Social networks: Time wasters or brilliant business tools?

Australia’s SMEs, already with enough on their plates, are also facing pressure to have an up-to-date damn fantastic presence on social networks. Is it worth the effort? By EMILY ROSS.

By Emily Ross


Australia’s SMEs, already with enough on their plates, are also facing pressure to have an up-to-date damn fantastic presence on social networks. Is it worth the effort?


A friend invited Delia Timms, Melbourne-based owner of profitable web startup, to sign up to earlier this year. Timms only filled in a very basic profile of herself and her work and has neglected LinkedIn ever since, preferring to stick to her traditional network.

“LinkedIn is the thing you do when you have time to faff around,” she says. “It’s MySpace for grown ups.” Timms is not the first to label the site a low priority for business, however many millions beg to differ.

Social networking is not just for kids. Yes, there are leisure sites such as MySpace and Facebook, there are virtual meeting place sites such as Second Life, places to share videos such as YouTube – but professional networking is a key part of the social networking phenomenon.

Sites such as LinkedIn, itLinkz and local Australian site allow business people to connect through cyberspace. In a Bear Stearns social networking presentation by internet analyst Robert Peck earlier this month, Peck points out that the largest users of social network sites are 34-45 year-olds (prime business years) and that within five years, social networking sites will control 12% of online advertising.

There are several professional networking sites such as Doostang, Ryze, Plaxo and Ecademy, however LinkedIn has the critical mass (12 million) while its competitors’ memberships are still in the early six figures. LinkedIn’s main competition comes from Facebook where a new breed of social networks combine business with pleasure.

LinkedIn is the social network for suits, with all 500 of the Fortune 500 corporate members and more than 12 million individuals in 147 countries building their personal networks through the site.

While Facebook (34 million members) tends to incorporate favourite music, pet photos and after-hours chat, LinkedIn is business, pure and simple. Established in 2003 in Palo Alto California, early LinkedIn members tended to come from IT, recruitment, venture capital and consulting, however time has seen a more diverse membership develop across most sectors, up to boardroom level.

As with any type of effective networking, LinkedIn can help users find employees, industry experts, jobs and make deals. It is free to join and offers paid accounts (however the majority stick to the free service) and the site sells advertising.

The whole concept of LinkedIn is that everyone in the world is connected through six degrees of separation. The past six months has seen a surge in Australian interest, with increases in Australian introductions. “All the big hitters are there in investment, property, IT,” says Paul Lange, a Sydney entrepreneur and marketing executive at Freelife International. Lange has a whopping 2950 LinkedIn connections (people he is directly connected to in his network).

LinkedIn’s popularity shows no signs of abating in the short term and the introduction this year of the LinkedIn Answers, a place to pose questions to the LinkedIn network, has added to its appeal. (Questions are asked such as ‘Who is the hottest salesman/woman in Australia?’)

Melbourne-based venture capitalist Peter Lewis, principal of Gramercy Venture Advisors, uses LinkedIn every two days or so, most recently to look for a contact at senior levels in Amazon as he has a company he is selling and sees Amazon as a potential buyer.

What Lewis finds valuable about LinkedIn is not only being able to research the right people he needs to make contact with, but finding trusted existing contacts who can help make the connections. He has 326 LinkedIn contacts, well above the average of around 60 connections. (San Francisco-based executive headhunter Ron Bates has the most LinkedIn connections with 33,540 direct contacts – that is some database.)

Like Bates, Lewis uses LinkedIn as a sophisticated extension of his contacts. “I find LinkedIn a very good and low-key contacts database – it allows me to keep up-to-date with the contact details of people I know and respect professionally (even if I don’t expect to do business with them),” he says. “We all move so much these days that such details can quickly get very out of date.”

Bill Lang International chief executive Bill Lang has 165 connections on LinkedIn. He recommends time-poor SMEs to think of LinkedIn as a source of suppliers and staff and as a research tool to learn about prospective customers.

LinkedIn experts don’t have to spend all day on their profiles. Lange only spends an hour a week on his 2950 contacts. The most time-consuming stage is the initial set up. This involves writing up a pithy profile (think of it as a live, dynamic CV) and then inviting friends, colleagues and contacts to become part of your LinkedIn network.

This can be done with the help of LinkedIn technology that can go into the user’s emailing software such as Outlook and see who is already on LinkedIn in your address book. With a click, invitations to connect to the user can be sent out in a mass email. Those who agree to accept the introduction then appear in the person’s connections. Connections build from there, one acceptance at a time.

This is when it gets interesting. You never know who you might meet. Often distant connections or weak ties can create great opportunities, or at least save some time. Even Delia Timms admits that when she was starting Find A Babysitter and needed a good graphic designer or lawyer, LinkedIn could have helped – especially as the alternative was cold calling and asking around. In hindsight she says: “A recommendation from a LinkedIn contact would have been a smarter way to do it.”


The art of LinkedIn

  • Think of LinkedIn as a shared address book, not a boast sheet.
  • Limit the amount of time you spend on the site. The pros say it only takes an hour per week once the network is established.
  • Use LinkedIn for recruiting research and reference checks (find former colleagues that aren’t on the candidate’s resume and see how they rate the candidate).
  • Use RSS feeds to subscribe to key topics on LinkedIn Answers relevant to your business.
  • Beware of almost-strangers and look to maximise your existing network, not build a fake one.


Emily Ross ( is the co-author of ’50 Great e-Businesses and the Minds Behind Them’, to be released by Random House in September 2007.


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