Tuesday, August 26, 2008

How Social Networking Sites are Helpful in Business?

How Social Networking Sites Help?

Web offers a platform to engage professionals and tap key talent for new ventures.

ASOUND adage to know is the one that says it’s not what you know but who you know that counts. Skill and grit can get you far, but it is only networking that will take you far enough. For entrepreneurs, it is the lifeline that fuels their startup aspirations. Until recently, social networking meant daylong seminars which meandered aimlessly or evening tuxedo events, where one waited for the first opportunity to leave gracefully. But it has taken on a whole new meaning in the internet age. Executives at companies of all sizes, but especially in startups, are connecting with professionals around the world through social networking (SN) sites to learn strategy, hire the best people and form alliances.

Keeping up with the competition demands cultivating contacts at warp speed, and that means working your shtick online. There are plenty of tools — many of them free — and more are on the way. Social networking sites are all the rage these days. Younger people may use such sites for dating and hobbies, but there are other sites devoted to professional collaboration.

LinkedIn and ZeroDegrees are two of the more popular services that facilitate business-oriented connections, and some argue that these and similar sites are now doing a better job at connecting entrepreneurs than any other medium before. Remember Metcalfe’s Law — coined by the inventor of Ethernet — which states that the power of a network grows in proportion to the square of the number of its nodes? That’s a geeky way of saying that networking technologies nobody uses are of little value. As the popularity of social networking sites grows, so does their value, because a larger number of users means better odds for productive connections. A look at the sheer number of start-ups getting online shows how their popularity is increasing among entrepreneurs. LinkedIn, for instance, had 40,000 users in mid-November 2003, and is now up to over 5,50,000 users, who have uploaded more than 25 million contacts from their address books. Many of those 25 million will soon be getting e-mails asking them to join LinkedIn and participate in the network.

And LinkedIn is not the only social network out there, of course. It is not even the biggest one, although it is the largest business-oriented network. Others, like Friendster, are oriented more toward easing the way for personal relationships and more popular ones like Orkut and Facebook have recently started professionals getting online to connect with peers.

And new ones seem to pop up every day. And then there is Techtribe, which brings together technology entrepreneurs through social networking. “Connections are of prime importance to any entrepreneur. And there can be no means cheaper to get to know people than creating a profile on an Orkut or LinkedIn,” says Rohit Agarwal, who operates TechTribe.

So how does all this affect entrepreneurial firms? Says Avinash Agarwal, founder of RouteGuru, “SN services offer a cheap platform for entrepreneurs to connect with experts who can offer mentorship and help shape business ideas. It can also prove to be a starting point for such connected entrepreneurs to get in touch with a few venture capitalists as well when they raise money.”

Mr Agarwal himself has used SN to great effect for his startup RouteGuru. Before starting his company, he started a discussion group on TechTribe about his business idea. He placed his idea about an India GIS (geographic information system) service on the internet for feedback from industry gurus. He says: “I blogged about my idea for RouteGuru using the website’s platform. This way, I got to connect with experts. And not just getting feedback, I also got to know a few people interested in my domain and eventually ended up hiring them for my company.”

And now that his company is looking to raise venture capital, he says that he would once again turn to many more sites such as Facebook and Ryze to connect with the right people both in India and abroad.

The world of venture capitalists, however, may still be slow to embrace social networking. Many VCs prefer face-to-face interaction with startups. SN sites, at best, can be a secondary means and not the primary means to connect to them, VCs say.

Also, the biggest concern for many is the amount of spam that an account-holder can face. Suvir Sujan, managing partner of Nexus India Capital says he had to close his account with a popular social networking site after getting an enormous amount of unsolicited messages. Such a tactic could undermine the credibility of a startup, he says. “For instance, while using social networking websites for sales pitches, if one sends out countless unsolicited advertisements to unsuspecting users, chances are that his account might get banned for that network. At the least, you will chase off potential customers and earn a negative reputation for your business.”

In fact, spam generated by social networking has come to be known by its own term: snam. Employees within a startup who are often motivated to join these networks for personal or professional reasons often end up exposing themselves, and their Rolodexes, to the outside world. This may lead to them being head-hunted when they are not actively looking for jobs, pitched products or services they might not want, and waste working hours dealing with contact requests from “a friend of a friend of a friend.” According to a research by comScore, employees tend to spend, on an average, 186 minutes on Facebook per session. “This definitely affects productivity,” says Mr Sujan.

So, what should companies do? Probably, the best policy is the one most commonly used for instant messaging and e-mails: allow certain, secure networks for business use and set policies about how contact data can be shared. Says Mr Agarwal, “I do not think that networking in the cyberspace can be stopped; one can waste a lot of money trying to stop and control it; but I think what they have to do is learn how to deal with it and learn how to live with it.”

Find a COO without spending a bomb

WHEN Bikram Dasgupta of Globsyn Technologies bought out the Mumbai-based Synergy Log-in Systems, he learned a few hard lessons. Dasgupta had acquired the promoter’s stake by making an upfront cash payment. But soon after, Dasgupta discovered that relations between the promoter and his management team had been strained and two key executives left taking their business and contacts with them.

Dasgupta was faced with the task of finding a person who could take on their roles and also the revive the loss-making banking products software company. Because of the differences between the promoter and the senior leadership of the firm, business was slipping and many client orders were unserviced. These customers were considering moving to a different software provider. The need of the moment was a chief operating officer who would lift the company from the morass.

“I couldn’t pay too much money, and I wanted someone who was willing to take on the risk and who had experience in working in a leadership role in a technology firm. If we could turn Synergy around, the rewards would be good,” says Dasgupta.

There was no money to hire a professional executive search firm. Thinking about it one night when he was online, Dasgupta decided to advertise on LinkedIn, the professional networking site. “It was only $160. So, I thought I have nothing to lose,” he recollects. The response was tremendous. And Dasgupta struck gold. One of respondents, Prakash Seernani, became his COO. “Prakash had excellent references. He had been an entrepreneur and had worked in several senior positions in IT firms,” says Dasgupta. Dasgupta is based in Calcutta; so although he travels frequently to Mumbai, Seernani has a big hand in running the venture.

For Seernani, LinkedIn was another way of networking. “Most senior-level appointments at this level happens through networking or through a professional executive search firm. So, it is not really unusual from that point of view,” says Seernani. The opportunity offered by Dasgupta was one of the many that came his way on the Internet. “Where I started, in Hinditron, we still have an alumni network on Yahoo Groups. It’s great way to network and the personal benefits are tremendous,” he says.

Article Resource:
Author: Ritwik Donde is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns on Entrepreneurship/Start-ups called "Starship Enterprise".

1 comment:

Entrepreneur said...

Productive social networking is becoming an element of the overall marketing scheme for many different businesses.