From The Archives: Understanding The Future Of Social Networking

(Long time readers will recognize this as a piece that originally appeared in June, 2004 over on AlwaysOn, before the AO link structure went south after their relaunch. Reprinting it here for both posterity and because Christopher Koch at CIO and Nick Carr have revived the meme.)

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June 15, 2004
Studying the flameout of “net markets” in 2000-2001 provides one piece of the puzzle.
by Christopher Carfi

“Yeah, I was on Friendster last week, and all I heard was the wind whistling..I actually think I saw a tumbleweed roll by. That place is empty.” – overheard

A current search of the phrase “social networking” returns over two hundred companies that are vying for various niches in the social networking space.

Most of them will fail.

Meta Group, a leading industry research firm, has written “Although executives in struggling [firms] may blame inertia…for the failure of their businesses, the real reason for that failure is that few of those markets have a solid business plan or opportunity to make money.” The interesting thing is that this insight from Meta Group was not written about social networks. It was written about the area of “net markets,” perhaps the most hyped area of all during the bubble years. According a various reports, net markets were going to grow from a $200 million market in 2001 to a $37 billion market in 2005. (note to self: get better drugs)

So, what happened with net markets? Why did they fail? And, more importantly for today, does the implosion of net markets in 2001 give us any indicators of the future path of social networking systems?

Similar to today’s buzz around social networking, net markets (aka “b2b exchanges”) were going to bring together formerly-unknown partners and provide the infrastructure and processes that allowed those partners to connect with each other quickly, easily, seamlessly, and inexpensively (says so right here on the label!). For buyers in net markets, aggregation of demand was going to allow them to achieve lower prices. For the sellers, net markets were going to give them access to a vast marketplace of buyers, and allow them to transact business globally for a fraction of their current costs. However, what actually happened was that the buyers who mattered actually preferred to build deeper relationships with a handful of key suppliers, instead of entering willy-nilly into transactions with the low-cost provider du jour. This is because a fundamental dichotomy lies between the desire of the net market (or social network) to increase the quantity of inter-connections between its members, and the trend of the individual members to instead prefer more quality relationships.

When these so-called “public” net markets failed, a switch was made to enable more “private” net markets. In contrast with the public net markets, private net markets provided the tools to build a market ecosystem around a few key players. Instead of providing the tools to find new partners, the private net markets provided the tools to enable richer and more productive interactions between partners who were already at least somewhat known to each other. We are now seeing a similar trend in the social networking space, with social networking tools moving from the “public” model and instead being used to provide the glue between individuals who are already part of a known community, rather than tools for search and discovery of the world at large. Social platforms are now becoming part of everyday life, especially for people who are using it to earn money and work. Making your social platforms public, or link in bio on instagram, can make your platforms visible to anyone, increasing your visibility and traffic.

For social networking, the reason the public-free-for-all type model isn’t going to work has to do with the asymmetric value of relationships. True, there are a few “super-connectors” who had rich offline networks prior to the social networking blitz who now have accepted many online social networking requests. But this type of individual seems to be the exception.

This is because, quite simply, most of the requesters of contact have less “relationship capital” to offer than those who are receiving the request, who quickly become deluged with requests and eventually drop out of the network or begin to only respond to requests from colleagues they already know through other channels. Relationship capital is by no means a commodity, and is not given up freely. All relationships are not created equal.

In reality, once one gets beyond two “degrees” in a public social network, the presumed “connection” between the requester and the requestee based on the strength of the intermediate relationships is tenuous at best. This is why public social networks are likely to fail. Instead, as we see the move from public social networks to private social networks, we will see individuals joining multiple private social networks for the various facets of their life — school, interests, various flavors of business networking, etc. Yes, there may be one eBay-sized “all purpose” public social network that comes out of the mix, but the vast majority of the social networks that we will see in the coming years will follow the path of the net markets, and be used to provide richer collaboration between individuals and companies that have existing commonality.

January 3, 2007

More Human Than Human

the human touch
Originally uploaded by max_thinks_sees.

“I am the jigsaw.” – R.Z.

I have to disagree, relatively strongly, with a number of items in Dave Taylor’s post “When Is A Blog Too Personal?” Dave writes:

“One of the great ongoing debates in the murky world of blogging is whether your weblog should be personal or professional, whether you should be revealing or private. There are, of course, many different answers and at some level the real answer is “whatever you’re comfortable with”, but I think it’s a topic worth exploration nonetheless.

Business blogging is a different story because your goal is to convey a certain level of expertise, credibility and, yes, professionalism, and that can be counter to the idea of being too personal.

One solution is to use the “water cooler rule”. If a topic isn’t something you’d talk about with your supervisor hanging around the water cooler or coffee station at your office, it’s probably not appropriate for your professional blog either.

That might work pretty well for you, but I don’t think it goes far enough, because I can easily imagine chatting about the latest TV show or sporting event with colleagues and supervisors, but that doesn’t mean it’s a good fit for my business blog.”

I actually think the “water cooler rule” is a pretty good one. However, Dave continues:

“I have a friend who is a professional editor and writer who is also in what she calls an “alternative relationship” where she and her husband both date other people. It works for her, but when she blogged about her relationship on her professional blog, I was shocked.

She said that “I’d rather just ‘out’ myself and if it turns off potential clients, I probably wouldn’t have wanted to work with them anyway.” I just don’t see it that way. When you buy a burger from the local eatery, do you want to know the politics of the owner? When you get your car tuned up at the local garage, do you even care about the religious background of the mechanic?”

Here is where we disagree, strongly. When choosing a service provider, I absolutely want to know his or her context and worldview, biases and motivations, whenever possible.

Exhibit A: I will never get a Domino’s pizza, because I disagree strongly with founder Tom Monaghan’s politics.

Exhibit B: I really like the Magnolia pub, in the Haight in San Francisco. Not only do they have terrific beer, but their menu tells me this about the philosophy of the owners:

“Magnolia is proud to support sustainable agriculture as well as local farms and businesses in order to serve food that tastes better. We buy as much of our produce as possible from independent, local, organic farms based on seasonal availability. Our meat and poultry is all natural, free range, and raised without the use of hormones or antibiotics. We make sure that our seafood choices are abundant and fished or farmed in sustainable ways. In general, we buy as locally and sustainably as possible and encourage you to do the same.”

So I suppose, yes, I do want to know the politics of the owner of the burger joint. (n.b. That said, there are a whole bunch of waypoints from transactions to community.)

We’re all jigsaw puzzles of varying interests, history, background and, yes, skills. For some, the Joe Friday, “just the facts” approach may be what they desire from their vendors. On the other hand, many of us spend at least a third (ha, right…more like two-thirds) of our days in our “professional” skins. Do we really want to be denying all of those aspects of “who we are” a majority of our lives? I think not, so Dave, I need to respectfully disagree with your post.

Some other viewpoints on humanity and business blogging:

Shel Holtz: “Business, Humanity and Blogs”
Jory DesJardins: “How To Get Naked” (bonus link: Survey – Sex and Money Still Taboo)

From the archives:
The Business Blogging Field Guide (HTML, or PDF)

November 30, 2006

A Look Back At 2006 – The Customer Really Is In Charge

This is my look back at 2006 from the current issue of CRMGuru.

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Companies Are Actually Engaging in Conversations With Customers

By Christopher Carfi, Cerado Inc.

In 2004, there were a few odd shakes. Some organizations noticed them, but most ignored them, perhaps attributing them to the distant passing of large truck.

In 2005, a few small, but noticeable, cracks appeared in the fortifications that separated The Corporation from its customers.

In 2006, the cracks widened. For some organizations, portions of the fortifications began to crumble and crash to the ground, casting away long-held beliefs and practices as they fell. It was the year the reliance on one-way “control” of the customer began to give way to “conversations” in earnest.

While viewing the world through the three-sided prism of “sales,” marketing” and “service” still holds as a reasonable way to characterize the breadth of CRM, these changes in customer relations affected all three areas very differently.

Sales

For some in sales, “CRM” is synonymous with Sales Force Automation (SFA). The problem is, very few customers want to be “managed” by their sales representatives. In 2006, those customers who “weren’t going to take it anymore” started taking up arms.

We’ve entered an era rich with cheap, easy, accessible of online tools to publish in nearly any format. Consequently, 2006 saw an explosion of words, photos and videos of customers documenting their experiences with products of nearly every stripe. Did you see the photos of the exploding Dell laptop in Osaka? If you didn’t, search on “dell laptop fire.” Those pictures sparked Dell to recall more than 4 million laptop batteries, and the incident ultimately may cost Sony, which manufactured the batteries, hundreds of millions of dollars. Millions of customers shared their experiences with companies with the world via their personal blogs, as well as through online communities such as TripAdvisor. Consequently, salespeople have been put in the unenviable position of competing in a world where the customer is, in many cases, better-informed than they are.

Another trend that affects sales is the rise of a new type of corporate customer: the “bizsumer.” These are individuals within large organizations who are making buying decisions at an individual level, oftentimes as a means to “get things done” in their groups without having to deal with the bureaucracy of their own organization.

The bizsumer is purchasing tools for project management, collaboration, business social networking and other systems at a price point that is often below the radar of centralized organizational planning-and usually delivered as an online service. (Joe Kraus, CEO of collaboration provider Jot, calls this purchasing things that are “expensable,” rather than “approvable.”) As such, sales has needed to embrace tactics that are much more common in the mass-market realm, such as online ordering and payment by credit card, which is a marked shift in the customer engagement process.

Marketing and PR

Of the three primary CRM areas, the areas of marketing and public relations made the most strides with respect to customer engagement. Not only startups but also behemoths such as General Motors, Microsoft, IBM and Sun Microsystems have embraced social technologies such as blogs and podcasts in a big way, as a method of getting their message out and engaging customers in the conversation about their products. These processes of engagement with customers through social media, however, need to be done correctly, and with unassailable ethics and transparency. As an example, Wal-Mart and Edelman, a PR firm, found themselves in significant hot water in October 2006, when it came to light that a blog framed as a “grassroots” effort of regular, everyday folk (“Jim and Laura,” who were driving their RV across the country, from Wal-Mart to Wal-Mart and documenting it) was actually a planned marketing campaign, paid for by Wal-Mart and supported by Edelman. Customer engagement is highly important in strategic business planning, the data gathered can help immensely with how they want to market their products/services. Using device tracking software from companies like Epsilon can add to this and provide a solid connection with customers leading to a potentially positive outcome.

Anyway, it turned out that “Jim” and “Laura” were professional journalists on assignment. (“Jim” was Jim Thresher, a photojournalist for The Washington Post, and “Laura” was Laura St. Claire, a professional freelancer.) With incredible research tools at their fingertips, customers now can ferret out the truth about products and companies in only a few clicks. Despite such missteps, through social networking, other companies began to put a more human face on their organizations. An increasing number of companies are engaging with their customers directly online; answering their questions in the public square; and moving away from “marketingspeak” and toward developing deeper relationships with their customers based on actual interpersonal trust.

Beacons

And then came “support tagging.” Stowe Boyd and Greg Narain, of the social application firm Blue Whale Labs, call these tags “beacons.” A beacon is a post in a public place, such as a personal blog, meant to draw the attention of a service provider to an issue the customer is having with the company’s products. In essence, beacons turn the service model upside down, drawing companies to the customer’s site to help them, rather than forcing the customers to go through the often onerous support process prescribed by the vendor organization. (The vendor organizations respond to such beacons through diligent, often automated, monitoring of search engine results for new items containing their company name, their products or relevant phrases.)

When it works, a representative from the vendor organization, or even an individual who may be part of a larger enthusiast community, will connect with the customer in the customer’s space and resolve the issue.

So I would call 2006 a sea-change year for CRM. Sales faced an ever-more-vigilant buyer. Marketing engaged with customers-and was called to task when it went overboard. Support is actually-surprise-supporting the customer, as opposed to purely being a cost center. The customer really is in charge.

(link)

November 29, 2006

Business Social Networking Breaks Out Of The Walled Garden

Today, am very happy to announce a significant development that Cerado has made with Haystack networking, our social networking service for businesses and associations.

What we’ve created is a novel way for an organization to easily create profiles of its externally facing individuals (e.g. sales, marketing, support in the corporate realm, or members for associations or groups), and allow prospective customers or members to interact with those profiles via a Flash-based player. Through this player, these profiles can be embedded into any website or blog (just like a YouTube video can be embedded in any site).

Examples of how it looks “in the wild” are included in this post, and on this page here, and on the sidebar here. Additionally, some answers to frequently asked questions are included below.

We’re really, really happy about this, and think this is an innovation that will greatly accelerate the adoption of social networking into the enterprise.

But, more importantly…what are your thoughts?

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What it is: An embeddable organizational directory that can be integrated with any website with a single click.

Why it matters: What YouTube did for sharing video, Cerado has done for business-oriented social networks. The embeddable Haystack networking directory enables anyone visiting any website, blog or other online destination to have simple access to the profiles of the individuals who are part of a business, association or organization.

Why it’s different: The philosophy behind Cerado’s Haystack networking is to turn the sales process around 180 degrees, and enable CUSTOMERS to choose with whom they want to deal within an organization. (This is in stark contrast to the “traditional” sales model, where a representative from a geographic location is foisted upon an unsuspecting customer.) The capabilities being announced here enable companies, associations and organizations to easily allow prospective customers or prospective members to connect with externally-facing individuals from their organizations.

Extended geek details: We believe this is first business-oriented social network that can be easily embedded into websites or blogs. We’ve created an embeddable, Flash-based widget that can be directly embedded into blog posts, blog templates, web pages, or any other type of site, enabling access to an entire organization’s externally-facing individuals.

What it costs: Haystack networking widgets are included in every Haystack networking subscription plan, including our free plans.

How you get it: Every Cerado Haystack network has a Haystack networking directory widget that can be embedded into any web site. Simply go to the Haystack networking page for the company, association, or organization, copy the “embed” link provided, and paste it into the web page in which you want to embed the Haystack network directory.

November 22, 2006

Building “Word Of Mouth” Capabilities Into Online Apps

Andy Sernovitz
Originally uploaded by christophercarfi.

Had a chance to meet Andy Sernovitz in Chicago a few weeks back (along with some other great folks). Andy is the CEO of the Word of Mouth Marketing Association, also known as WOMMA.

Have been flipping through his new book on word of mouth marketing, and there are a number of good points and checklists. The one he keeps coming back to: “Put a tell-a-friend form on every page of your website.” (Just checked, and yes, the WOMMA site does this. Excellent consistency!)

Some other things on Andy’s list:

Create a blog
Put a special offer in an easily forwardable email
Come up with one buzzworthy topic — keep it simple
Let your talkers sign up for a private newsletter
Do something unexpected
Be nice

From the “eating our own dogfood” department, here are three examples of ways we’ve built these kinds of tools into Haystack networking.

Number 1: Every network has a “SHARE URL” link

Every network our customers create has a SHARE URL link built in, that allows them — or anyone viewing the network — to send the URL to a colleague easily and quickly. One click, it’s selected, and can be copy-pasted into an email. Simple, fast.

Here’s an example from the Social Media Club haystack.

Number 2: The “Invite” link

Every person registered on the system can also invite others to join the Haystacks to which they belong with two clicks. (We limit the number of invitations to discourage spammers, and only registered users can send invitations.)

Here’s an example from the Speakers Wiki haystack.

Number 3: I can’t tell you about Number 3 yet. It’s in final testing this week prior to the holiday here in the States, but the early feedback is that it’s a big winner, perhaps even game-changing in the business social networking space. If you’re subscribed you’ll know about it as soon as it’s public when we release it into the wild next week.