The Promise and Pitfalls of Social Networking

[reposted from Darwin, November 2003, courtesy of the Wayback Machine]

In an editorially schizophrenic show of ambivalence, Business 2.0’s November issue lauds social networking — with mentions of offerings from companies like Linkin, Ryze, Friendster, Spoke and VisiblePath — as the best technology of 2003, while the magazine’s lead article warns that the tech bubble is about to blow again. This juxtaposition of tech rise and fall has sparked a strange turn in the media discussion regarding social networking, specifically: Is the bubble around social networking about to burst?

Let me confess that I am no impartial observer to this phenomenon: I am a strongly biased advocate for the future benefits of social tools in general and social networking specifically. I coined the term “social tools” in an article I wrote in August 1999 about the then-hot social technology start-up, Abuzz. I am unconcerned that venture capitalists are throwing money at the problems of social networking prior to completely built-out financial models, and I don’t believe that we are fanning an “irrational exuberance” for social networking. There is nothing wrong with early stage money moving into an emerging niche like social networking and, in fact, it may well be that large sums of capital will need to be invested before social networks can be made to work.

A Little Context, Please

The premises of social networking are simple and intuitive. People are social, and will naturally form groups, share information and contacts, and advance their personal agendas through interaction with others. The Internet is an amplifier for this sort of interaction.

Social networks have been studied for decades, and some of that research has made its way into popular culture, such as the notion of “six degrees of separation.” This is the premise that there are no more than five intermediates between any two people on earth (incidentally the source of the Kevin Bacon movie trivia game).

Of course, we now have moved to an electronic footing for our relationships with others, so we can search e-mail folders, CRM databases and instant messaging logs to determine peoples like, dislikes, expertise, or to discover friends-of-friends. So, one of the most obvious applications of social networking solutions is to close that gap: to find the shortest or best path to another person, whether you are trying to sell soap, find a date or locate a drummer for your new band. And these are exactly the scenarios driving the uptake of social networking solutions.

Getting to Critical Mass

Perhaps the biggest barrier to social networking solutions’ usefulness is critical mass: getting enough people to join the network so that people can find each other. Without a relatively large body of participants, socializing — about whatever sort of issues, needs or desires — just won’t take off.

There are a number of other impediments that stand in the way of social networking, a major one being that most people today don’t know anything about it. Of course, coverage in Business 2.0 and the soon-to-be-exploding marketing budgets of the soon-to-be-well-funded startups will counter that issue relatively quickly. Also, the bottom-up nature of social networking — where one politically active user invites a clique of politically active friends to join a group at Tribe.net, Ryze or some other social networking community — is very viral. Those who network tend to drag their network of friends along and, as a result, the growth rates of these solutions is impressive.

How much work is getting done is another question.

Working the Network: Buy in and Pay Back

My own experiences trying to leverage the networks within the available solutions have been fairly lackluster. But on the other hand, I have been unwilling to subject my entire Rolodex to the potential annoyances of being imported wholesale into Spoke, Ryze, Friendster or LinkedIn. I have only invited that small cadre of folks that I think might be interested in social networking as a phenomenon, because the costs to play are high relative to the return.

Like the world of instant messaging, the lack of interoperability between social networks has led to a fragmented and non-uniform market for social capital exploitation. It’s just too much work to upload your contacts into all the various mass-market social networking solutions, and actively participating in more than one or two of them would require too much care and feeding.

We are stuck at the Beta-versus-VHS fork in the road, where some company (or a few at the most) will break out of the pack with a winning business model, and establish a de facto standard for social networking, either as a monopoly (like Office) or through interface and protocol standards (like POP3 and SMTP).

I believe that a critical element of that necessary payback is to get people like me past the tipping point and to remove the barriers to adoption. This requires a clear demonstration of the business pay back from social networking solutions in distinction to their meat world analogs. Unlike the examples cited in Business 2.0, my own experiences trying to actually conduct business through several of today’s services has been poor, so far.

Here Versus There

The final barrier I see to the productive application of social networking systems is that they are being designed as being “there” as opposed to “here.” What I mean by this here/there dichotomy is that the solutions — in general — are being developed as standalone systems, divorced from the information technologies that businesses are already using to manage business relationships or relationship-related information.

In my case, I spend a lot of time “in” Outlook and instant messaging clients of various flavors. The typical sales rep at a large company spends a lot of time “in” Siebel. A consultant in a professional sales firm spends much of her day “in” a project-oriented content management system, like eRoom or Sharepoint. A financial analyst at a brokerage firm “lives” in Bloomberg or Reuters information services.

Getting to “here” — where social networking solutions extend tools already in use — instead of making users go “there” to network is essential. In my September column (Cracking the Social Code), I profiled VisiblePath, one company that has built its social networking solution around this premise. I bet that all the survivors of the inevitable shakeout in this market will adopt an integration approach, at least to the degree that they want to penetrate the enterprise market. And that’s where the smart money in this market is going to flow.