Cisco Bought Tribe.net! (WTF!)

You read the title correctly. Cisco Systems bought Tribe.net. Cisco is that company that makes routers and switches. They bought Tribe.net, a not-very-popular social networking site. If Cisco paid any more than $100 million, we’ll call this the dumbest purchase of 2007. Even $10 million would be too much money.

Cisco has no experience in this realm, but apparently somebody in management drank a little bit too much of the social networking Kool Aid. Proof? Well, it turns out Cisco bought another social networking company last week called Five Across. According to that development, Cisco did it because… well, check out this quote:

Based on conversations with three or four different Cisco executives in recent months, it is clear Cisco sees social networking and the wider Web 2.0 phenomenon as ways to drive Internet traffic, and thus traffic over their routers and other networking gear — and, it follows, more revenue for Cisco.

I guess by that logic, oil companies should buy amusement parks to get more people outside and driving. The logic is retarded, and highly troubling that it’s coming from executives themselves. Cisco is chasing a pipe dream.

Tribe.net might as well have asked Krispy Kreme to buy them because the fit is that bad. I can’t see any competitive edge coming out from either company’s assets that will help the other. They are simply unrelated. One caters to free loading teenagers while the other builds hardware for paying corporate clients. One is sales and support based while the other is supported by ad revenue. One sells tangible goods while the other gives away a service on a website. One has over 50,000 employees and the other has less than 10. One is a proven fighter in its sector, and the other got smashed into obscurity and nearly went bankrupt.

The New York Times calls it a “curious pairing.” I call it dumb, especially on Cisco’s part.

The new social networking players, which include Cisco … say that social networks will soon be as ubiquitous as regular Web sites. They are aiming to create tools to let ordinary people, large companies and even presidential candidates create social Web sites tailored for their own customers, friends, fans and employees.

Cisco is hoping to use this new resource to eventually create customizable, personalized social networks. They believe that social networks will become a commodity. Ning is already doing exactly that and it has a two year head start. If Cisco was really committed to this vision of theirs, they should have bought Ning.

Besides, if an eight person company can build something that you plan on re-developing into something else, why not just hire 20 people and do it from the ground up, the way you need it to be? Why hack an already existing system that was built from the ground up to compete with Myspace and Facebook when you are after a whole different market? Frankly, even the technical justification doesn’t make sense.

And if Cisco truly believes social networking will become ubiquitous, which I can understand, they need to start on a new technological foot. Social networks will become a commodity when open protocols for exchanging information between them becomes open and published. Much like HTML of today, social networks of the future will communicate on open protocols to exchange data. That’s the only way they’ll ever get as common place as Cisco sees it. And tribe.net isn’t getting them any closer to that path. You would think a major producer of hardware that relies on open protocols would understand this best.

Congratulations on the big pay day, Tribe.net owners. You just schooled some heavy weight businessmen from their hard earned money. In closing, the founder of Ning said:

The idea that Cisco is going to be a force in social networking is about as plausible as Ning being a force in optical switches.

I understand Cisco’s motives for buying Tribes.net, but if you want to branch out into other markets by buying companies, you do it by buying winners, not has-beens.