New networking sites mean business

 New networking sites mean business

July 18, 2007 

LinkedIn chairman Reid Hoffman.
By Douglas C. Pizac, AP
LinkedIn chairman Reid Hoffman.

By Joe Bel Bruno, Associated Press
NEW YORK — These aren’t your teenager’s social networking sites.

Take a spin on MySpace and Friendster and most adults
find amusement in the concept and technology, but relatively few practical
reasons to keep coming back for more. They’ve been a boon to a mostly younger
set of users looking to meet new friends, find a date, or just generally kill
some time online.

An increasing number of professionals are tapping into a
new breed of networking websites to do more than just boast about how many
"friends" they have. Millions of users each day are using the Internet to
compare investment techniques, correspond with job recruiters and find help in
launching a business.

The same technology that lets members of social
networking websites share blogs, photos, music and video has gained popularity
among businesses. Not only have big technology companies such as Cisco Systems
bought firms that design social networking software, but some professionals have
begun to use sites like Facebook as a way to link with co-workers.

Now, sites are also being designed specifically with
professionals in mind.
LinkedIn, a
business-contact networking site, has seen its ranks swell to 12 million in just
four years. And online brokers, including TradeKing and Zecco, are using social
networking to let investors swap stock tips.

"The whole MySpace culture just passed me by, and there’s
a whole generation of people that feel the same," said Matana LePlae, 36, an
advertising executive and mother of two daughters.

Then the New York City resident was invited by a
colleague to join LinkedIn.

"For my kids, these networking websites will be part of
their lives," she said. "I didn’t think it would be part of mine."

In the past, websites like Monster.com and message boards
were simply a space where members could post a resume or a stock tip and hope
someone stumbled upon it. LinkedIn, and other business networking websites,
allow for more relevant contacts and more private communications. They allow
business people to share their network of contacts with others and share their
contacts in return.

And that’s exactly what Reid Hoffman envisioned when he
and four others launched LinkedIn in 2003. The ad-driven website is now growing
by about 700,000 new users each month, and is considered to be the model for a
growing trend of business-oriented networking sites. Management said the
privately-owned company is profitable, and revenue has doubled year-to-date.

The 1,294 contacts on Hoffman’s LinkedIn profile read
like a who’s who of Silicon Valley elite — everyone from Internet executives to
venture capitalists. Users on the site who know Hoffman, or become one of his
contacts, would have access to those names — and vice versa. On LinkedIn,
members have to accept contacts — and unlock their lists to others they have
approved.

"At this point, if you come in and upload your address
book and connect with people that are here, it doesn’t take much experimenting,"
he said. "You can be off to the races immediately, and that’s one of the
benefits of being at a scale of 12 million people."

Trade associations have long used the Internet to connect
members within a particular industry. However, sites using social networking
software allow them to post details on a profile, and use it to directly
communicate and access information.

"For many people, these sites will mirror the way we
behave off-line," said Steven Jones, a professor at the University of Illinois,
Chicago who specializes in new media.

One popular niche is linking investors, allowing online
traders to boast about a shrewd trade or a hot stock tip, like the traders do on
the floor of the New York Stock Exchange.

TradeKing, a
discount brokerage based in Boca Raton, Fla., last year began allowing its
customers to set up profiles and blogs. This allows investors to search out
users with similar investment strategies, and dig up more information about them
and their stocks before a trade.

Those discussions had taken place before in message
boards where investors were vulnerable to so-called pump-and-dump schemes, where
fraudsters posted messages anonymously touting stocks and then cashed in when
shares moved higher.

TradeKing gives its members a "Certified Trades"
designation that indicates the brokerage vouches for what was bought or sold.
Rival brokerage Zecco, which offers free trades, has also introduced a way for
investors to share information in forums and blogs.

About 2,200 investors are active users of TradeKing’s
online community, which was first offered to the brokerage’s customers last
year. The company’s founders hoped adding a personal aspect to trading would
make investing more interactive and accessible to investors, boosting business
and fostering an environment that might increase trade activity.

"This is the crest of a wave that’s happening, and we’re
among the first movers in the space," said Donato Montanaro, TradeKing’s
co-founder and chief executive. "There will always be sites that exist like
Facebook and other advertising supported models, but the real question is can
you employ them in a proven business model. And we’re seeing that."

 

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