I enjoyed attending last night’s Business Development Institute panel on “SOCIAL NETWORKING: WHAT’S NEXT?” My company, Nitron Advisors, was a supporting organization for this program. The speakers and I and a few guests had a good dinner afterwards at Prime Grill. Biggest newsflash: VisiblePath just raised money from Kleiner Perkins, and Ray Lane is joining their board.
My favorite line was from Mark Pincus, who said: “All the social networking sites are a dumbed-down
version of what’s going on in the blog world.”
Transcript follows.
Tuesday, February 10, 2004
http://www.bdionline.com/calendar/events.asp?ID=52
Morrison & Foerster
1290 Avenue of the Americas, 39th Floor
New York, NY
I. Panel
Moderator: Lee Greenhouse, President, Greenhouse Associates
Panel:
Antony Brydon, Founder and President, Visible Path Corp.
Reid Hoffman, CEO, LinkedIn, Ltd.
Andrew Weinreich, Founder and CEO of I Stand For, Co-Founder and Former CEO of Six Degrees
Adrian Scott, Founder and CEO, Ryze
Mark Pincus, CEO, Tribe
II. Transcript
Business Development Institute is a “brick and mortar” social network company. Hence
interest in this space.
Lee Greenhouse, President, Greenhouse Associates
3 Bs of moderation: Be curious. Be humble in presence of people smarter than
you. Be brief. (and 4th one: Ban Powerpoint.)
Format:
1 hour discussion and then questions from panelists.
Greenhouse: What is the definition, and what is the landscape?
Scott:
- social/general sites, and business services sites
- within business services sites: membership/end user sites and enterprise oriented services
Brydon:
1) focus on community, and 2) analytics of community
Weinreich:
using the people you know to meet and find the people you don’t know. Social networking is an old practice; internet makes it more efficient.
Brydon:
recruiting/HR , and sales, pay finder fees; that was an old way of capitalizing on enterprise social networks
Weinreich:
With this tech, we can codify the social map.
Pincus:
Every day, people email their friends saying “I’m looking for a dentist, I want to sell my car, etc.” This makes this process more efficient.
Greenhouse: why is this happening now?
Weinreich:
What’s the difference between SixDegrees and Friendster?
+ Better technology: SixDegrees had 3.5m members, and a big percentage of the usage was dating. They thought about becoming a dating site. But they needed photos to do that. SixDegrees figured
out that if they hired 100 interns, in a year they could scan 3.5m photos…impossible! Today, everyone has digital cameras.
+ Validation of models: Friendster’s model is validated by Match. Tribe’s model is validated by Craigslist.
Scott:
people are excited because this is about people. VisiblePath helps people build and analyze their own relationship networks.
Today,
most of the info about a person’s relationships is digitized, and therefore mineable (Outlook, CRM, etc.) They usually sell to VP Marketing/Sales.
Hoffman:
LinkedIn vision: each individual has his own network. (less true in the old lifetime employment world.) He asks people when hiring them: what lieutenants will you bring with you?
Scott:
we’re being approached by people who want to tap into the energy of our network. MTV’s TRL program, various fan clubs, any company, have a pool of social capital.
Hoffman:
when you invite someone on Friendster, you’re inviting them usually for dating purposes. On LinkedIn, you’re inviting them to join a purely business network. The culture of the network is key.
Weinreich:
people know people, in many different contexts. That mapping exists once; you know someone 16 ways, but you only know them once. The quality of the networks varies based on how well the relationships are classified.
Pincus:
Tribe wants to connect people to the right small world. Each Tribe user has his personal CRM. The blogosphere is one big connected web. All the social networking sites are a dumbed-down version of what’s going on in the blog world.
Brydon:
From enterprise view, there’s not only one relationship. VisiblePath looks at different components of a relationship. They vary by application. One person is good and bad at different things. My relationship with that person is highly context specific.
Pincus:
In a year, all of us will have a reason to have a public name on the internet. I own my name on google; if you google me, I control what you see.
Weinreich:
a high percentage of people on dating sites are on multiple sites. The rationale: you want to cover all your bases. You want to participate in different social networks because they offer different functionalities. In dating, you’re seeking one person (usually). In business, you’re seeking many people. You definitely want to move to larger networks. There accrues a real value to the largest player.
Pincus:
Compuserve didn’t give you a recognizable email address. AOL gave you a screen name which was much easier to put on your card, which made it much easier to email people. AOL was much more open.
Weinreich:
there used to be 10 instant messaging companies. Now Messenger, AOL, ICQ are the only ones that matter, because people don’t want to sign up for the others.
Scott:
the smaller and more focused networks are more valuable.
Greenhouse: what happens when Google, AOL, Microsoft get into this?
Scott:
we’ll all be different companies then. Ryze has been profitable for more than
a year. Founded 2001.
Greenhouse: What’s the business model today, and what will it be in the future?
Pincus:
Adrian is the only person here with revenues.
My last company was an enterprise software company, and it took us 2 years to get revenues. Tribe and LinkedIn have built big user bases with little money on marketing.
Tribe’s model: next-generation online classifieds. Similar to Craigslist, which gets $10m/year just from SF market. They charge $75 to post a job listing, which is very cheap relative to Monster, etc.
The
exciting opportunity is increasing the number of paying participants in the classified market. Online gives this space new legs. Upsell customers persistent listings, placement around the listings, etc. Similar to adboxes on Ryze, which look like google adwords. Tribe can provide the local internet.
Scott:
Ryze revenues:
+ gold membership is $9.95/month (biggest revenue stream). Includes many high-end features.
+ Some featured ads, $5.95/month.
+ Small revenue stream from events.
Brydon:
our business model is proven in CRM/SFA space.
Hoffman:
LinkedIn revenues
+ fee for linking to someone, in order to keep communication value high
+ AdWords type model—you’re looking for a lawyer, and here’s a lawyer who’s a few degrees away and is highly endorsed
Greenhouse: email and IM have not done a good job of crossing the border to paid
Brydon:
lessons from IM—one of the big blocks to payment is that there are three non-interoperable systems. Enterprise messaging in the enterprise is a proven revenue source.
Greenhouse: How many of you have raised $ from institutional investors?
Answer:
everyone except Scott.
Pincus:
Mayfield, Knight Ridder, Washington Post. They invested despite social networking angle, not because of it.
Hoffman:
same with Sequoia.
Brydon:
we just announced yesterday we closed institutional round with Kleiner. Ray Lane has joined Board of Directors. We are solving real business problems.
Greenhouse: how come major players haven’t come into this space?
Pincus:
Match hasn’t grown its user base in 3 quarters. Great cash flow, but not growing. Why pay $20/mo. for Match when you can be on Friendster for free, and you get much more information about the people? Match is surviving because not enough people have arb’d this. Monster does less and less revenues every year; now $600m, formerly $1B.
Weinreich:
there are real business models. The real home run is make social networks into an operating system for the enterprise. Valuable to look on ebay, at amazon, etc. and shop/read reviews from people within 3 degrees of you.
What happens when Amazon (which bought Planetall and Alexa) gets into this space ? And a dozen car dealerships?
Hoffman:
people care about close degrees (each link has to have specific value/meaningfulness). I don’t care what my nanny’s ex-boyfriend thinks.
Pincus:
get onto Monster Networking now, and help them cannibalize their own business. Just $3/month.
Questions and Answers
Fred Wilson: what’s the IP protection in this space?
Weinreich:
today, 2 people with access to open source libraries can build a social network site in under 3 months. It took SixDegrees 45 people and many millions of dollars. The real time consumption is the business rules/system design. That’s a much tougher proposition. This is a marketing/consumer interface challenge. IP will play a big role in this space. It could get very ugly as big companies enter this space.
AOL has many dozens of millions of names, and AOL knows whom they know in that system. BUT AOL needs to ask them for permission.
Brydon:
Orkut will have an impact because it offers access to a huge map. Some of these companies on the panel will go broad, and some will go deep. You’re broad, you’re deep, or you’re dead.
David Teten: what technology will share contact data between all the players?
Pincus:
FOAF XML standard.
Question: what about privacy?
Weinreich:
Perception of privacy is a bigger concern than privacy itself.
Scott:
people want to be in environment where they can control whom they interact with. Ryze used to be a totally open model (except you could block people). They have since introduced a significant privacy layer. They also have a ‘groups’ layer.
Brydon:
privacy is critical in the enterprise. Value of rolodex is major asset of many people. Granting people control of that is key.
Darren Hornig, Dwelling Quest: how does a company leverage a network?
Scott:
they have a branded network on top of Ryze, to allow companies to offer a branded corporate presence.
Brydon:
building the map is easy. The heavy lifting is analyzing those relationships.
Bob Coen, LA, board of Borland: I’ve joined several SNS companies. I’m getting spammed by invitations, email, etc.
Hoffman:
we’re discouraging people from inviting too many people. As a result, we now have an ‘ignore’ option for invitations. This is a growing pain.
Scott:
you can limit contacts to people within 2 degrees of you
Mark Lesnick, runs internet dating conference. Average customer lifespan in our industry 3-5 months. In your sector, what’s the lifespan?
Pincus:
people have a broader reason to be on Tribe than just dating. People feel very strong affinities to some of these groups. In focus groups, people said ‘craigslist’ is essential to my life: I found my coach, girlfriend, apartment on it. They did not have that loyalty like that to Friendster.
Raman, Matcheroo. They’re focused on privacy, identity
theft. Comments?
Cem Sertoglu, SelectMinds: How are you handling the behavioral changes? How are people handling the problem that people know that they’re being watched?
Brydon:
we’re not trying to force new behavior. We try to embed behavior in existing frameworks. Much more difficult if we force cultural change.
CRM has tried for years to get people to put relationships into system. That’s stillborn. Instead, VisiblePath uses an individually controlled, anonymous system. The CEO of my company doesn’t know I have a path into Goldman Sachs, unless I choose to disclose that.
How do we tell which endorsements matter?
Hoffman:
we intend to build out the LinkedIn profile into something you can carry around with you.
Rick: what do you think of reputation management? Is there a
way to handle negative feedback? Is there a self-correction mechanism?
Hoffman:
recommendations work publicly (on your profile). The communication channel on LinkedIn is an endorsement system. There are the same retribution systems that exist today.
You cant publish negative stuff, but you can do due diligence on people.
Scott:
one of our members connected through Ryze and did project for another Ryze member, and was having trouble getting paid. She told him, “Do you want other Ryzers to know you are slow on paying?” That was a threat that motivated people.
X in NY was looking at hiring another Ryzer, and did some background research on Ryze. Got some negative feedback and decided to hire a different person.
Brydon:
report cards are a difficult way to do this.
III. And now, a presentation by NTag. George Eberstadt, co-founder
Social
networking technology: it’s not just for the web. Effective networking at events is hard. 3 problems underlie this:
1. Matching problem: of all the people here, which should I speak with?
2. Recognition problem: I know I need to meet Bob, but how do I find him?
3. Icebreaker problem: what do I have in common with someone?
Results of this: people fly all over the world to a conference, and then speak mainly with people we already know.
NTag is the “perfect host”. It provides you with just the info that you need to understand it. World’s first interactive nametag. Our tags filtered all of our needs/interests, to find common interests.
Sally & Jen meet. Then Jen meets Bob, who’s looking for a job. Jen’s tag knows that Sally is looking to hire engineer. So Jen can introduce the two of them, in a mutually beneficial way.
Nametag is minimally disruptive way to provide introduction data at key moment. Referral is made through a 3rd pary –allows for filtering, and increases trust.
Technology is easy; getting the use model right is hard. Allows for referrals through third party.
We take aspects of web-based social networking into event context. We leverage personal profiles, and leverage social network models.
Potential to integrate with the social networking websites. From web to event (personal profiles, social network models) and from event to web (auto capture of social network data).
Company founded 02, available since fall 03. Rick Borovite did underlying research as part of PhD at MIT.
Not just about social networking: attendee networking, intros and referrals, networking activities, one-click card exchange.
Event management: polls and surveys, lead capture, personalized event info, message delivery, attendance tracking and security, event analysis.
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