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Big moves, big money, and the year social-media startups proved their worth

social startups Between all the bubble talk, the IPO rumors, and the acquisitions at every turn, it’s safe to say that 2012 was the year social startups grew up. Despite the undeniable presence of social media in our lives, how much actual money it’s capable of making has been up for debate.

Well debate no more: In 2012, we saw these startups transition from experimental pipe dreams led by tiny teams into enterprise level companies and Wall Street fodder.  

Facebook – finally – goes public

facebook ipoAfter more than a year of will they or… well it was really just when will they, Facebook filed its S-1 forms in February, starting the IPO process. What began in a college dorm had officially become a billion dollar company and its worth no longer debatable.

Transitioning from a privately owned and operated company to a public one wasn’t without hurdles, however. Shortly after Facebook shares became available for trading, its stock rose… and then fell. And then fell some more. It was enough for some to cry social media overvaluation (again). But since this initial instability, things have begun to level out. Despite any concerns over whether Facebook can monetize its platform, the company has continued to iterate new marketing products – it’s not all poking and drunk photos and Farmville anymore. Now, it’s Sponsored Stories and Promoted Posts and “frictionless sharing.” The times, oh how they have changed…

Twitter hits the big time… and so does its API

twitter rate limitWhile Twitter is still a private company, it’s made some heavy-handed enterprise, big business-level moves this year. Over 2012, Twitter boldly went from a developer’s playground, an ever-morphing experiment in worldwide, real-time communication, to a marketing, advertising paradise.

That isn’t to say the social network eschewed its roots completely, mind you. The platform is still full of the celebrities to stalk, has continued to prove itself a valuable communication medium in times of trouble, and is hands down a go-to source for breaking news. But also, all that stuff about being a marketing and advertising platform has become really, really, really important to Twitter.

This past summer, Twitter announced it would be taking control of the “Twitter experience.” Over the course of the past few months, the company has taken many measures to make sure eyeballs are being sent to its site, its mobile apps, and leaving many third party developers behind while doing so. And, of course, it has the right to, but the message was clear: Twitter is playing for keeps where ad dollars are concerned. The social networking experiment phase is over, and things are getting quite professional over there.

Instagram graduates to the major leagues

instagram moneyFacebook and Twitter are social media veterans, which makes Instagram’s meteoric rise all the more proof that social startups are not a money pit or a fluke. Instagram officially launched in 2010 as a tiny team, and co-founder and CEO Kevin Systrom was responsible for much of the back end work himself.

And the rest is history. The app was scooped by Facebook in April for (initially) $1 billion. This fall, less than two years since its launch, Instagram announced it had more than 100 million users. And then, as we all saw this week, Instagram put on its big boy pants arguably faster than any other social startup and starting talking monetization. Of course, our collective rage put the brakes on all that pretty hard, but for all our swearing up and down and all the “I’m never ever, ever, ever, ever going to use Instagram again, how dare they!”s, check this out:

instagram dau

According to AppStats, Instagram saw a dramatic dip following its announcement of new ToS and privacy policies… and then everything went back to normal.

While the company made a small backtrack regarding new advertising terms, everything else about the changes will go through. And user numbers will hardly suffer. And thus, Instagram will become one of the first social startups to introduce a profitability plan within a handful of years of its founding.

Rise of the Tumblr professional  

tumblr bookAaah Tumblr. Built off the backs of hipster nonsense and addicting animated GIFs, Tumblr has existed as the strange, intriguing cousin of more “traditional” social networks. It can be credited with being an instrumental part of evolving the blog, paving the way for the likes of Pinterest to take us deeper and deeper into a mass culture hell bent on the visualization of the Web.

Its earliest and most devoted users were creative types, to say the least. Everything about what Tumblr was doing was “indie.” But now the platform is turning this “indie” content into a path to commercialization. Blogs like F*ckI’mInMyTwenties! and StuffHipstersHate began as Tumblr favorites, and now each have book deals. Writer Kelly Oxford’s Tumblr helped propel her career, and Tumblr artists have even been credited with largely influencing current fashion and pop culture visuals. Suffice it to say the Tumblr community has become kind of a big deal.

And this year, the platform began to introduce a variety of monetization mechanisms. Its first analytics dashboard was introduced, you now have the option to pin your posts for more eyeballs, and CEO David Karp has made no secret about how he sees Tumblr as a means to franchise discovery, a talent pool for the Web, and one that people will pay to be a part of. It’s come a pretty long way since introducing us to the reblog button.