Technology

MySpace for the Office


Make no mistake: Young people love to socialize on the Web. Tens of millions of teens and young adults use sites like News Corp.'s (NWS) MySpace or Facebook to trade messages on home pages loaded with blogs, photos, and music.

Now a startup called Visible Path is hoping to harness the popularity of Web-networking to create a tool for businesses. The closely held company in Foster City, Calif., has just raised $17 million in a second round of venture-capital funding, BusinessWeek Online has learned. The fund includes $10 million from Menlo Ventures, $5 million from Kleiner Perkins, and $2 million from Integral Capital Partners, according to Visible Path CEO Antony Brydon. The deal will be formally announced in the coming days.

Visible Path isn't the first social networking site to target Corporate America. LinkedIn also courts the business and professional market (see BW Online, 04/10/06, "How LinkedIn Broke Through"). The hope is that social networking will follow the trend of other communications, such as e-mail and instant messaging, which got a foothold among tech-savvy youngsters before gaining traction in business.

EMPHASIZING ENTERPRISE. But Visible Path is taking a different approach. While LinkedIn is aimed mostly at individuals who pay fees depending on the level of service, Visible Path sees companies as its main market. "Our business model is different because the enterprise pays, not the individual," says Brydon. "The value in our case accrues to the enterprise, although it also accrues to individuals who comprise the enterprise."

Classic social networking sites like MySpace and FaceBook include millions of home pages featuring member profiles and photos (see BW Online "Users Crowd into MySpace," and "Socializing for Dollars"). Members spend hours surfing the pages, checking each other out, and exchanging messages. Advertisers populate the site with ads and promotions. LinkedIn, aimed at a more mature business audience, relies on subscriptions for revenue. But it, too, is built on home pages with member profiles.

Visible Path looks different from other social-networking sites. Users don't create home pages or profiles on Visible Path. The site instead keeps tabs on whom its users communicate with by e-mail or through other means. And it ranks the strengths of those relationships based on how often people communicate. Then it helps users find common sources and contacts so they can approach one another to do business. "Social networks have an increasingly obvious model on the consumer side, and we think the model on the business side will be increasingly obvious, too," Brydon says. "Social networks have great value."

MULTIPLE PATHS. Here's an example of how the site works: Let's say a salesperson at company A wants to contact the chief information officer at company B. The suitor could make a cold call, but that's not a very good way to get through the front door. Visible Path would let the salesperson seek a colleague or business associate who has a connection to the CIO. He or she may find multiple "paths," in fact. The site also will compile publicly available research on the CIO, tapping resources such as Google (GOOG) or Hoovers.

Brydon is drawing on a background in social sciences. He studied social networks as an undergrad at Yale in the early '90s, and has a background in statistics. He headed to Silicon Valley after college and applied his psychology degree to business. He spent about five years working as a business consultant for R.B. Webber, taking on clients such as Compaq, Sybase HP, and Avant Go. Then he left to launch an early digital music site called the Internet Underground Music Archive, or IUMA. He sold it to eMusic in 1999, and Vivendi (V) acquired eMusic two years later.

When it came time to launch his next venture, Visible Path, he used his personal social networks to raise money. He picked up $250,000 in seed money from several individuals, including one at Vivendi. He later raised $500,000 in angel funds led by Esther Dyson, and $5 million in initial venture capital from Kleiner Perkins -- also an investor in Friendster.com, an early social networking site that has since been eclipsed by MySpace and its ilk.

PRIVATE MATTER. Brydon, 34, won't reveal too much data about the privately held Visible Path. He says it isn't profitable yet, but that he believes the current round of financing will be sufficient to take it to profitability. He won't disclose the number of corporate customers or users, but he says they include Fortune 50 companies, smaller enterprises, and law firms. Deployments range from hundreds to thousands of users, he says.

Visible Path and other sites that want to bring social networking to the business sector are in uncharted territory, though. So far, all the successful companies, from MySpace to Facebook, have evolved at the grassroots level. They have evolved outside of the tech establishment of VCs and business experts, growing by word of mouth. No one ever has built a successful social networking site in the tech lab. And the record of any company getting individuals, let alone enterprises, to pay for such a service is sketchy at best. That doesn't mean it can't be done, but there's no precedent to fall back upon.

Brydon hopes that will change soon. No one ever will confuse the plain, uncluttered appearance of Visible Path with a page from MySpace or Facebook. It doesn't feel like a party. It feels like a quiet, corporate conference room. Users see a long, vertical window on the left side of their screen. There's a box there they can punch in names of people they are trying to find. And a map quickly appears, literally sketching a "visible path" to their prospect.


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