Anti-Social Software?

Social networking is the newest new thing. But can you make a business of it?

BillT [PricewaterhouseCoopers LLP] | POSTED: 02.02.04 @00:01

Last December, I received an e-mail invitation from Stewart Alsop from NEA to join his LinkedIn network. In it he questioned whether the social networking phenomenon was just a "big false positive," i.e., whether by being intellectually stimulated by the social networking concept, we join in, and then the concept appears to be successful.

Alsop had LinkedIn compare his contact database against the site’s members and found that over 300 of his 5,000 contacts had already joined. He now has over 350 connections, so it looks like most of his invitees accepted.

I did a similar experiment a few days later and found that nearly 400 of my contacts were already on LinkedIn. Until then, I had only responded to people who asked me to link to them and had a paltry 28 connections. By following Stewart’s lead, I was able to send an invite to join, a holiday greeting and a promise to make 2004 more valuable for each of us—with a single click of a button. I declared the experiment a success an hour later when my previously small circle tripled to 88. By 2:30 that afternoon, it was over 100 and now stands at just over 300. The point of my test was not merely to collect links, but to see whether the people that I was "connected to" (i.e. I had their contact information) thought enough of that connection to respond. Now connected, the challenge becomes how to make our futures better because of that electronic link.

It all started for me in late summer of 2002, when after a Venture Finance SIG put on by the Software Development Forum, Jonathan Abrams talked to me about his new business idea: a site that enables people to connect for dating and social activities. I congratulated him, glad that he had found something useful to do with his time and talents, but still unsure about how he was going to make a long-lasting business out of it.

Fast forward a year or so, and I still have the same questions, but smarter people than I are falling all over themselves to give money to the CEO of Friendster or buy his company. Besides Friendster, now you'll find LinkedIn for "business dating," Tribe for communities of interest, and dozens of other wannabes clamouring for our attention, contact lists, and connections. Even the open standards movement has gotten involved, with Marc Canter, Project Wiki and others calling for an open social network environment using FOAF (friend of a friend) lists.

What fascinates me are the underlying social mechanics and how relationships will be created, enhanced, weakened, or even destroyed by applying the tools that are being offered by these sites. As a result, I’m less interested in the business of social networking (seems like there is good money to be made by growing these companies and then selling them to Yahoo, Google, or the like) as I am in the technology, which I’m sure will be helpful in many other contexts. Less certain is whether any of these new businesses are standalone companies in their own right.

There are drawbacks. For example, I’m not that interested in helping someone make a buck off of my connections—what’s in it for me? Also, these are connections that I’d make (or not) anyway in the analog world; but with social networking, now I have another message modality that I have to keep up with, in addition to multiple voicemail and e-mail accounts.

I joined LinkedIn last summer in preparation for our Venture Lab Social Networking event in September. My thinking then was that I’d try it out and then move on. It seemed to me that using these tools would merely help those without networks start and build their own. But almost immediately after I joined LinkedIn, some very interesting side effects appeared. First, I received dozens of e-mails saying, "I have been meaning to get in touch, let’s get together." That was especially rewarding and the get-togethers are still ongoing.

More interesting were the five declines I received. One, which I can understand but think a bit extreme, was from a competitor I see at community and industry events. The others, however, were from people whom I had helped in the past that were either "preserving their connections" or "didn’t know me well enough to add a link." The ones that don’t know me well enough now sure did when they wanted something in the past. They clearly don’t understand obligation and you probably know where I’ll stand when they come back in the future: "You are the weakest link!" The ones who are preserving their links completely miss the point of being in a network or a relationship.

Nurturing a relationship (both direct connections and those two degrees away) is much different than using a transactional connection (three or more links away). There are three ways that I might build a relationship with someone, all of which are much harder to do electronically. The first is through shared human experience, like working at a company or doing a deal together, going to school together, or even just living on the same block as someone else. A second way of building a connection is by teaching or learning from someone, where we have given or received something valuable that can then be repeated over time. Lastly, we can make money for each other, which may also just devolve into a transaction, but hopefully can grow up from that point through the other methods (shared human experience and/or learning).

You can tell you have a relationship when you can call or drop in on someone at almost any time. You are in a transaction when you are "out-of-sight, out-of-mind," you have to schedule time for a call well in advance, and would never just stop by to say hello. We can talk in future columns about the resilience, costs, and returns of our relationships, but suffice it to say that relationships are like love: the more you give away, the more you get in return.

For me, the big questions are still there: What’s in it for the "haves" for ceding some of their competitive advantage to the "have-nots"? And when do the "haves" need to adopt these new technologies in order to stay competitive in our relationship-driven world? In fact, can these tools help us have relationships that are better, faster, or less costly?

I am all for tools and have, in fact, been a toolmaker (or worked for one) for most of my career. At the same time, I want my new tools to help reduce the friction and costs of connecting with, relating to, and helping others, not replace the face time and personal connectedness that an authentic relationship requires.


Bill Tobin is the Director of Emerging Company Services for Pricewaterhouse Coopers LLP.

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Bill, I would strongly recommend that you analyze the telesociology of the largest teleworker social network in the world since the early 1970s.

With a turnover of US$3 trillion a day.

Where teleworkers buy and sell their views. And nearly all the deals are done between people who have never met each other face to face.

What is this social network of complementers called?
The US$ spot foreign exchange market. Most think of it as folks buying and selling currency -- more to the point it is the buying and selling of views on where a currency is headed.

What will you find?

1. The current suite of social network software is missing a key element that this market had -- sense of presence. Sense of presence that raises spontaneity; that reduces space between minds; that fosters trust-building.

For this market it was the telephone. For social networks, IM or IM combined with Skype and webcams would take them there

2. These teleworkers were able to buy and sell their views because:-

(a) the product is specified. A spot US$ is understood by all.

(b) the counterparty settlement risk is underwritten by a third party -- the bank.

Social networks need to plug in to web service location where trust can be packaged and counterparty-risk reduction is provided as yet another packaged service in the ecosystem.

"Bottled", like Coca-Cola has bottled glee. Like the foreign exchange market has packaged views.

Work backwards from instantaneous complementing -- imagine a world where there is super-conductivity and frictionless synchronization between minds and sequence the opportunities towards them in order of "how low of a low hanging fruit is it?"

An example would be packaging views to be listed on E-Bay.

Say for which emerging Indy movies/music will do well.

More at http://www.ryze.com/go/bala

cheers.../bala
Bala Pillai
APIC Halls Without Walls/Mind Colonies

Nice work Bill, in giving a clear overview and premise. I don't think the lasting value of SNs is anywhere near obvious yet, but they seem to be an extension of (though not replacement for) analog networking, with some potentially useful extra features. Some interesting conversations I've had recently with people active in or near the space, suggest that more work both in technology and in the analog world to define pervasive online identity, levels of trust, F2F knowledge, and interaction that is more than technology-propelled (IM, blog, e-mail) will be crucial for the growth and practical value of these social networks for as long as a larger proportion of life is analog instead of digital.

Yep, close, but no cigar. Linkedin had the strongest buzz since Google. I got my first invite last December and within 2 days had 5 more invites, all from folks that I know pretty well, and respect. Wow, I think, this must be hot. So after sitting on it for a couple of week, I moved forward and invited those reasonably close to me. After all, the hit rate for a good working relationship is a lot higher via referral than via cold call, right?

So now I have 37 connections and the 2nd tier network contains amazing people. But so what? In the last month I've had many times when I needed to build a bridge to someone. But with 'only' 71,000 in my network, what are the odds that THE person I want to bridge to is in my network. Well, assuming a potential community of say 10M people who I might want to find contacts within it's below 1:100. So the 1st problem is mass. Seems that Linkedin would need at least an order of magnitude more people to make it work. That is unless I changed my MO and looked first within Linkedin to build contacts. I don't think so.

2nd problem is function. The other day I wanted to put two people in my network together. One is a contractor, the other had a need for those services. Nope, can't do it via Linkedin. So I just sent them an intro email. Linkedin was no help. So haven't put my finger on it yet, but think that Linkedin is missing some pretty basic functions that could make some difference. Hey, here's one that's missing, a spell checker. I endorsed someone, but being a terrible speller, yep, misspelled a word. And guess what? Linkedin didn't let me access the endorsement. So my friend had to email the endorsement to me so that I could correct and repost. This reminds me of breakfast cereal where the box can't be opened without destroying it. Do these guys eat their own cereal? Are they paying attention?

P.S. How about adding a spell checker to always on? All standard group discussion software provides spell checkers. OK?

This is all subjective. Bill -- you say that those three techniques for building relationships are harder to do online. Personally, I find them easier. I've actually gotten to the point that I simply don't do phone calls or meetings unless I'm actively involved in a project with someone. Since I home office and live in suburbia, for me to just "go have lunch" with someone is a three-hour ordeal right smack in the middle of my work day. Phone calls inevitably end up being 20-30 minutes, whereas an e-mail exchange typically takes less than 5 minutes, plus have the added advantage of a written record of the action items agreed to.

Online dialog can (and does) support both your first and second methods for sustaining relationships. Admittedly, it doesn't work for everyone, but for many, discussion forums and mailing lists ARE a means of sharing experience and teaching/learning.

In regards to your "big questions":

>What’s in it for the "haves" for ceding some of their competitive advantage to the "have-nots"?

If you make a useful connection for someone -- have or have-not or one of each -- you look good in the process. And maybe I'm being overly idealistic, but I prefer to think of the whole thing as a cooperative game, not a zero-sum one. Let me ask you this -- what do you really LOSE by sharing a connection?

> And when do the "haves" need to adopt these new technologies in order to stay competitive in our relationship-driven world?

When an individual can position themselves as a top expert on a topic in just a few months. Or, in other words, NOW! ;-)

> In fact, can these tools help us have relationships that are better, faster, or less costly?

Unequivocally, yes. I have lots of personal stories to back this up, and dozens that we've collected over the past year of researching online social networking. I'll be happy to expand to anyone who wants to contact me privately -- not enough room or time to even begin to list them.

Messaging -- email, SMS, VoIP -- collides with time to decrease productivity. Interconnecting our contacts and messages to algorithms so we can know more about our relationships may help. But in the short term more messages are generated. Will this turn people off?

Also, social networking promises to make everyone a networking rock star. Equipment can help an athelete compete but... When social networking can show the non-obvious relationships (check out NORA at SRD Software) and help us all jump out of the self-reinforcing webs of contacts we can already generate then we will see the Internet's disruptive nature really impact how we socially interact.

We're not seeing the value of Social Networking today because most of the sites are focusing on capturing people's network of relationships to grab market share and attract venture capital. The real value of Social Networking is in providing tools and infrastructure to help manage and nurture relationships. It really isn't very different from using CRM to manage your customer realtionships. Managing our individual business relationships will become increasingly important, given the increased competition and changes that are happening in our professional lives.

The big winner in this space is going to be the company that can come up with an effective answer to the "now what?" question that everyone asks after signing up at a social networking site. With friendster, it might be dating. With LinkedIn, Spoke, and others, they need to morph into the "Dunn and Bradstreet" of professional profiles or the Siebel/Salesforce.com of business relationship management.

I have serious doubts about these social networking sites even though I am on Linked In, Tribe, Friendster, Orkut, etc. Linked In is the one I'm focusing on right now and I do have a large network of ex-colleagues, clients and business partners. However, recently someone asked to be linked to another person who was 3 degrees away. I have a vague idea of what this person wants, but in the spirit of experimentation, I sent his request to a friend on Linked In, who then passed it on to the target. What happened next? I have no idea. What did this person want? I don't know. That's the problem. What if the request was inappropriate or annoying? No way to find out unless the person at the receiving end tells my friend who tells me... and so on. Who has time for this?

Then there are people who want you to endorse them. Problem is I don't know them well enough or I am familiar with their work but only in a very limited capacity. And if I endorse someone, why shouldn't I ask him to pay me? In any case, I would be really embarrassed to ask anyone in my network to endorse me. What am I -- some kind of dishwashing liquid?

Bill, while the public Internet-based social networking sites may have difficulty generating meaningful revenue, let alone a profit, this software does have more obvious commercial merit on a private corporate Intranet.

Most people who have worked with or for large multinational companies have their own stories of how these enterprises truly don't KNOW what they've collectively KNOWN. It's ironic, but the ruling "command and control" mentality within many organizational cultures essentially ensures that executive power-brokers proliferate myopic gate-keeping methodologies -- self-inflicted communication barriers between their human capital.

Why is the typical corporate grapevine an "underground" movement? Why do formal channels of internal communication still have to go up and down structural organization chart pyramids? Why aren't "open" employee connection grids the standard modus operandi?

Every single day senior executives reinforce the dysfunctional environment where their thought-leader employee's proven practical wisdom, solutions to process problems, and valued business contacts are under-utilized. It's amazing to me just how few companies (even those that have invested billions in IT and telecom infratructure) have applied technology effectively to bring people together in such a way that would have otherwise been unlikely or impossible.

The raw potential of social networking platforms behind the corporate firewall is huge. However, reaping the rewards will clearly require a change in executive mindset, corporate culture, and "open" formal connection and collaboration processes. See the GeoNetworker International site for links to research regarding this phenomenon.

In summary, yes, you can make a viable business from social networking. The real dormant need is actually closer to home than most people realize.

Bill, while the public Internet-based social networking sites may have difficulty generating meaningful revenue, let alone a profit, this software does have more obvious commercial merit on a private corporate Intranet.

Most people who have worked with or for large multinational companies have their own stories of how these enterprises truly don't KNOW what they've collectively KNOWN. It's ironic, but the ruling "command and control" mentality within many organizational cultures essentially ensures that executive power-brokers proliferate myopic gate-keeping methodologies -- self-inflicted communication barriers between their human capital.

Why is the typical corporate grapevine an "underground" movement? Why do formal channels of internal communication still have to go up and down structural organization chart pyramids? Why aren't "open" employee connection grids the standard modus operandi?

Every single day senior executives reinforce the dysfunctional environment where their thought-leader employee's proven practical wisdom, solutions to process problems, and valued business contacts are under-utilized. It's amazing to me just how few companies (even those that have invested billions in IT and telecom infratructure) have applied technology effectively to bring people together in such a way that would have otherwise been unlikely or impossible.

The raw potential of social networking platforms behind the corporate firewall is huge. However, reaping the rewards will clearly require a change in executive mindset, corporate culture, and "open" formal connection and collaboration processes. See the GeoNetworker International site for links to research regarding this phenomenon.

In summary, yes, you can make a viable business from social networking. The real untapped need is actually closer to home than most people realize.

Bill Tobin has articulated some of the things that I see as inherentily negative about social networking software. Relationships are a Face-to-Face not a F2U measuring scale. We live in a world which is infected with spam, so here comes a technology which in effect is really a different form of spam, "Permission Spam", If I piss someone off, that is a human trait, if I link on the basis of weak ties or in terms of 5 prayers per day to a Metcalf principle, that is as inauthentic a relationship as robotically depressing dystopia.

Look at the true promise of social networking software beyond the trite boundary of being electronic sales leads or people who must be so aloof from touch that they actually believe in a electronic networking paradise. Nothing wrong with being kinky, but business will always be about real life relationships not a friend of a friend of a friend based on an algorithmic multiplier effect. Here is the crux (I do realize crux is a religous word), if you don't know who your key contacts are and you need a globally connected super-network to "find" and "know who you key contacts are, you must be counted as a full prized electromoron.

Social Networking Software is a nice toy. Technology WILL contribute greatly to our personal efficiencies but it is from within us that personal efficiency can transpire, social networking software as a business proposition is as as stable as knowledge management software is as a business proposition - somewhere, someone will pay for things they believe in, but we as an individual are the only drivers and motivators of our own efficiency - everything else is a nice to have or a burdensome luxury. I am with Bill Tobin, I want authentic relationships and even "Mark Zorro" as an electronic form of thinking is not an authentic relationship unless you as an individual deem it or prescribe it to be so.

M.
zorromark@consultant.com
(Mark Twain wasn't Mark Twain, Mark Zorro isn't Mark Zorro)
http://www.markzorro.blogspot.com

Just as many among us I guess, I've tried some of these sites and so far have yet to discover one which delivers great value - especially after several months. In the beginning, they all seem very nice and do generate some of the anticipated traffic but this soon dies out. Am I alone experiencing this or is this common?
It remains to be seen whether, when faced with a lack of income, some of these sites or the people behind them will resist to using the harvested contacts for other than the intended use...
On the other hand, some of these social networking sites seem to rely on software which they built and which manages to link people beyond the keywords they entered for hobbies, etc... If some of these mechanisms prove reliable, they may become a great building block for CRM or sales automation tools.