Do Favors or Cash Motivate Online Business Networking?

Top executives in the social networking industry debate the incentives that drive businesspeople to make connections through their services and software.

LOS ANGELES—With more social networking Web sites and software reaching out to business users and enterprises, users must be motivated to remain active in their online networks of colleagues and contacts in order for the technology to reap rewards.

While agreeing with that assessment during a panel discussion Tuesday at the Business 4Site conference here, top executives from four leading social networking sites disagreed on what incentives get users to participate in online social networking. (Business 4Site is produced by Ziff Davis Media Inc., the parent company of

The debate centered on whether tit-for-tat relationships are enough in business social networking or whether businesspeople require financial incentives to participate.

Jas Dhillon, president and CEO of ZeroDegrees Inc., said the biggest motivator for joining a social networking site is the expectation of a mutually beneficial relationship among those in ones network of friends and business contacts. He called it "the favor economy."

"Social networking is as old as humanity itself," Dhillon said. "The whole concept is about reciprocity."

The people within ones network tend to share common beliefs, values and goals, allowing them to more easily help one another in their networking goals that can vary from dating to job hunting to finding an expert in a given field, he said.

Reid Hoffman, CEO of LinkedIn Ltd., agreed, saying that "the editorial value of the connection" is more important than any expectation of a direct financial reward.

"Like professional networking today, you help your friends and they help you," Hoffman said. "People accept invites from and send invites to people that they want to help."

ZeroDegrees, recently acquired by InterActiveCorp, and LinkedIn both are public social networking sites that focus more on individuals signing up and building out networks of contacts.

ZeroDegrees, of West Hollywood, Calif., is aimed at search for people and experts, while LinkedIn, of Mountain View, Calif., is focused on professional development and job hunting.

The enterprise software competitors to those sites offered a stark contrast in their view of peoples motivations for using social networking technology.

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New York-based Visible Path Corp. plans to offer enterprise software that maps a companys social connections, both inside and outside its walls, for use in sales and marketing, said Antony Brydon, co-founder and CEO of the company.

He dismissed the notion that goodwill alone will motivate people to join and become engaged in social networking.

"No way," Brydon said. "The favor economy is where we started, and we quickly moved to the barter economy and then the economy economy. Its an ideological point that will become a real issue for what to do to move things along faster [in this industry]."

Brydon said he favors cold, hard cash as the best incentive for participating in social networking. Salespeople, for instance, should be financially rewarded when their connections in an online social network help land a deal, he said.

The chairman and CEO of Spoke Software Inc., Ben T. Smith IV, offered a mixed view of incentives. Spoke sells social networking software to enterprises but also has created a public, online social network where individuals can join.

/zimages/6/28571.gifClick here to read more about Spokes recent product launches.

Personal relationships and their dynamics are important, he said, but businesspeople, especially in sales, also need to be able to reward contacts with gifts or financial compensation.

Palo Alto, Calif.-based Spoke, for instance, has mechanisms for letting users send a gift or a thank-you message after closing a deal as well as for incorporating a sales teams compensation plan, Smith said.

"Seventy percent of the relationships an A rep uses are controlled not by the company network but by his personal network," Smith said. "[But] the fact is that incentive compensation matters in sales teams."

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