Will the Web Replace the Business Lunch?

Aug. 29, 2005 — -- Teenagers, music fans and singles have flocked to various Web sites to find mates, exchange photos and share songs, but few sites have built online communities that center on members' professional goals. Grace Chang found one that did.

Chang, 31, decided in February that after three years working for the same company and 14 years living in Chicago, it was time for a change. She updated her resume, posted it online and called a few recruiters, but none of those led her to a new job.

Instead, she dived into an online professional networking site called LinkedIn.com, one of a number of Web sites devoted specifically to making business contacts. The operators of LinkedIn and similar sites like Ryze.com and ZeroDegrees.com tout them as places where people can easily tap into business resources they've cultivated throughout their careers.

After signing up for membership, users can run searches on companies they've worked for in the past to find and contact former co-workers, or they might search companies that they've done business with and find old business associates. The goal is to make the longstanding practice of glad-handing at conferences, collecting business cards and remembering faces as easy as signing in and sending an e-mail. Site creators hope users will log on to network and make business connections in addition to finding jobs.

Using LinkedIn, Chang quickly found a job as a senior finance manager with Intuit, a financial services company with an office in Mountain View, Calif. She relocated to the San Francisco Bay area and started her new job in May.

"A previous colleague of mine had suggested that I join LinkedIn, so I already had a profile. I eventually found my new job on a listing in their job search tool," Chang said.

Social networking sites like Friendster and MySpace have enjoyed heavy traffic and considerable press coverage. But the social networking business model, while attractive for users, has not yet proven a consistent money maker. Friendster, once a Silicon Valley darling, has experienced tough times of late as competing sites siphoned users and the company struggled to define its niche.

Some analysts believe sites catering to business professionals could become more lucrative, as users could see the business angle as a possible financial incentive for logging in. But others suggest that limiting the potential user-base to only business contacts could limit advertising opportunities.

"If it's a very good audience, people will pay to get access to them," said John Tinker, research analyst at ThinkEquity Partners. "The question I'd have is how often do people go on and use it. If it's just once to set up their account, then they're not that attractive."

Building Up Membership

LinkedIn, which boasts more than 3.5 million users, has grown into the largest aggregate of potential contacts since its launch in May 2003. The site is free for individual users, 97 percent of whom signed up after being invited by a colleague or friend, according to co-founder Konstantin Guericke.

"Ninety-five percent of our users are currently working somewhere, but it's still helpful to get in and build up a network. Good business opportunities and good jobs tend to come through the networks people create themselves," he said.

The site has some advertising and recently began selling subscriptions to businesses and recruiters who can set up accounts for $15 per month. LinkedIn also charges $95 per month to list job openings.

The benefit for subscribers, Guericke said, is having access to a wide network of professionals who may not be actively searching for a job but still make good candidates. That's an advantage networking sites have over traditional classified listings or job-finder Web sites like Monster.com, who might not have access to the same pool of people.

"On regular job sites, recruiters only find one subset -- that's active job seekers. But there's a passive candidate pool, and sometimes those are the best job candidates," he said.

Tinker said the access to a larger pool of potential hires might be attractive to recruiters.

"If they're functioning as a head-hunter or a lead aggregator, that's not a bad model. That would be a neat way to broaden the list of people who might be interested," he said.

Putting a Name With a Face

Another business-related site, Ryze.com, claims to be the first Web site to use a networking model. It initially launched in 2001. Company founder Adrian Scott said the site was at first a haven for entrepreneurs in the tech industry who shared ideas about building a business. Its user base has since grown to more than 350,000 -- representing a wide array of industries and members in more than 200 countries.

Ryze, which charges users $9.95 per month for a basic membership, also offers members the option of including a photo in their profiles.

"Remembering people who you've met only over the site is a lot easier if you have a visual cue. It helps people get to feel like they know each other," Scott said.

Other networking-based businesses like ZeroDegrees.com and Spoke Software offer users the chance to avoid the outdated mode of cold-calling and blindly sending resumes in a job search. The goal for all of these sites, Tinker said, is to become the one trendsetting site that attracts the most users. The best way for any networking operation to work, he said, is to become the location that people believe offers the most opportunities.

"If you connect with the influence generators, you succeed," he said.

For Chang, who had never used any online networking services prior to her job search, the experience is good enough that she plans to continue networking on LinkedIn, even though she's happy in her new job. She has updated her business information and added several new contacts since moving to California. She's even using it as a recruiting tool.

"I'm looking for a financial analyst for our staff, so I posted the job and I've already been in touch with two people from the site," she said.