Social Networking Software

This is another technology area I am thinking a lot about these days. It’s software that lets you connect to people and opportunities via your network of friends, colleagues, business relationships, etc. The first company that tried to build a business around social networking was called Six Degrees (for the Six Degrees of Seperation concept). It was started by Andrew Weinrich here in NYC in the mid 90s. It was always interesting to me but I never wanted to invest in it because I couldn’t see a commercial application.

Well there are a bunch of companies emerging that are taking Andrew’s basic concept of a social network and turning it into specific applications that do make a lot of sense.

There is Friendster which does this for online dating. You meet people who know people who know you. And that’s a good filter for a lot of people. As I understand it, Kleiner Perkins and Benchmark have or are about to invest in Friendster.

There is LinkedIn which does this for professional networking. You get to people you want to meet or build a business relationship with via other people you know. I have heard that Sequioa has or will shortly invest in LinkedIn.

There is, which i am an investor in and recently wrote about. Tribe applies social networking to the classified ad business (job listings, find a roomate, sell a car, etc). I think that’s an interesting opportunity and its run by my friend Mark Pincus, who is a great entrepreneur. I am sure Mark will find a way to make money in social networking with Tribe.

There are a bunch of other social networking software comapnies that are working on other interesting applications. In fact, there is even a whole weblog devoted to this market at Weblogs Inc.

The area I am most interested in is applying social networking software to enterprises. I like it for two reasons. First, there are a bunch of important enterprise applications that can be vastly improved with social networking software. Examples are sales force automation, customer relationship management, and human resources software. There are probably a bunch more. That sounds like a good market to me. And the second reason is that i think a tightly controlled social network may have more utility to its users. You can apply privacy, trust, rules, and controls on an enterprise network that you can’t apply to a public network. And that means that the participants in the network will be willing to share more of their knowledge and relationships without worrying about what bad stuff could happen. I think that leads to more utility and more usage.

I am aware of two companies going after this market, Spoke Software (in Silicon Valley) and Visible Path (here in NYC). I am going to learn more about their businesses. And I’d love any insight any of my readers can offer about this market and these companies or any other companies pursuing this opportunity.

#VC & Technology