The business case for mainstream business adoption of social network services.

By David Teten and Scott Allen

Simon Rogers has uncovered over 1 million British pounds in potential revenues for his company 2Delta, a reseller specializing in project management software, as a result of his participation in Ecademy, an online networking site. After just four months in business, he has been introduced to more than 16 opportunities, each worth 75,000 pounds or more. He's already closed four deals, including one "nicely into six figures." For him, Ecademy is a significant business accelerator.

"It is early days," Rogers says, "but this is startup No. 5 for me, and I know I am miles ahead of where I was with any of the others, and I built each of those businesses into $5 million annual revenue before selling them. I have high hopes."

When asked whether a social network like Ecademy works for people wanting to build a business, he answers, "Absolutely, but it needs to be 'worked' with a process and a view to sharing the rewards. I plan to make money for the people who help me. The word will get around that Rogers is a good man, that his proposition is a good one, that 2Delta delivers the highest quality service and has delighted clients, who give us all repeat business."

The tech media, perhaps burned by its spoiled love affair with the dotcoms, is now ready to dump online social networks after only a brief fling. Until late 2003, the coverage consisted of, essentially, "Why are all these VCs investing all this money? Where's the business model?" For a year, there was romance. But now, some pundits are saying that the wave has passed, that the bubble has already burst.

Meanwhile, LinkedIn has topped 2 million users. Many more socially oriented sites crossed the million-member point a while ago, including Meetup, Friendster, and Tickle. The band REM announced that they will be previewing their new album on MySpace. OpenBC has gone truly global, supporting German, English, Spanish, French, Portuguese, Russian, and Chinese on their site. Enterprise-oriented tools from Contact Network Corporation and Leverage Software have already garnered multiple paying customers. And tens of thousands of people are developing business relationships in ways they never did before.

And yet most Internet users still haven't even heard of them.

To put this in perspective, Classmates boasts over 38 million members; Reunion.com, 22 million; and craigslist gets 6 million unique visitors a month. Clearly, there's a lot of room for the new crop of social networking sites to grow, as well as a demonstrated precedent that people are willing to pay to connect with each other for a variety of purposes.

The potential market for business networking is enormous. Over 20 million businesses worldwide are members of local chambers of commerce. Add to that all the marketing, business development, and non-retail sales professionals, plus hiring managers, recruiters, and job seekers, and the number gets very large. Generating revenue and supporting other business processes via relationships are as compelling reasons to connect as finding old schoolmates or potential dating partners. This technology is still in the early adopter stage and has a ways to go before being truly mainstream.

The ultimate question that's going to determine mainstream adoption is simply, "Do they work?" At the moment, the answer is twofold. Yes and no.

Business networking sites are not living up to the expectations of many people. They don't effectively represent electronically the complexities of interpersonal relationships. They create awkward social situations that don't exist face to face -- such as how to deal with an explicit request to be someone's friend, something most of us haven't had to deal with since third grade. And they don't prevent spam.

But the fact that they're not yet living up to their potential shouldn't blind us from the real immediate benefits to be gained. Let's look at some of the unique benefits online networking sites offer that traditional face-to-face relationship building does not:

Searchable directory
Where else can you easily search for people by industry, geography, title, and personal interests? It's the yellow pages on steroids. You can be highly focused in a way that's impossible in person.

High visibility at low cost
Most of the sites let you create a profile for free. Sure, there's a limit to how many you can actively participate in, but you can participate passively in dozens of sites. The trick is to keep a document with a master copy of all your profile information so you can easily copy and paste it and set up your profiles quickly. As UCLA Professor Phil Agre says, "The most fundamental way of finding people online is to help them find you."

Receptive audience
While no one likes to be approached inappropriately, you'll find people in networking sites more receptive to an informational phone call or email exchange. On LinkedIn, for example, you can specify whether or not you're willing to accept contacts regarding deal proposals, and you can limit your searches only to people that are. In the discussion boards, blatant advertising may not be allowed, but you won't be accused of making a sales pitch just for sharing your expertise.

Easy group-forming
Growing a discussion list or forum on your own site is no easy task. In the social networking sites, there's a built-in audience looking for groups to join. Groups have a visibility within the larger environment that simply doesn't exist with an independent community, or even on a broad open site like Yahoo Groups. People really will start signing up almost immediately after you create your group, if you offer value to them.

Get visibility into the networks of your connections
The ability to see your connections' connections, and to determine who you know that can make an introduction to the person you're targeting, is very powerful and has no direct parallel in face-to-face interaction. In fact, it's so powerful that entire products are created just around this ability. As Contact Network founder/CEO Geoffrey Hyatt says about his company's product, "It's a one-trick pony, but it's a very valuable trick." Jeannine Solanto, CEO of Foundation Systems, reports that her company has cut their sales cycle by 15-20%, on average, by using Leverage Software to gain access and influence within target accounts.

You can realize these benefits immediately with the existing technology, regardless of its imperfections. In many cases, you can just use the free service, but even the premium memberships only run a few dollars a month -- chump change if you're actually generating business. So the real ROI question isn't whether they're worth the money, but whether they're worth your time. The answer is "yes" -- not because the sites themselves are, but because the relationships are.

Online network services simply help you manage more relationships with less effort.

David Teten and Scott Allen are coauthors of The Virtual Handshake: Opening Doors and Closing Deals Online, the first mass-market book on how to use online networks to find your next business partner, next client, or next job. More technically, it is the first mass market guide to �social software�. Teten runs a detailed blog and resource site at TheVirtualHandshake.com, and is CEO of Nitron Advisors, which provides industry experts with the chance to consult with premier institutional investors.� Allen is a consultant and industry analyst on building quality business relationships online, and the Entrepreneurs' Guide at About.com.

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