Social Networking Software

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Social Networking Software

This is another technology area I am thinking a lot about these days. It's software that lets you connect to people and opportunities via your network of friends, colleagues, business relationships, etc. The first company that tried to build a business around social networking was called Six Degrees (for the Six Degrees of Seperation concept). It was started by Andrew Weinrich here in NYC in the mid 90s. It was always interesting to me but I never wanted to invest in it because I couldn't see a commercial application.

Well there are a bunch of companies emerging that are taking Andrew's basic concept of a social network and turning it into specific applications that do make a lot of sense.

There is Friendster which does this for online dating. You meet people who know people who know you. And that's a good filter for a lot of people. As I understand it, Kleiner Perkins and Benchmark have or are about to invest in Friendster.

There is LinkedIn which does this for professional networking. You get to people you want to meet or build a business relationship with via other people you know. I have heard that Sequioa has or will shortly invest in LinkedIn.

There is Tribe.net, which i am an investor in and recently wrote about. Tribe applies social networking to the classified ad business (job listings, find a roomate, sell a car, etc). I think that's an interesting opportunity and its run by my friend Mark Pincus, who is a great entrepreneur. I am sure Mark will find a way to make money in social networking with Tribe.

There are a bunch of other social networking software comapnies that are working on other interesting applications. In fact, there is even a whole weblog devoted to this market at Weblogs Inc.

The area I am most interested in is applying social networking software to enterprises. I like it for two reasons. First, there are a bunch of important enterprise applications that can be vastly improved with social networking software. Examples are sales force automation, customer relationship management, and human resources software. There are probably a bunch more. That sounds like a good market to me. And the second reason is that i think a tightly controlled social network may have more utility to its users. You can apply privacy, trust, rules, and controls on an enterprise network that you can't apply to a public network. And that means that the participants in the network will be willing to share more of their knowledge and relationships without worrying about what bad stuff could happen. I think that leads to more utility and more usage.

I am aware of two companies going after this market, Spoke Software (in Silicon Valley) and Visible Path (here in NYC). I am going to learn more about their businesses. And I'd love any insight any of my readers can offer about this market and these companies or any other companies pursuing this opportunity.

Comments (17) | Posted October 25, 2003 in Venture Capital and Technology

Comments

Fred,

My company, The Opportunity Services Group, will pursue the enterprise socnet market, by way of the consumer market.

From our business plan:

Enter Go_Ogle, a site for online matchmaking, and for searching social networks more generally.

Go_Ogle utilizes modular open standards for encoding information about socnets. Specifically, linkages between people will be encoded in the Friend-of-a-Friend (FOAF) dialect of RDF, a Web standard for formatting information. Static personal profile data will also be encoded in FOAF. Additionally, Go_Ogle supports the use of web logs, or blogs, as a kind of 'living' personal profile (in the 'living document' sense). Here Go_Ogle will support Atom, the emerging open standard for structured blogs. Atom is an XML dialect which maps losslessly to RDF. Go_Ogle's use of these standards will leave users in control of their information, and shifts the basis of competition away from trying to lock in users via proprietary encodings, and (largely) to the quality of sites' search/navigation features (see Clayton Christensen's The Innovator's Solution for details about this kind of 'value chain migration').

As is detailed below, Go_Ogle is powered by the best technology in the world for this application: [snip]. Better still, [snip]'s lead architect, [snip], is the lead architect of Go_Ogle.

---

We've met with folks at Google, and a Microsoftie is waiting for a demo, but a New York area VC who is thinking about the socnet space is potentially a good fit for us.

If any of this is of interest, I can be reached at the e-mail address supplied above.

Enjoy,

Frank Ruscica
Founder
The Opportunity Services Group :: Have Fun To Get Ready

Posted by: Frank Ruscica | Oct 26, 2003 10:53:28 PM

Check out this very relevant comment from the Chief Strategy Office of salesforce.com

http://www.corante.com/many/archives/2003/10/13/salesforcecom_on_social_networking.php

Posted by: Nivi | Oct 27, 2003 3:19:05 AM

Don't forget about referral networks (no longer exists)....

Posted by: Stephen | Oct 28, 2003 8:55:11 AM

The social network market is certainly getting a lot of attention. Although I have seen limited information regarding enterprise focused social networks that you have described in your column, there is at least one career focused social network that you did not mention: http://www.Ryze.com

I have been a member for some time now and though I am not currently an active user, I know of a number people who seem to be dedicated to the site.

In addition, I thought that you might be interested to know about an upcoming event about social networking, hosted by Rafe Needleman (Red Herring, Business 2.0, and AlwaysOn).

Information for this evenet can be found at:
http://www.acteva.com/booking.cfm?bevaid=55544

Posted by: Nathaniel McNamara | Oct 29, 2003 1:25:41 AM

Fred:

Astute observations. I believe there's a B2C play, too. Look at what our pal Mark Hurst (Creative Good, etc.) is doing with www.addyourown.com, an independent restaurant review site.

I told Mark, after he gave me a sneak-peek weeks ago, that he should consider using a socnet platform to support the site. I think a lot of people would derive high value from the personal recommendations that drive business to brick/mortar. I would venture that other industries would benefit, too.

Socnet is a new form of recommendation engine, based not upon your past purchases or the related purchases of others (viz. Amazon), but the like-minded opinions of others "close" to you either in personal relation or by similar interest.

Bon appetit!

Posted by: Michael Beckner | Oct 29, 2003 3:13:23 PM

I think Chuck D said it best - don't believe the hype.

Friendster to me is another Classmates.com, merged with a dating site.

I'm the target audience (single, male, 32, tech savvy), but after joining, and surfing for a few days, I got bored. I don't need to build up a network to have 1,000,000 connections - I'm not that insecure.

It's like Evite part II. If they really got that $30M offer from Google, they should have taken the money and ran.

I just don't get it, and worry that the VC community is overly hyping this dreck to try to jumpstart the next bubble.

Oh, and for another two cents - I joined Linked-In, Ryze, Spoke, Six Degrees, etc when they all came out, and it's the same thing. For me to be really excited about the possibilities, I think there needs to be more of a business model than advertising and the promise of being connected to other people. Whatever happened to the real networking, with ACTUALLY meeting people?!

Posted by: Philip | Oct 31, 2003 7:48:39 PM

I have thought about this idea for years. The idea of social networking in business is very interesting. The problem is that a business network only comes into play at certain time in the workflow. For instance, when I am beginning a new project, I may need to find a company or person with a certain kind of experience. The two questions I need to know are - Who has experience with this type of problem and who knows them. You must first be able to sort the person by their prior experience and by who knows them. Even VC's operate this way. The level of understanding about someone's past experience, their skills, their relationships etc., must fall out of the business process. Very few people I know will take the time to fill out forms unless they are compelled to by their employer, or if the data just falls out of thier work.

The idea of a business network is a part of the puzzle, but it must work together with larger systems. Even a sales force automation tool alone will not gather enough data. You have to combine it with HR data, and with project data and with references. The more interlinked the better.

Posted by: Dan Cornish | Nov 2, 2003 8:06:39 AM

One of the key things for me is that this is yet another way to qualify messages - it's not advertising, per se.

And that's important, particularly for entrepreneurs who don't have large marketing budgets in order to scream their messages from the rooftops.

This may seem simplistic to some, but is just one more piece of the puzzle for entrepreneurs. On one level, it's just another process that has to be managed and is relatively low-cost.

What would I like to see in my utopian socnet software? A few years back, the Japanese - always ahead of the cool curve - had these devices that one could program according to one's personal preferences. Utilizing RF, the devices, when placed within a certain (pre-determined?) distance could sense other devices that had similar preferences, and would alert the wearer. The implications for marketing blew me away.

I would like there to be some kind of alert system, via email, or even wap/cell, that could inform me of new potential partners. Such messaging could be tailored further according to preferences, such as degree of importance, or even descriptive categories.

Then, with the touch of my cell, I could obtain the user information make a value judgement and even generate a short message with a press release, link to a news story, business plan... instantly.

Such an environment is a far more fluid workspace, temporally brings customers and potential partners dramatically "closer," and increases productivity in times where, say, it would be impractical to whip out a notebook and start typing away. (Think: At a company party, play, concert, or the movies...)

For someone such as myself, an entrepreneur with a great new product looking to snatch that proverial marketing brass ring (ie: buzz), such a service would be invaluable.

Posted by: Jeff | Dec 1, 2003 9:55:34 PM

Philip's observation about workflow is very insightful. That would seem to point toward consulting firms and other professional services firms where networking and problem-solving are bread-and-butter activities as a wedge into the enterprise market.

The device Dan is describing was called the "LoveGety" and was a fleeting fad in Japan circa 1997. I actually looked into this when it came out and read that someone was trying to import them to the US, but apparently they weren't too successful. In general, any strategy that requires adoption of specialized hardware is probably doomed to fail, but maybe a more powerful (and customizable) LoveGety will soon be possible using wireless devices and personal area networking technologies like Bluetooth or Wi-Fi.

Posted by: John Leibovitz | Dec 16, 2003 12:22:07 PM

I have a question, does anyone know where you would be able to see, possible profit projections for such online social-networking companies.

Do, thes Venture Capitalists just hand out the money without any kind of profit forcast. We kind of money are these companies saying they can make?

I would love to see some numbers, or somewhere I can go to get them. I am very interested in what the appeal is to this business model?

Please email me any info: rodney1997@yahoo.com

Posted by: Rodney | Mar 8, 2004 7:10:40 PM

I can sense that the success of social/professinal networking sites, along with media attention to hi-profile VC injections, are steadily erasing taboos associated with meeting people online.
I am working on a business plan for a website in the social/professional networking space. So far, it doesn't seem to clone any existing players.
Would you happen to know of some VCs who may be interested? I am a lawyer in NY and am doing this with a friend who's an MIT grad. I'll appreciate any leads (srishti_jha@yahoo.com). Thanks!

Posted by: Srishti | May 12, 2004 2:37:26 PM

College Social Networking is where the action is....with the success of thefacebook & collegester, these networks will grow even more because college kids have all the free time

Posted by: lloyd banks | Aug 2, 2004 12:33:34 AM

How about face to face social networking for all age groups...but with a purpose?!

Check Your Network First - CYNF -
is the first social networking and
asset management system in one
that has unparalleled functionality
and security to save you money
and give you more choice.

We believe CYNF is the next level
of social networking. If you have the
time, we welcome thoughts about what
CYNF has to offer.

www.cynf.com

Best regards,
Donna

Posted by: Donna | Aug 9, 2004 2:52:29 AM

also check out the Friendster for College students they even offer loans

Posted by: dave | Aug 14, 2004 9:09:25 PM

Collegester is a resource for college student loan information. If you need to consolidate college loans or learn more about college loans consolidation, collegester is here to assist your federal student loan consolidation process.

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Posted by: Aparaty cyfrowe | Jan 18, 2006 8:13:55 AM

I am really interested in the idea of social networking for business as well. I recently started an online community site called the Joint Venture Network at http://www.JointVentureNetwork.net for business people to connect, build relationships, and work on creating joint ventures to profit from each others resources.

I'm just using a Drupal based community portal right now, but as I research and look at the other possibilities out there, I can see a lot of potential with some of the other social networking site models.

We'll see where this network of mine takes me, but I think I might upgrade to some new software sometime soon, in order to have greater networking capabilities.

Posted by: Jambhala | Jul 10, 2006 5:58:27 PM

A VC

Musings of a VC in NYC