Business networking

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					Business networking

E-schmoozing
Apr 7th 2004
From The Economist print edition




Will the internet transform how business contacts are made?



FOR most people, managing the mountain of spam in their inboxes is a wretched
task. So the temptation, upon spying a mass e-mail from a friend inviting chums
to join an “online business networking” site, is to hit delete. That would be a
mistake, at least according to a growing number of lawyers, entrepreneurs and
assorted other business people who are productively schmoozing online.

A crop of business-networking firms—LinkedIn is the most popular—that 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 firms take their inspiration, in part,
from hugely popular social-networking
sites such as Friendster and Tribe that      Jeff Taylor of Monster
target younger customers interested in       Mar 25th 2004
online socialising. But whereas dating
sites become obsolete once a lonely
heart has found a soulmate, business-
                                             The internet
networking sites claim that they have a
role as long as a customer has, or needs,    E-commerce
a job. Monster, the world's biggest online
job-search site, has been prompted by
the popularity of its new competitors to
add a networking function to its existing
offering.

The potential is huge—if 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. Perhaps some lucky social-networking
entrepreneur will even find that his office-mate knows Bill Gates

				
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