The Economist writes about the use of social networking for making business connections:
A crop of business-networking firmsLinkedIn is the most popularthat let individuals mine the connections of friends-of-friends online, has sprung up in the past three years. After a quiet start, their e-mails are becoming ubiquitous. The idea is that finding a job, freelance project or new employee is easier when trusted friends make the introductions. Already, they have attracted hundreds of thousands of subscribers, mostly through word of mouth.
The potential is hugeif a way to charge a decent price can be found. America’s total hiring market, including online agencies such as Monster and Yahoo’s Hotjobs plus offline headhunters, was worth $5.3 billion in 2003, says Forrester Research. Trade shows, a rough proxy for the market for paying to meet industry contacts, are a $100 billion industry, says Tradeshow Week, a trade magazine.
Business models vary. Ryze, one of the few profitable e-schmoozing firms, offers public chatrooms and organises monthly, face-to-face networking events in big cities to supplement its online networking offering. It charges for a premium networking service, tickets to (offline) networking events and classified advertising.
LinkedIn, with over 400,000 registered users, is invitation-only. It focuses on facilitating one-to-one connections, not community-building. It claims to log 20,000 completed connections a month. In November, Sequoia, a leading venture capitalist, invested $4.7m in it. But so far, there are no plans to charge for its service.
Arguably more interesting are such outfits as Spoke, Visible Path and Contact Network Corporation. They target businesses directly, rather than just business people, and already routinely charge for their services. Spoke, the leader of this group, has raised over $20m from US Venture Partners, Sierra Ventures and others.
Their corporate versions of social networking software analyse (with their permission) employees’ address books, CVs and e-mail to create contact databases that can be mined by all workers. Thus, for instance, a sales person seeking an introduction at IBM could discover if any of his colleagues has a friend, ex-boss or business contact there.