In 1998, IT professional Thomas Powers decided to leave the corporate world and go it alone. His wife Penny was at home with their three children. 'I observed the life of a self-employed person, the isolation and the need for a network, people that you could collaborate and help you with your skills,' she says. Thomas needed services from other freelancers so together they decided to develop a website that catered for isolated freelancers and independent business people. Ecademy was born.
Long before anyone knew of social networks like MySpace and Facebook, or Friendster and Orkut before them, the Powers (below) created a successful online business community. Using the site's infrastructure, the developing community added its own value, coming together online and offl ine via networking events.
In the early days, Ecademy members were 'media luvvies and geeks,' says Penny. 'All of our members were rushing around in the dotcom boom.' Then the crash hit. 'It was akin to 300 people going into a room and looking on the fl oor for the lottery ticket they thought they had.'
Ecademy survived, evolving from an e-business site to a general business network. About 60 per cent of members are selfemployed, but interest from mid-sized and large corporations is growing.
The site makes money from member subscriptions, and members make money several ways, including selling their services or organising one of the site's 3,000 clubs.
Social software expert Tom Coates says that traditional online communities such as messageboards can be diffi cult to turn into successful businesses because they fi nd it hard to grow beyond a few thousand users. Social networks are diff erent because they can grow almost indefi nitely and because they encourage users to share information about themselves, information that's of enormous value to advertisers. 'It's the holy grail of targeted advertising,' Coates says.
But while sites such as Facebook and MySpace are focused on advertising consumer products and entertainment to the key 18- 34 demographic, targeted advertising on business social networks is focused on ensuring job ads are seen by the most qualifi ed people.
A quarter of the revenue for business networking site LinkedIn comes from job ads, says Liz O'Donnell, the sites' international director. Another quarter comes from general ads on the site, and the remaining 50 per cent of revenue comes from subscriptions, not only for individual members but also for corporate accounts from businesses such as eBay, PayPal and Salesforce, which use the site to recruit.
Reid Hoff man, one of the best-known angel investors in Silicon Valley, was one of the founders of LinkedIn. He is the networkers' networker. On Sundays he will often go to a local Starbucks in Silicon Valley and take pitches from aspiring entrepreneurs. He has provided angel investing for Friendster, Facebook, blog search engine Technorati, wiki software company SocialText and social music site Last.fm.
In the late 1990s, Hoff man and his friends had the idea of an online business social network. They watched, and even invested in sites such as Friendster as they caught fi re. But they still didn't see social sites that catered to business professionals, so in March 2003 they launched LinkedIn.
LinkedIn now has more than 10 million members in 130 countries and is projected to take $100 million in revenue next year. Apart from the site reaching a tipping point where the size of the network drove growth, they have also seen features such as the ability to reconnect with colleagues from previous employers drive membership.
Tom Coates describes the process of creating a successful social network as a chain reaction, not about reaching some critical mass. Seeding the network with valuable contacts, the 1 per cent of infl uencers that the other 99 per cent want to meet, is crucial for business networks.
Even Facebook, which began as a schools-based social network, has branched out into business networking by allowing people to connect with people at their current jobs and reconnect with former colleagues.
In the end, whether the social network is business focused or not, it has to be valuable to its members. As Coates says, 'People are aware that the way to get the jobs and work you want isn't through applying to ads in newspapers, but is through contacts and relationships.'
