Social Networking Sites

Social Networking is abuzz with excitement. Friendstrer has reportedly raised USD 13 million from Kleiner Perkins and Benchmark. WSJ takes a look at some are calling as a bubble:

Most of the social-networking sites operate on the same basic idea: connecting people to new people. In the case of Friendster, an individual — say person A — creates a personal profile and invites friends B, C and D to join with their friends; B accepts and brings in his buddies, as does C, who brings in her friends, and so on, enabling person A to meet friends of friends of friends. Friendster connects to “four degrees of separation,” Mr. Abrams, who founded Friendster, says.

“They’re obviously growing by leaps and bounds and spending no money on marketing,” says Mr. Doerr. “That they’re using very powerful human relationships to connect is really at the core of what makes this for me quite compelling.”

Ethan Watters, author of “Urban Tribes,” a recent book that examines friendships among young, unmarried urbanites, says Friendster has caught on with this group because the complicated tasks that confront them — finding a job, a friend, an apartment, a date or a used-car deal — are facilitated by connections.

Friendster’s users have eclectic aims, but some networking sites specialize. LinkedIn and, for example, focus on matters of employment. functions like online classifieds. (How better to buy a used car than from someone you know?) helped Democratic presidential hopeful Howard Dean with successful grass-roots fund raising. Emode gained steam as a place where users could take personality tests and then connect with like-minded friends.

Sites like Friendster have to be careful about how they grow, says Charlene Li, an analyst with Forrester Research Inc. in San Francisco. “The social networks are great as long as they are small,” she says. But “in order to have a business model, that requires scale, typically,” she adds. “Those two things are inherently in contradiction. It’s a fundamental challenge.”

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.