calls the “Second Internet.”

Wedbush says there are certain attributes that allow such players to grow and thrive while more traditional players — including some of the leaders from the early days of the Internet — fail to prosper and gradually recede into history. The most important of these attributes, the firm says, is an understanding of the value of the social web. The social nature of this new wave of Internet companies is such a major factor that Wedbush also calls it the rise of the “Social Internet” in a new report on the sector, and says successful companies are powered by similar features, including:

• Platforms open up their API to developers
• Continuous and rapid pace of innovation (see Facebook)
• The company/brand must listen to the dialogue and participate with customers
• Customer contribution is a large percent of the value/experience
• Every customer has a personalized experience
• Social graph connections drive discovery rather than search