THE SEARCH FOR A BUSINESS CASE
As the table below shows, startups differ widely in how they sell their technology, or in some cases, give it away. The majority have SaaS business models, but some sell software or appliances. Free services can seem attractive, but in most cases vendors retain ownership of users' data, something that could threaten both trade secrets and customer privacy. This is a particular risk given the likely fate of at least some startups--privacy policies and contractual obligations don't always survive bankruptcy and liquidation.

Though they all try to sell to enterprises, some vendors such as Pringo Networks and Kick Apps are finding that their largest market is niche sites, where social networking is an end in itself. These sites are essentially in the media business, with business models based on selling ads. They're betting that users will ultimately be more loyal to sites narrowly focused on an industry, sports team, or hobby than a giant network that anyone can join. The relatively few vendors focused on social networking for use within an enterprise intranet, such as Awareness Networks and Tacit, often provide these features as part of a larger Web 2.0 suite that includes blogs and wikis.

Social Networking Technology Startups VENDOR MAIN MARKETS PRODUCT SOLD AS Affinity Circles Education Service Awareness Networks (iUpload) Enterprise, intranet Service Community Server Consumer, enterprise Software, service (free or paid) CompanyLoop Intranet Free service Connectbeam Intranet Hardware Curverider (Elgg) Enterprise, education Free software Inspire Health nonprofits Free service KickApps Enterprise, media industry Service Leverage Software Enterprise, intranet Software Ning Consumer, small business Free service Pluck Media industry Service Pringo Networks Media industry Software SelectMinds Enterprise, intranet Service Small World Labs Enterprise Software, service Spigit Intranet, consumer Software, service Tacit Intranet Service Visible Path Intranet, extranet Service via partners

When database vendor Endeca wanted to roll out a social networking site aimed at customers and system integrators, it rejected off-the-shelf software in favor of a homegrown system. Though enthusiastic about social networking for customers, Endeca isn't convinced it has a role to play internally. "We're still holding off on what the ROI is for our own employees," says Colby Dyeff, Endeca's IT manager. "It's hard to say if that's a valuable use of their time."

Many of Endeca's contributors are system integrators selling their expertise, giving them a direct financial incentive to be highly rated. But the same lessons can apply to social networks elsewhere, where rating content is also a way to help people find others with similar interests or locate related information. The former isn't of much use within an enterprise, but the latter could be, especially given the poor state of enterprise search compared with the big Internet search engines.

This kind of tagging isn't strictly social networking, so it's usually described as social bookmarking, based more on Del.icio.us than MySpace. It's a big part of Connectbeam's social networking appliance, as well as new Web 2.0 platforms from IBM and BEA Systems. IBM's system is called Dogear, part of its larger Lotus Connections suite that also includes blogs, wikis, and shared workspaces. BEA's entry, AquaLogic Pathways, is sold alongside its Pages and Ensemble mashup tools. Both products are relatively new, as is the concept of enterprise social bookmarking itself.

Relatively few vendors are pushing full-scale social networking for intranets. Of those that are, Visible Path is the most ambitious. Its service tries to span the extranet as well as intranet, linking staff to contacts within other organizations as well as their own. Its pitch is heavily oriented toward sales staffers, who can use social networking as a way to reach prospects, as is its own go-to-market strategy: Rather than sell directly to enterprises, it prefers to go through partners like Oracle and Salesforce.com, whose CRM systems its social networking is integrated with. Most people won't join a social network just so that salespeople can contact them, of course, so Visible Path emphasizes its security and privacy controls at both the individual and corporate levels. Users can decide what sort of introductions they want to receive, while companies can override employee choices. That might seem to make Visible Path impractical as a sales tool, since blocking unsolicited sales pitches is a no-brainer. According to its users, however, this isn't necessarily the case.

"People don't have to be users to be accessed through it," says Rod Morris, VP of business information solutions at LexisNexis. Morris uses the tool to promote his company's ExecRelate service, which tracks relationships between C-level executives and board members in publicly traded companies--people who are more likely to rely on the old-boy network than LinkedIn or Twitter.