Big Help for Small Businesses

by Catherine Holahan

Max Hill’s image of a perfect retirement was his favorite pastime. The 66-year-old Texan pictured himself standing on a vast green, holding a shiny old hickory club, and watching a small white ball sail far away into a clear blue sky.

Initially, Hill did not imagine his dual hobbies of golf and collecting antique clubs would become a business. Yet, thanks to the ease of e-commerce technologies for small businesses, retirement from the corporate world was the start of Hill’s new career as the owner of HickorySticks.net, an online antique golf store.

How Hill transformed his hobby into a business is illustrative of what many small business owners can do with relatively little money and Internet experience. Hill got his site up and running four years ago with the help of a Web design firm that charged $3,000 to develop the site and a Web host company that stores Hill’s data and connects him to customers for roughly $10 a month. Hill now fills several orders a week. “I am not a computer guy at all and the site works very nicely,” he says.

We looked into some of the Web offerings for small businesses and determined which ones are easy enough for Web novices like Hill and cheap enough for the smallest small-business owner. Here are some of our favorites.

WEB HOSTING.

When first starting a site, many small businesses opt to rent space with Web hosting companies. The reasons are ease and price. For between $10 and $300 a month, depending on the company and site capabilities, Web host services provide domain names, IP addresses, e-mail, and space for the site on their massive, secure servers. They also typically throw in 24-hour customer service and downloadable software to help beginners design simple Web pages.

Netfirms, a Web host service with more than a million customers, including Hill, provides one of the best values on the Web for small businesses, with plans ranging from $4.95 to $14.95 a month. The company’s most popular business option, the “Advantage” plan, costs $9.95 a month and includes domain names, a Web page design kit, and a 40-page step-by-step reference guide explaining how to set up the site. It also includes 24-hour customer support seven days a week.

Christopher Hebert, a marketing manager at the company, says Netfirms built its software to ensure that novices can use it. “With any of this, there is a bit of a learning curve, but we have a bunch of businesses that have gone from zero to 60 in a couple of days,” says Hebert. “It’s not out of the realm for a grandmother who knows nothing about computers and wants to start a small Internet business to be up and running on the same day.”

Most impressively, Netfirms’ Advantage plan includes 20 gigabytes of space on its server, enough to run sites laden with pictures and multimedia files, and 750 GB per month of bandwidth. Bandwidth, also known as data transfer, is particularly important for e-commerce sites because it is used every time a visitor views the images and text on Web pages. With 750 GB a month, a business whose site is laden with images and videos could serve more than a million visitors a month. A text-only site could serve billions of customers.

IN CONTROL.

Jeannine Ranni upgraded to Netfirms’ CommercePro after paying a Web designer to host and run her site, embellishedbean.com, which sells gourmet coffee beans. The stay-at-home mom says the site, which was designed using Netfirms’ templates, makes it easy for her to fill daily orders. “I have a control panel that I log onto daily that gives me all my Web stats, my visitors, and any orders. And once I click on the pending orders, it gives me an option to make labels and invoices,” she says. “It links with the postal service, or whoever you want, to ship, and then it notifies the customer that the order has been shipped.”

The major drawback to Netfirms is that it takes time and activity for a user’s site to begin showing up in the results of related searches on Google, Yahoo! , MSN, and others. The result is less initial traffic. For smaller sellers, this is not always a problem. “Most of the time people hear about me through word of mouth or the search engines. I’ve never paid to advertise the site or have it listed,” says Hill. However, sites relying on e-commerce as their primary source of income may want to see more immediate results.

Netfirms tries to counteract the anonymity problem by including a $25 coupon to advertise through Google’s AdWords program, a pay-per-click advertising site that allows users to bid on keywords and then places bidders’ text ads on its pages.

For a bit more money than Netfirms, Yahoo Small Business offers more marketing help and capabilities. The search engine’s hosting arm is a popular option for e-commerce companies, serving more than a million customers that do more than $3 billion in transactions each year.

FREE CONSULTING.

Yahoo’s business plans typically range from $39.95 to $299 a month, not including a $50 setup fee. However, Yahoo periodically waives fees and reduces prices as part of promotions. Its lowest-priced small business option—the “Merchant Starter”—was discounted to $29.96 a month recently.

For businesses just starting out, the Merchant Starter package provides all the needed capability and then some. It includes a domain name, 1,000 business e-mail accounts, Web design tools with hundreds of templates and sample pages, checkout and shopping pages, order management and product catalog systems, and round-the-clock telephone support. It also includes 20 GB of space and 500 GB of bandwidth.

Jimmy Duvall, Yahoo’s director of e-commerce products, says the Merchant Starter is very similar to the more expensive plans, without some of the complex features such as gift certificate printing and issuing capabilities. “[The Merchant Starter] is geared to be a really inexpensive world-class e-commerce system that can scale to a very high level,” Duvall says. “We are really focused on new merchants coming in and getting started as soon as possible.”

To that end, Yahoo also has a partnership with UPS that enables customers to seamlessly ship merchandise, print labels, and request pickup and delivery. It also automatically enters the site in Yahoo’s index of possible search results and includes discounts on its marketing services such as sponsored search advertising and Fast Track, a service that assists businesses in bidding on and selecting the right keywords to associate with their Web site. Best of all, it includes 30 days of free consulting to help small businesses organize and develop the site.

PAYMENT PLANS.

There are dozens of options for sellers to receive payments for merchandise sold on their sites, and Web hosts are compatible with most. Traditional credit card merchants such as Visa, for example, offer accounts enabling sellers to receive and transfer funds.

The specter of identify theft, however, has made some computer users wary of giving their credit card number to all but the most established businesses. VeriSign, a company that establishes the legitimacy of e-commerce sites, has eased this tension somewhat by providing a service that notes that a site has been verified.

Still, some users remain reluctant to part with their credit card numbers. As a result, sellers are increasingly opting to use digital wallet services, which work by allowing users to deposit money into an e-wallet via credit card or their bank. The wallet company then can move the money around for its clients—from buyers’ e-wallets to sellers’ e-wallets, for example.

The trouble with using any old e-wallet is that there is a sign-up process for each one, and customers may not want the hassle of registering. That’s why it pays to go with the popular ones.

Luckily for merchants, the most popular service, eBay’s PayPal is free to download and incorporate into a site. PayPal has 100 million account members worldwide and is available in 55 countries. It makes its money by charging fees of 1.9% to 2.9% per transaction. For Internet novices unsure of how to handle transactions, the ease and ubiquity of the service makes it a small price to pay.

Source: www.businessweek.com

Secrets of Online Business Success

by Jeffrey Gangemi

Part I: Taking Your Brick-and-Mortar Online

American Pearl had been a successful jewelry store in New York City’s diamond district for almost 50 years when Eddie Bakhash took over the company from his father, Charlie, in 1997. One of Eddie’s first moves was to take the brick-and-mortar company online. Since then, he says, sales have grown yearly at a rate of 20%. Last year they surged to almost $20 million—with 20% in person and 80% online.

Bakhash attributes some of his company’s success to having a well-known and respected store, and good word of mouth. But, he says, the key was constructing a site that builds trust with the consumer, while educating them about the product or service offered. “We tell the truth, showcase the product, and recreate the world that the product comes from through a variety of rich media,” says Bakhash.

Retailers like Bakhash are aware that doing business online boosts sales. A 2006 Forrester Research study of 174 retailers found that online retail sales rose last year by 25%, to $176.4 billion, and are expected to rise 20% in 2006, to $211.4 billion. By 2010, sales should reach $329 billion.

HELPFUL SERVICES.

If you are contemplating taking your brick-and-and mortar online, don’t think you have to set up the site yourself. Providers such as Yahoo! Stores, FreeMerchant, or LiteCommerce can create an online storefront that is easy and affordable.

“Small businesses inherently have built their business themselves. A lot of people look at doing everything themselves—the backend servers, all the infrastructure, learning HTML. Whether selling products or not, you don’t have to do that anymore,” says Jimmy Duvall, director of e-commerce products for Yahoo! Small Business.

Once the site is up, don’t start conducting business until it’s been tested and deemed ready. Make sure all the site’s features are working, since customers today expect the same good service and quality online that they find in regular shops.

And just because the site is up, don’t think your work is done. You have to update continuously. If you have outdated information, “you could be losing sales and causing customer dissatisfaction,” says Harry Hollines, vice-president for channels and business development at Englewood (Colo.) direct marketing consultant Verio, which also offers a service to help small businesses update their sites.

When your site is running on all cylinders, then it’s time to think about traffic. Develop a plan for generating buzz online and search engine optimization.

ONLINE STREET CRED.

Many small businesses—almost half of those surveyed by Forrester—are also using cross-promotions between their offline and online stores to boost sales. But while promotions can often increase sales, don’t overwhelm your loyal customers.

“It’s important to be an active online marketer, while making sure not to overload people with offers after they’ve been nice enough to patronize your store in the first place,” says Kim Gordon, president of the National Marketing Federation, an outfit based in South Florida that counsels small business owners on marketing.

Don’t take for granted that potential customers will believe every offer of a discount or sale. People can sense a scam, even if it’s virtual. That’s why credibility is just as hard to come by in cyberspace as in the real world, and there are multiple ways to establish it.

Having a high-quality site goes a long way. But for e-commerce, having an established and reputable payment system like PayPal or WorldPay can turn a nonbeliever into a customer.

If you’ve been running a brick-and-mortar business for a long time, it might seem unnecessary to have to prove your credibility all over again. But that’s the name of the game in the online world, once you’ve found a way to get people to visit your site in the first place. Those who succeed find that a new world of customers awaits them.

Part II: What Not to Do When Building a Web-only Business

Kieden, a San Francisco software startup that helps companies track the success of their Google keyword advertising, launched in January and was snapped up by Salesforce.com just eight months later. Salesforce hopes Kieden’s application will help integrate its core customer-management program with Google’s AdWords service, significantly improving advertisers’ ability to track click conversion.

Kieden co-founder Kraig Swensrud says his company’s launch was successful both because of what the company didn’t do and what it did. Most importantly, he says, it resisted the urge to take on an entire industry.

“Ours was originally a grand vision, to help all companies understand return on investment from online advertising programs,” says Swensrud. To develop such a broad application, Swensrud reckons, would have taken several years. So the company narrowed its target customer to users of both Salesforce.com and Google.

For innovative companies like Kieden, doing business online offers no shortage of opportunities. But when starting one, there are plenty of missteps to avoid. Be sure to choose a differentiated product or service and master it before looking to expand. “If you’re the small guy, you’re not going to come in and get noticed, unless you have something different,” says Melissa Payner, CEO of BlueFly, an online-only designer apparel retailer with about 80 employees and $60 million in revenue last year.

ALL ABOUT AGILITY.

For online video store Netflix, the key was not trying to perfect its service before taking it online, says Neil Hunt, chief product officer. When it launched in 1999, Netflix’ speed to market and subsequent agility was mission critical in its unlikely bid to compete with Blockbuster.

Although acting speedily is dangerous for businesses looking to transfer from bricks and mortar to online, it can be the key to success for Web-only outfits. Getting the product out there not only puts pressure on the competition but also provides an earlier opportunity to get customer feedback.

“Don’t believe that you understand the whole business model from the beginning. We built stuff quick and dirty [before launching in 1999], because we didn’t want to spend all this time and money working on the wrong thing,” says Hunt.

The experience helped Netflix find what its users wanted and deliver it with gusto. Hunt says his company’s willingness to adapt is the major reason it now boasts over 5 million subscribers, a number he says continues to double every 18 months.

ENCOURAGING IMITATION.

Companies offering great services that customers begin buzzing about can’t neglect the need for scalability. Get the servers in place and the Web technology up to speed immediately, and make sure it’s set for multiple years of rapid growth, says Hunt.

Also, don’t think that one or two players in the market means there’s no room for a new one. “In the past, the first brand out the door in old businesses tended to do well. But with the Internet, the second mouse gets the cheese—look at Yahoo, eBay, and Monster. It’s encouraging for small online startups to look at what people are doing and do it better,” says Marcel Legrand, senior vice-president for strategy and development at Monster.

Photo sharing and printing service Snapfish was the 127th to market. Today, Snapfish is the largest photo sharing site in the world, with 30 million users. That’s up from 14 million in early 2005, when it was acquired by Hewlett Packard.

Seven years after launching, general manager Ben Nelson says Snapfish is still working to serve its primary demographic, a hypothetical customer named Emily. Emily, who Nelson says makes up about 80% of the market, is a woman who takes a lot of photos and looks for value, convenience, and easy-to-use service.

“If we constantly work to serve the biggest market segment, we’re probably in pretty good shape with the rest,” says Nelson. The formula worked for Snapfish. Keep these strategies in mind to help make your Web-only business flourish, too.

Source: www.businessweek.org

Doing business online – advise from the internet pioneers on what not to do

By Jeffrey Gangemi

Marcel Legrand, senior vice-president for strategy and development (Monster, founded in 1999)

Advice: Don’t get burned by user-contributed content. It’s tempting to create viral, open-source information, but there are issues around liability and the truth of the data. If Monster allowed people to create career content, users wouldn’t be getting good, strong info about interviewing and how to write a resume. You have to balance between professional and community content.

As a young company, it’s tempting to allow your brand to go all over the place. Don’t let it happen! Be vigilant about managing your brand, so the blogosphere doesn’t tear you apart. You’ve got one chance to come out of the block, so make sure you’re the voice of the brand. Amy Klement, vice-president for products, Paypal (a division of eBay, founded 1998)

Advice: Focus matters — don’t lose sight of your core capabilities. PayPal has been successful by staying 100 percent focused on payments and carefully building its expertise over the last seven years. [Online] payments is a complicated business, requiring a maniacal focus on risk management and fraud. PayPal has built some of the most sophisticated and world-class fraud systems in the industry.

Neil Hunt, chief product officer, Netflix (founded in 1997)

Advice: Don’t believe that you understand the whole business model from the beginning. Plan to fail inexpensively and early. We built stuff quick and dirty, then left a lot of stuff up to customer service reps on the phone. The lesson here is, don’t be afraid to cut corners. If you spend a lot of time building something and it’s the wrong thing, then you’ve wasted a lot of resources. As we grew, we knew that we’d need Web site components that could scale hugely. We couldn’t be too attached to technology; we had to be prepared to switch and change.

Konstantin Guericke, co-founder and vice-president, LinkedIn, founded in 2003

Advice: Don’t have a bunch of promotion and marketing fluff on your page. Just saying you’re the best doesn’t mean you’re the best. Customers want to know how much it’s going to cost, how long it’s going to take to get to them, and if they’re going to get good service.

Don’t take up screen real estate that’s not actionable, useful information. Don’t make them click too much or make it too hard to find products. If they don’t find what they want from the home page, they’re going to click to the next site. They’re expecting convenience. Make a compelling offer, because customers on the Internet are expecting a deal.

Ben Nelson, general manager, Snapfish (a division of HP, founded in 1999)

Advice: Don’t chase other customer segments before you’ve won your primary. From the day after we launched, we’ve had pressure to go beyond ‘Emily,’ the woman whom we consider to be our core customer. If we solve issues for our busiest, highest-volume user, how likely is it that we’ll get our fair share of the rest of the market? High.
Don’t hire too quickly!

Dwayne Stradlin, president, Hoovers online (a division of Dun & Bradstreet, launched in 1994)

Advice: Avoid anything that doesn’t focus on the unique thing that your company does well. Protect it, invest in it. The other thing is to focus on scaling — small companies sometimes run into a wall. They can’t scale.

Clarence So, senior vice-president for marketing in Europe, the Middle East, and Asia, Salesforce (founded in 1999)

Advice: Don’t let potential investors throw you off what your gut is telling you to do. As the entrepreneur, you’re defining the market. The entrepreneur is the person with the passion and vision that started the company.

Don’t waste time focusing on anything that’s not your company’s core competency, like installing software. I would encourage small companies to adopt business Web applications before installing traditional software. Your technology should support core competency in simple, easy-to-use, easy-to-adopt fashion.

Melissa Payner, chief executive officer, Bluefly (founded in 1998)
Advice: Don’t do something that’s already well covered or already exploited in the marketplace. If you’re the small guy, you’re not going to come in and get noticed unless you have something different. We made sure that we identified our focus from a brand perspective. It wasn’t like any designer could be on Bluefly. There was trust established that it would the “in” designers and [the] “right” designers and would [follow the latest] trend. We were arrogant about who would be on Bluefly. Once you decide, you have to be true to it.

Sally McKenzie, senior vice-president and general manager, Expedia (founded as a division of Microsoft in 1995 and spun off in 1996)

Advice: Don’t assume your customer shops like you do. You need to be sure to look at everything from your customers’ perspective — to understand the consideration factors and the decision process they go through, as well as what tools, information, and services they need along the way. In listening to and observing our customers, we’ve learned that their shopping behavior varies depending on the reason they are traveling and the type of trip they are planning. This is especially true in the early stages of travel planning. A business traveler who knows that they need to be in New York next Thursday by 3 p.m. will shop one way, while a couple planning time off from work to de-stress in a warm, sunny beach destination will go through a very different process.

Mark Floisand, director of worldwide direct commerce, Adobe Systems (founded in 1982)
Advice: Evidence-based decision making is critical to successful ecommerce; avoid rash decisions based on gut feeling alone. E-commerce leaders have the technology, scale, and data available to them to do rapid testing, learn quickly from it, then implement or adjust as necessary. To not take advantage of this powerful, rapid feedback loop, is to miss a major strategic advantage of the online channel itself.

Jeff Glueck, chief marketing officer, Travelocity (founded in 1996)

Advice: Don’t forget your economic engine. Figure out where your margin is coming from, in volume and unit margin. Before Travelocity’s turnaround, we failed to drive revenue growth, because we were addicted to one vulnerable business model — commission from selling airline tickets. We realized that there was more money to be made from other products like trip packages, rental cars, and other things.

Don’t forget the human element. Part of our revival was promising consumers that there are real human beings on the phone, in case they needed help. The human trust and expertise — we layered that onto online software.David Filo, chief “Yahoo” and co-founder, Yahoo (founded in 1994)

Advice: It’s important to never lose sight of your original goal. When Jerry and I founded Yahoo we were focused on making it easier for users to navigate the Web. That’s still our goal today. Our users continue to be at the core of everything we do.

Jim Buckmaster, chief executive officer, Craigslist (founded in 1995)
Advice: Don’t do what users don’t ask you to do. If you want to control your own future, don’t accept outside money, like from VCs. Don’t do marketing or advertising. As a startup company, those are some of the costliest things you can do. Those can chew up an enormous amount of money.

Source: www.businessweek.com

What Facebook Could Learn from MySpace

by Paula Lehman

For the record, Richard Wistocki is not a 14-year-old girl. He’s a 41-year-old detective with the Naperville (Ill.) Police Department’s Computer Crimes Unit, but he poses as a female teen, using the name “Sierra,” on social networking site Facebook. What he’s found there, Wistocki says, suggests Facebook isn’t doing all it can to ensure it protects minors from harm.

Case in point: On Facebook, “Sierra” is able to make friends with users of any age and receives invitations to join such groups as “I’m Sexually Inappropriate with My Friends,” Wistocki says. The virtual teen is able to participate in the group’s online activities, such as message sharing, and pore over images—some of them pornographic—posted by its members.

Growing Pains

Wistocki’s underage alter-ego on competing network MySpace, by contrast, cannot search adults’ profiles, and any efforts to communicate with adult members are blocked. “Facebook does not have the monitoring that MySpace has,” says Wistocki, who’s also a member of the Internet Crimes Against Children Task Force run by the Justice Dept. “It’s not controlled or as law-enforcement friendly.”

Wistocki is one of a growing number of advocates who urge Facebook to make its site safer for kids, arguing that when it comes to safety, Facebook would do well to take a page from News Corp.’s (NWS) MySpace. On Sept. 24, New York Attorney General Andrew Cuomo informed Facebook Chief Executive Mark Zuckerberg of an ongoing investigation of the site’s safety and security measures. Among the findings: Investigators posing as underage users had been solicited by strangers and had access to pornographic content.

The heightened safety risk, experts say, is tied to the surge in growth since September, 2006, when Facebook flung open its doors (BusinessWeek.com, 9/12/06) to all users, morphing from a site tailored mostly to college kids and high school students, and more recently, when the company gave outside developers more leeway in creating tools available to Facebook users. Facebook has 34 million unique visitors, 5 million of them under 18, according to comScore Media Metrix (SCOR). Cuomo’s office, in a statement, outlined concerns that “in Facebook’s efforts to grow, the company may be giving a lower priority to the safety and welfare of its users, and in particular, underage users.”

Wiggle Room

Hand-wringing over kids’ online safety is nothing new for MySpace, itself the target of allegations of predatory behavior by adults toward minors. The difference, child advocates say, is that MySpace has aggressively begun tightening protections. Under Chief Security Officer Hemanshu Nigam, MySpace has developed various safety teams (BusinessWeek.com, 1/24/07) with responsibilities including image review and handling complaints filed by users about inappropriate content or behavior. “In the past year, MySpace has become more proactive in seeking solutions to protect its users, whereas Facebook, which started as a safer environment, seems to have loosened some of their policies and practices,” says Donna Rice Hughes, president and chairman of Enough Is Enough, a nonprofit organization that focuses on online safety. “They’ve gone in the opposite direction.”

Hughes points out that MySpace does not allow profiles of 14- and 15-year-olds to be searched on the site, a practice that started last year. Facebook allows all members’ profiles to be searched, both on the site and on Google (GOOG), except when the users opt out. MySpace has developed a team that previews all uploaded material to verify that it is not pornographic, whereas Facebook does not practice image review, according to Hughes.

A Facebook spokesperson declined to detail the company’s safety practices, but said in a statement, “As our service continues to grow, so does our responsibility to our users to empower them with the tools necessary to communicate efficiently and safely.” On its site, Facebook recommends that children ages 13 to 18 “ask their parents for permission before sending any information about themselves to anyone over the Internet.” Users also can restrict access to their Facebook profiles by non-”friends.” Other protections include a stipulation that only current high school students can join high school networks. Facebook also has a chief privacy officer, Chris Kelly, though it doesn’t disclose Kelly’s responsibilities.

Gatekeepers Needed

Such measures are not stringent enough, says Connecticut Attorney General Richard Blumenthal, who has alleged the site allows sex offenders to register profiles. “Facebook has a long way to go before we are satisfied,” Blumenthal said in a statement. “We will continue to consider all options, including possible legal action, to assure that Facebook and other social networking Web sites better protect children from sexual predators and adult material.”

For its part, MySpace works with Enough Is Enough to produce educational literature and forums in online safety to parents and kids. MySpace also works with law enforcement to crack down on cyberpredators. In December, 2006, MySpace contracted Sentinel Tech Holding, a provider of online identity verification, to create a database of e-mails and physical descriptions of more than 500,000 registered sex offenders. The database is used to screen profiles on social networks, and matches are taken down. MySpace reportedly removed 29,000 profiles as a result of the technology. Facebook, which does not currently use the database, “grew incredibly rapidly, and they weren’t ready for the security problems that were going to hit them,” says Sentinel Tech CEO John Cardillo. “It’s a growing pain. It’s something that happens when you become successful.”

To cope with those pains, Facebook needs to overhaul its security, starting by appointing someone to lead the way to a safer site, Hughes says. The company ought to have its own staff devoted to taking down inappropriate content and providing a better response when children or parents report improper behavior.

Until then, safety on Facebook begins with users like Alana Morales, a 14-year-old high school student who says she spends about an hour on the site each day. She takes steps to protect herself by only accepting requests from people she knows from school. “Just being on the computer, you’re not safe,” she says. “Someone can IM you, and you don’t know if they are who they say they are.”

Smile, You’re on LinkedIn

By Aaron Ricadela

Business networking Web site LinkedIn is loosening its tie. Caught between a polished image as a nexus for professional contacts and the encroachment of Facebook and other networks, LinkedIn is taking a step toward informality. Starting Sept. 26, the site’s 14 million users will be able to post photos of themselves.

These won’t be just any photos, mind you. The company wants users to post serious-looking head shots of the kind that would accompany an executive biography. LinkedIn will “do everything we can to encourage it to remain professional,” says spokeswoman Kay Luo, lest the site “degrade” to the level of a less business-like destination. She didn’t name names, but it’s clear LinkedIn wants to avoid the informality of places like News Corp.’s MySpace and even Facebook, the social network that’s exploded in popularity and has become for some Web users an alternate to LinkedIn for keeping up with their professional contacts.

However limited, LinkedIn’s move satisfies users’ requests for a tool that can help jog the memory of a person’s face. It could also make the site more attractive at a time when traditional media and Web companies covet a slice of its affluent audience (BusinessWeek, 1/29/07), and the advertising money spent to reach it. Featuring photos “obviously seems critical for a social network,” says Barry Parr, a media analyst at JupiterResearch. “I don’t remember what all my business contacts look like.” The feature also puts starchy LinkedIn more in tune with the Web’s expanding social nature, which is blurring the line between professional contacts and friends.

Staying Relevant

More openness may be coming. LinkedIn is working on ways to let outside software developers tap into the company’s database to create applications that, for example, would let users keep tabs on their LinkedIn network from within an industry conference Web site, an Internet job board, or a business application like Salesforce.com. Making LinkedIn more accessible could be key to retaining value at a time when Microsoft and Google are reportedly eyeing investments in Facebook (BusinessWeek, 9/25/07) that could value the company at $10 billion or more. Facebook, which started as a hub for college kids who wanted to share beer photos and trade messages, has expanded to become, in Silicon Valley at least, a tool for keeping current (BusinessWeek, 8/6/07) with business contacts and planning conferences.

LinkedIn has hired a new chief financial officer, as well as vice-presidents of marketing, engineering, and operations, since June in preparation for a possible initial public offering in 2009, and may need to reassure investors that it remains relevant. “The challenge for LinkedIn is not only [that] Facebook [is] getting a whole lot more traffic, but in many cases people are using Facebook to pursue their business relationships,” says Josh Bernoff, a principal analyst at Forrester Research, who has used Facebook to find interview subjects for his research. “That’s what LinkedIn was developed for.” Facebook now claims 43 million members and is adding 200,000 a day. LinkedIn is adding users at a pace of about 36,000 a day.

A Different Kind of Club

Including photos isn’t a response to Facebook’s popularity, says LinkedIn’s Luo. “There is buzz about Facebook moving into the professional arena,” she says. But LinkedIn helps people expand their professional networks in part because of the participation of many higher-level executives who are unlikely to join other networks. “To be a useful professional network, you have to have the people above you on the network,” Luo says.

Indeed, LinkedIn has long debated whether to include photos, Luo says. As recently as an August interview, LinkedIn’s co-founder and president Reid Hoffman said “photos and business don’t go together,” partly because images could unduly influence recruiters. To lessen that threat, LinkedIn is letting HR reps turn off the feature so they can screen candidates without regard to age, race, and appearance.

Retention Concerns

Hoffman says the company for the past year has been working on an application programming interface that would let outside developers use some of LinkedIn’s data in their programs, and plans to release the technology by the spring of 2008. Hoffman gives the hypothetical example of a user of Salesforce.com’s customer management software being able to view the LinkedIn profiles for their leads without having to navigate to the LinkedIn site.

Whatever LinkedIn’s reason for adding photos, it will need to confront the bigger question of how big an appetite users and software developers will have for a proliferating number of social networks. Traditional media companies and Web outfits are trying to make social networking less of a destination and more of a feature. For instance, Yahoo!, Viacom’s MTV.com, and eBay are all adding networking features (BusinessWeek, 9/24/07).

The trend will likely accelerate in 2008, forcing users and developers to make harder choices about where to spend time online. “Social networking is going to be a feature in lots of places,” says Jupiter’s Parr. People are going to start picking and choosing where they make their home.” Amid the land rush, LinkedIn wants to make its high-earning devotees don’t stray too far from the cosseted quarters it’s built.

Source

Y Combinator Inspires Imitators

by Kerry Miller

Paul Graham knows that most startups will eventually fail. But at Y Combinator, the hacker guru’s seed fund for young techies, they’re encouraged to fail fast and fail cheap—and then to reboot and start again. Designed with the new economics of Web-based entrepreneurship in mind, Y Combinator is a new type of venture fund—dispensing tiny amounts of cash but lots of hands-on mentoring.

Since its founding in 2005, Y Combinator has funded 58 startups—nearly all in software or Web services—bringing in a new crop twice a year (in Cambridge, Mass., in the summer; in the San Francisco Bay Area in the winter) for a three-month crash course in the Graham-ian philosophy of entrepreneurship (BusinessWeek, 9/26/07). Each team gets a small sum to cover basic expenses ($5,000, plus $5,000 per founder) and the chance to pitch their idea to a roomful of top angel investors and venture capitalists. The insider status of Graham himself—a Web software pioneer who sold his startup to Yahoo! (YHOO) in 1999 for $49 million—lends additional cachet.

“Cheaper Equity”

In return, Graham and his four partners get a stake in the company, usually about 6%. So far, Y Combinator investments like the social news site Reddit, acquired by Condé Nast in 2006, and slide show app-maker Zenter, acquired by Google (GOOG) earlier this summer, both for undisclosed amounts, are positive signs that the formula works. Because the sums Y Combinator invests are so small, even early-stage acquisitions can translate into relatively big paydays.

After two years, Y Combinator’s portfolio is still too young to fully evaluate the success of Graham’s strategy—but that hasn’t discouraged a growing number of investors around the globe from launching their own copycat programs.

One main reason? “It’s cheaper equity,” says David Cohen, the executive director of the most established Y Combinator counterpart, a Boulder (Colo.) program called TechStars, which ran its first three-month session in May, 2007. “If you look at the companies that are getting to an A-round, the model that we’ve created gives a significant discount to those valuations.” Critics say that makes the arrangement exploitative for the startups involved, but Cohen disagrees: “I think for a first-time entrepreneur, it’s actually an incredible deal.”

Both Cohen and Graham say money is actually among the least important things they offer to entrepreneurs, since drastically cheaper hardware, software, and bandwidth—among other factors—have made it much easier to start a company than it was a decade ago (BusinessWeek, 5/31/07).

Dating Before Marriage

But disappearing barriers to entry also make it harder for any one startup to stand out in the crowd—a challenge that’s as tricky for investors as it is for entrepreneurs themselves. Without a track record to go on, after all, how do you discern a future Mark Zuckerberg (Facebook) or Kevin Rose (Digg) from a sea of equally fresh-faced, Red Bull-swilling computer whizzes? With a program like Y Combinator, investors get three months of hands-on experience with talented entrepreneurs—and an early look at their work—before reaching for their checkbooks.

Cohen says he’s already fielded inquiries from angel investors in 20-odd cities, all interested in starting similar programs of their own. “You’re going to see a massive proliferation of this model,” he predicts.

Graham, a widely read essayist who has written prolifically on topics like “What Business Can Learn From Open Source,” isn’t flattered by the unauthorized open-sourcing of his own model—including one clone in Vienna shamelessly named YEurope. (His opinion about such copycats is made clear on Y Combinator’s FAQ. Question: “Will you help us set up something like Y Combinator in our town?” The answer: “There already is a Y Combinator in your town: Y Combinator.”)

Why Reinvent the Wheel?

Many of Graham’s admirers, however, say they respectfully disagree. Among them is Web industry veteran Saul Klein (BusinessWeek, 6/7/07), a partner at London venture capital firm Index Ventures and a former executive at Skype (EBAY). Klein helms the most prominent Y Combinator lookalike in Europe thus far: the London-based Seedcamp, which launched in September. In a slightly novel twist, Seedcamp began its competition by bringing 20 startups—plucked from an application pool of 268—for an “unconference” (BusinessWeek, 5/14/07) before selecting six companies to participate in the three-month program. Each of the six companies received €50,000 (about $70,614) in seed money—a considerably heftier sum than other Y Combinator-like programs—with Seedcamp taking a larger, 10%, stake in each.

And bona fide venture hubs like London aren’t the only place the Y Combinator model is attracting interest. Cities such as Lexington, Ky., and Milwaukee are taking note, too. In Atlanta, a small group of angel investors hopes to replicate the Y Combinator model with a program called BoostPhase. Co-founder Wayt King says he envisions BoostPhase, set to launch this fall, as “a Y Combinator for the Southeast.”

“We have huge respect for Paul Graham and what he’s done, and we figured there’s not much sense in reinventing the wheel,” King says—adding that he doesn’t see BoostPhase as competition for Graham’s original. “There are a lot of entrepreneurs who don’t want to or simply can’t move to Silicon Valley or Boston.”

Standing Out from the Crowd

TechStars’ Cohen says he’s not worried about the competition. “There’s a pretty clear demand for this,” Cohen says, noting that the 10 startups TechStars funded represented only 26 of 302 applicants. Y Combinator accepted an even smaller number for its summer 2007 round—19 of 435 applicants—making an applicant’s chances of getting tapped for Y Combinator (4.4%) only slightly higher than those of the brainiacs vying for a Rhodes scholarship (last year’s acceptance rate: 3.6%).

For participants, the real draw of a program like Y Combinator isn’t the money, it’s credibility—and not just with investors. The traffic bump from an early mention about getting funded on an influential blog like TechCrunch can be just as crucial as a Series-A round in helping a Web startup gain traction over its rivals. And by adding structure to an otherwise nebulous pursuit, Y Combinator also makes a startup a less risky endeavor for entrepreneurs themselves—both practically and psychologically. “Y Combinator provided a socially acceptable way to drop out or postpone my college education and focus on the company full-time,” says Kevin Fischer, a 21-year-old industrial engineering student at the University of Pittsburgh who applied to both Y Combinator and TechStars. Plus, he adds, “It seems like even the people that fail still go on to jobs at Google—no one does too badly.”

Source

How Y Combinator Helped Shape Reddit

by Kerry Miller

Alexis Ohanian and Steve Huffman, co-founders of the social news site Reddit, have become Y Combinator (BusinessWeek, 9/26/07) poster children since their company was snapped up by Condé Nast for an undisclosed (but no doubt, tidy) sum in 2006. Their success is one example tech superstar Paul Graham points to when he says Y Combinator, his ultracompetitive seed-funding program, is a better way of developing early-stage companies than traditional incubators, venture funds, or business plan competitions.

The difference, Graham says, is that Y Combinator picks people, not business plans—or even business ideas. “The idea is going to change anyway, so the most valuable thing about the idea is what it tells you about the people,” he says. Of course, picking people is easier said than done. In fact, Reddit’s co-founders were initially Y Combinator rejects—like 95% of the program’s applicants.

Second Thoughts

At the time, the two University of Virginia seniors had their own doubts about Y Combinator. Ohanian says it took several months to convince Huffman that “he didn’t want to take the very appealing job close to his girlfriend back in Virginia, and to instead try living with me in near-poverty for some indefinite period of time.” Even after submitting their Y Combinator application, the two debated the wisdom of picking up and moving to Cambridge, Mass. Why not just stay in Charlottesville, Va., where at least the rent was cheap? “Of course,” Ohanian says, “as soon as they rejected us, we desperately wanted to get in.”

After drowning their sorrows at a local pub, the two decided they’d go ahead with the startup anyway. Huffman would take the software development job he’d been offered in Virginia, Ohanian would do freelance Web design, and they’d live together and collaborate when they had time. It’s a strategy that, in hindsight, Ohanian says almost certainly would not have worked. Launching a successful startup, he says, “really does require nearly undivided attention.” (That’s another Graham tenet—and the rationale for insisting that Y Combinator startups commit to relocating for three months of full-time work.)

The next day, however, they got a second phone call from Graham—he’d changed his mind. While he hadn’t been crazy about their business idea (a mobile application), Graham said he thought Ohanian and Huffman had potential, and he was offering them a slot in the Y Combinator program. The two jumped on the first train to Boston.

Opening Wallets and Doors

When they got there, Ohanian says, Graham sat them down for a talk. “I believe his words were, ‘Let’s come up with something for you guys to do.’” At the end of the conversation, Ohanian and Huffman left with a $12,000 check and a brand-new business idea that would become the social news site Reddit.

Ohanian says they didn’t waste much time thinking about how they would make money from the idea, confident in Graham’s conviction that “if you make something that people want, there’s always some way to make money from it.” Soon after, a dinner conversation with another software guru, Joel Spolsky—who asked them to create a white-label version of Reddit for his own site—led the team to a business model and, indirectly, to a successful exit, when a licensed version of Reddit created for Condé Nast turned into an acquisition offer.

For Y Combinator, which had close to a 10% stake in what was likely a multimillion-dollar figure, the Condé Nast deal was a handsome return on the fund’s initial $12,000 investment, an amount Ohanian concedes he and his partner could have easily bootstrapped. But Ohanian says the valuable publicity—in particular, mentions in several of Graham’s widely read essays—that he credits with jump-starting the site’s popularity would have been harder to achieve. While the Y Combinator model isn’t the best fit for every startup, he says, “For what we did with Reddit, it was definitely worth it.”

Salesforce Dives Into the Mash Pit

by Steve Hamm

One sure-fire way for a tech company to generate excitement is to link up with Web search king Google. Salesforce.com, the high-profile seller of on-demand services, hardly needs the Google glow, but it’s getting it anyway. On Aug. 22, Chief Executive Marc Benioff is set to announce a new service, Salesforce for Google AdWords, that combines his company’s easy-to-use interface with Google’s powerful advertising engine.

Using the new program, Salesforce.com customers can manage their advertising campaigns from beginning to end. They can create advertisements, place bids with Google’s targeted advertising service, monitor the performance of the ads, and track all further interactions with the customers who click on them. “It helps eliminate click fraud,” says Benioff. “Now there’s a closed loop, so you know who clicked on your ad and what they bought”.

Salesforce.com’s application is part of the so-called mashup phenomenon, where two or more online applications are combined to create something more powerful than either is by itself. Until now, most mashups have been used on consumer Web sites—most of those used by businesses do very simple things, such as combine Google’s maps with business locations. The Salesforce.com application thoroughly integrates its core customer-management program with Google’s AdWords service. “Until now, I haven’t seen a lot of business value in mashups,” says analyst Rob Bois of AMR Research. “This is a real business value you couldn’t achieve without it.”

ALL IN THE FAMILY. The new application comes at a time when Salesforce.com’s fortunes are soaring. Its most recent quarterly earnings report on Aug. 16 blew the doors off analysts’ expectations. It added 57,000 new subscribers, bringing the total to 501,000. Meanwhile, revenue grew by 64%, to $118 million, putting the company on track to achieve nearly $500 million in revenues this fiscal year. After the earnings report, Credit Suisse upped its revenue estimate for the year to $489 million, from $487 million (see BusinessWeek.com, 8/16/06, “Salesforce.com Posts 2Q Loss, Raises View”).

The new service will carry an initial promotional price of $300 per customer per month. Long-term pricing will be set by the time of the service’s official release in October. Since only Salesforce.com subscribers can use the new application, it feeds the company’s core business, as well. “It’s like having our parents become friends with our in-laws,” says Benioff.

For now, Salesforce.com only plans a Google version, since Google has an 85% share of the targeted search advertising market. However, Salesforce is evaluating Yahoo!’s upcoming new paid search technology, too. A Google spokesperson says, “We are pleased to see third-party developers using the Google AdWords API to create new applications that extend the reach of Google’s advertising products. Equipped with more information, businesses can make better decisions, create more value out of their marketing efforts, and ultimately reach more customers.”

BETA RUN. The foundation for the company’s new offering is a service introduced in March by Kieden, a small startup that participates in Salesforce.com’s AppExchange directory of online applications. Salesforce.com bought the smaller company in early August and is beefing up the service before its October relaunch.

“AppExchange has become a viable lead generation and marketing tool, and now Salesforce.com is incorporating the very technology that is being built in the ecosystem,” says analyst Erin Traudt of market researcher IDC. “It will be interesting to see what else Salesforce.com may look to incorporate from the community in the future.”

Already, about 45 customers have been using the Keiden service in what Salesforce.com considers a test version. But even the early version is attracting kudos. Among its fans is Avideon, an online marketing consultancy based in Baltimore. It uses Keiden on behalf of its advertiser customers. “This is a tremendous application,” says Avideon Chief Executive Rich Wiklund. “Marketing has been the last bastion of unaccountable spending in corporations. By having this connection, marketing can at last be held accountable.”

Source: www.businessweek.com

Social Networks: Execs Use Them Too

by Rachael King

Encover Chief Executive Officer Chip Overstreet was on the hunt for a new vice-president for sales. He had homed in on a promising candidate and dispensed with the glowing but unsurprising remarks from references. Now it was time to dig for any dirt. So he logged on to LinkedIn, an online business network. “I did 11 back-door checks on this guy and found people he had worked with at five of his last six companies,” says Overstreet, whose firm sells and manages service contracts for manufacturers. “It was incredibly powerful.”

So powerful, in fact, that more than a dozen sites like LinkedIn have cropped up in recent years. They’re responding to a growing impulse among Web users to build ties, communities, and networks online, fueling the popularity of sites like News Corp.’s (NWS) MySpace (see BusinessWeek.com, 12/12/05 “The MySpace Generation”). As of April, the 10 biggest social-networking sites, including MySpace, reached a combined unique audience of 68.8 million users, drawing in 45% of active Web users, according to Nielsen/NetRatings.

Of course, corporations and smaller businesses haven’t embraced online business networks with nearly the same abandon as teens and college students who have flocked to social sites. Yet companies are steadily overcoming reservations and using the sites and related technology to craft potentially powerful business tools.

PASSIVE SEARCH.

Recruiters at Microsoft (MSFT) and Starbucks (SBUX), for instance, troll online networks such as LinkedIn for potential job candidates. Goldman Sachs (GS) and Deloitte run their own online alumni networks for hiring back former workers and strengthening bonds with alumni-cum-possible clients. Boston Consulting Group and law firm Duane Morris deploy enterprise software that tracks employee communications to uncover useful connections in other companies. And companies such as Intuit (INTU) and MINI USA have created customer networks to build brand loyalty.

Early adopters notwithstanding, many companies are leery of online networks. Executives don’t have time to field the possible influx of requests from acquaintances on business networks. Employees may be dismayed to learn their workplace uses e-mail monitoring software to help sales associates’ target pitches. Companies considering building online communities for advertising, branding, or marketing will need to cede some degree of control over content.

None of those concerns are holding back Carmen Hudson, manager of enterprise staffing at Starbucks, who says she swears by LinkedIn. “It’s one of the best things for finding mid-level executives,” she says.

The Holy Grail in recruiting is finding so-called passive candidates, people who are happy and productive working for other companies. LinkedIn, with its 6.7 million members, is a virtual Rolodex of these types. Hudson says she has hired three or four people this year as a result of connections through LinkedIn. “We’ve started asking our hiring managers to sign up on LinkedIn and help introduce us to their contacts,” she says. “People have concerns about privacy, but once we explain how we use it and how careful we would be with their contacts, they’re usually willing to do it.”

BOOMERANGS.

Headhunters and human-resources departments are taking note. “LinkedIn is a tremendous tool for recruiters,” says Bill Vick, the author of LinkedIn for Recruiting. So are sites such as Ryze, Spoke, OpenBc, and Ecademy (see BusinessWeek.com, 2/20/04, “The Perils and Promise of Online Schmoozing”).

Many companies are turning to social networks and related technology to stay in touch with former employees. Consulting firm Deloitte strives to maintain ties with ex-workers and has had a formal alumni-relations program for years. It bolstered those efforts earlier this year, tapping business networking services provider SelectMinds to launch an online alumni network.

Ex-Deloitte employees can go to the site to browse 900 postings for jobs at a range of companies. They can also peruse open positions at Deloitte. The online network is an extension of an offline program that includes networking receptions and seminars.

Deloitte makes no bones about its aim to use the network to lure back some former employees, or so-called boomerangs. “Last year, 20% of our experienced hires were boomerangs,” says Karen Palvisak, a national leader of alumni relations for Deloitte.

MARKETING NETWORKS.

Boomerangs cost less to train than new hires and they tend to hit the ground running. As the labor market tightens, alumni become an increasingly attractive source of talent. Last year, 13% of employees who had previously been laid off were rehired by their former employers, according to a survey of more than 14,000 displaced employees at 4,900 organizations by Right Management Consultants.

Not only do business-oriented networks help executives find employees, they’re increasingly useful in other areas, such as sales and marketing. When Campbell’s Soup (CPB) asked independent location booker Marilyn Jenett to select a castle in Europe for a promotion, she put a note on business networking site Ryze, offering a finder’s fee to anyone who could suggest the right place.

Jenett got seven responses, including one pointing her to Eastnor Castle. “It was the one castle that could suit us for everything which the others could not,” she says, adding that she was so pleased with the location that she booked it again for another event. Jenett says Ryze also helped her develop another small business, a personal mentoring program called Feel Free to Prosper.

Social networks also help forge community with, and among, would-be customers. In August, a group of MINI Cooper owners joined the company for its two-week cross-country car rally. Participants took part in company-sponsored events, such as the official wrap party overlooking the Hudson River and the Manhattan skyline in New Jersey.

FREE HELP.

But they also planned their own side events along the way with the help of the community forums on the MINI Owner’s Lounge site, sponsored by MINI USA. Each month, about 1,500 to 2,000 new owners become active in the community. “Our very best salespeople are MINI owners, and they like to talk about their cars,” says Martha Crowley, director of consulting for Beam Interactive, which provides various Internet marketing services for MINI USA.

A handful of companies has found creative ways to harness social networks to provide customer service or conduct market research. Intuit tapped LiveWorld to start customer-service forums for its Quicken personal-finance software about a year ago. About 70% of all questions on the Quicken forum are answered by other customers, rather than Intuit employees.

“The most pleasant surprise in the Quicken community has been the desire of the members to help others,” says Scott Wilder, group manager of Intuit online communities. In November, Intuit plans to enhance member profiles and will add blogging and podcasting tools.

THE SECRET SNOOPER.

Social networking technology also can also help businesses search employee relationships for possible clients and other key contacts. Ed Schechter, chief marketing officer at Duane Morris, a law firm with 1,200 employees, estimates that about 75% to 80% of all employees’ relationships with possible clients are never entered into a customer relationship management system.

Duane Morris saw this firsthand recently, after it began testing software from Contact Networks, which helps businesses study employee communications and other data to pinpoint relationships between staff and potential clients. Within a matter of days, the software uncovered a key connection that the existing CRM software had failed to capture. “It showed a senior relationship that existed in our firm with them,” says Schechter. Duane Morris subsequently won the business, thanks in part to the Contact Networks discovery, Schechter says.

As helpful as they may be, networking tools like these can also reinforce executives’ worst fears surrounding social networking technology in the workplace. Many employees will find themselves uncomfortable with bosses mining their e-mail and calendaring applications for potential ties.

SLOWER GROWTH.

Boston Consulting Group has gotten around potential problems by ratcheting up privacy settings. While the system still tracks individual e-mail communication, it doesn’t automatically reveal the name of the contact. Instead it points employees to colleagues who may have a desired connection.

The group has been using the software since 2002, and now has about 200,000 contacts in the database. Analysts use those names to make contacts at other companies, primarily for trying to find out about certain industries. “We’ve done surveys where users say that over 50% of the time they find a useful contact,” says Simon Trussler, director of knowledge management at Boston Consulting Group.

Other businesses don’t find the issues quite so surmountable. Business networking sites have been much slower to gain members than social networks catering to a younger audience. LinkedIn was founded in May, 2003, two months before MySpace, but as of August, it had fewer than one-tenth the number of registered users. MySpace boasts more than 100 million member profiles. Other business networking sites—such as Ryze, OpenBC and Ecademy—all fell below the Nielsen/NetRatings reporting cutoff in July of 355,000 unique monthly visitors.

“ALWAYS AT WORK.”

Some companies shun social networking sites and tools because, by encouraging user participation, they inevitably force executives to cede control over content. Not only do businesses shy away from creating their own sites, they also put constraints on employee use of non-work-related sites.

Last year, the Automobile Club of Southern California fired 27 employees for work-related messages they posted on MySpace after a colleague complained about harassment. Companies can mitigate risk by clearly communicating expectations for employee conduct online, says Scott Allen, co-author of The Virtual Handshake, a book about online business networking.

However clearly the expectations are spelled out, some employees will feel their privacy has been violated, especially if they’re maintaining profiles on non-work-related sites on their own time and equipment. “A number of companies are using public social networks to spy on employees,” says Danah Boyd, a social media researcher and graduate student fellow at USC Annenberg Center for Communication.

This is particularly a problem when it comes to social networks such as MySpace, where younger workers may spend quite a bit of personal time. “You have to act like you’re always at work, and it doesn’t necessarily make people happy nor does it necessarily make good workers,” Boyd says.

FINDING BALANCE.

Executives’ use of networks can backfire too. “I left LinkedIn because I found I was connected to people I didn’t really know,” says Richard Guha, a partner at The New England Consulting Group who estimates he was connected to 300 people. Guha later rejoined LinkedIn and is now linked to about 43 people, a number he considers much more manageable.

Encover’s Overstreet is another executive who has found a way to make the most of networks. He says LinkedIn gives him a better picture of a job candidate and lessens the likelihood a potential employee can hide past work experiences. The extra reference checks showed Overstreet that his vice-president for sales candidate was not only a great salesman, but that he also had outstanding character. When eight of the back-door references volunteered information that the candidate had high integrity, Overstreet knew he had found himself a new vice-president. Sometimes, online references pay off.

Link

When Your Social Sites Need Networking

Link

Thursday Bram had become a social-networking butterfly. The recent graduate of the University of Tulsa moved to Laurel, Md., to work as a freelance writer and used online communities to stay in contact with pals near and far. Bram had profiles on MySpace (NWS), Facebook, Twitter, Flickr (YHOO), and LinkedIn. But before long she tired of flitting from one to the next. “I was hoping to sign up for something to bring them all together,” Bram says. So she turned to ProfileFly and Tabber, sites that help people do just that.

Within the last year, at least a dozen such aggregators have cropped up. Others include ProfileLinker and Dandelife.com. In January, Henri Duong and brothers Sony and Hong Le started SocialURL, yet another site that helps Web surfers manage increasingly intractable online social lives. “Every other week, social networks were springing up for specific niches and market demographics,” says Duong. So far, 10,000 have signed up for the site. Among them is Tom Krieglstein, 26, whose profile contains links to his MySpace, Facebook, Flickr, and del.icio.us pages, as well as his two Typepad blogs. Krieglstein, founder of a startup educational company, Swift Kick, even imported his YouTube (GOOG) videos, including the one where he proposed to his fiancée.

Pulling Together Content

For people who belong to only one or two networks, signing up with an aggregation service may make little sense. But many people amass far more networks than that. SocialURL’s founders say females who use the service belong to about 10 sites, while males belong to about half as many. “The average human will be a member of five to seven different networks,” says Marc Canter, chief executive officer of Broadband Mechanics, which has a service called PeopleAggregator that connects various networks.

Krieglstein wanted a collection page for the links to his various profiles and other public content spread around the Web and has been testing aggregators to see which one best fits his needs. So far, his favorite is Dandelife because it not only lets him import all manner of links and media onto his profile page but it has added features, such as a timeline of his life.

As useful as these sites may be in pulling together information from other sites onto a single location, they’re less helpful when it comes to sending updates to those various sites. In many cases, that’s because social networks don’t want to share traffic and associated ad dollars with other sites, requiring users to log in before making changes or communicating with friends. “Will a profile aggregator siphon traffic away?” says Debra Aho Williamson, senior analyst at eMarketer. “If so, the social networks won’t like it very much and will try to shut down the service.”

Networks Open to Aggregators?

MySpace tries to accommodate users who want to post content from third parties, such as video clips or other so-called widgets, but shows little tolerance when that content contains a commercial message (see BusinessWeek.com, 4/12/07, “MySpace Plays Chicken with Users”).

Facebook has shown a high degree of openness to working with other sites. Last year, the site opened its network to third-party developers and in May it introduced a system that lets outside developers create applications that can be integrated with Facebook (see BusinessWeek.com, 5/24/07, “Facebook Aims to Socialize All Online Services”).

ProfileFly recently took advantage of that new openness and launched a widget that lets Facebook users bring links from their ProfileFly.com account directly into their Facebook profile pages. It’s one of the first instances of a major social-networking site linking to a social-network aggregator.

Privacy for Some Profiles

Even if sites like ProfileFly succeed in winning over social networks, they have plenty of other hurdles, starting with privacy. For instance, a job applicant may not want Flickr photos of last night’s kegger a click away from a LinkedIn profile. “My LinkedIn profile is very different from my LiveJournal profile,” says Bram.

That’s a lesson she learned the hard way. When Bram worked as a managing editor for The Collegian, the University of Tulsa campus newspaper, she published an article critical of the way the student government was doling out funds to certain organizations. Some students took offense and retaliated by using her Facebook account to find a photo of Bram making what she calls “an inappropriate gesture.” A photocopy of the photo ended up being plastered all over campus. “I’m concerned about how much information a person can access about you,” says Bram.

Some folks are content to keep their networks separate for other reasons. As people move to different stages of their lives, they often move to new social networks, rather than delete old acquaintances, says Danah Boyd, a social-media researcher and graduate student fellow at University of Southern California’s Annenberg Center for Communication. “The only reason people delete each other from a network is because of a vicious breakup,” says Boyd. Old social-networking accounts are often like time capsules, akin to a high school yearbook, she says. In cases like that, it may not make sense to aggregate sites, she says.

Missing the MySpace Experience

About nine months ago Harrison Tang and three friends from Stanford started a social-network aggregator, Spokeo. The site acted like an easy-to-use “really simple syndication,” or RSS, reader for new blog entries, YouTube videos, photos, and other social-networking feeds. Yet it didn’t go as planned. “A social network is like a community and you can’t really integrate communities,” says Tang. “They have personalities. People who like MySpace don’t like Facebook, and vice versa.” In May, Tang and his colleagues shuttered Spokeo.

Indeed, people can have many different roles in their lives, some of which may be conflicting. Someone may be a mother, an employee, and a gambler, and people may not want to connect these roles, says Broadband Mechanics’ Canter. However Canter suggests that using personas for each of these roles might solve the problem and that people may choose to aggregate specific roles. “Maybe you will want all the mom and church Web sites to connect together,” he says, adding that the ability to have separate personas will eventually be included in his product.

Others say that social-networking aggregators, as they operate today, take people out of the immediate experience of a social-networking site such as MySpace or Facebook, which they may enjoy. While Spokeo was still operating, Rob Lindsey, 30, signed up to test it out. The freelance Web developer from Columbia, S.C., uses MySpace every day to keep up with his 120 friends there, but he also visits Friendster and Facebook a few times a week. Lindsey says 95% of his MySpace friends are actual friends and he uses it to catch up with people he sees in the real world and to plan real-life events. But he found that with Spokeo, he felt pulled out of the experience of the social network and missed the interaction. “You’re reading updates and your friends become news rather than being friends,” he says.

Next: Built into Browsers

Ultimately, Canter says that when we get to the point where open standards proliferate and customers can control their data and move them around however they want, there won’t be a need for separate aggregators. For instance, in the future, Canter says that users might want to create a direct relationship with someone who is on a different network, post content from one platform onto another network, or even create a group across networks. “The aggregation of the profile should be inherent in each system,” says Canter who adds that most of the social-networking aggregators on the market today are a temporary fix while the industry catches up. In the future, that integration could even happen in the browser, he says.

Williamson of eMarketer points out that Mozilla is developing a Firefox add-on called The Coop that will add social tools to the Web browser. The browser will let users essentially “subscribe” to a friend and easily keep track of that person’s pictures, movies, blog posts, and other new information as it comes along. The browser will show friends’ faces; to share a photo or other information with a friend will simply require dragging that item onto the friend’s face. Says Williamson, “You don’t have to visit a Web page—it’s all part of your browser and I think we may ultimately be headed in that direction.”

But until the job is done by the Web browser or the networks themselves, many people will likely turn to other tools to manage their crowded social-network lives.