By DENNIS NISHI
Social networking can be a powerful tool for small businesses looking to grow. But for some start-ups, it’s more than that: Social networking is the basis for the business.
Take Brent Hieggelke and his wife. Three years ago, the couple decided to rent their vacation home in Mt. Hood, Ore., but worried about letting strangers on the property. That’s when Mr. Hieggelke decided to use social networking to screen tenants.
He created a Facebook app called Second Porch that keeps dealings between friends. Users post their property availability, and the listings stream in their friends’ news feeds. Friends can also make recommendations about prospective tenants and properties.
“Every person probably knows 10 people that have vacation homes and even more than that are interested in renting. That amounts to a lot of vetted choices,” says Mr. Hieggelke.
Within a year, Second Porch attracted more than $1 million in investment funding, which Mr. Hieggelke used to set up an independent website that worked with the app but offered more features. The site drew more than 16,000 listingsâand caught the eye of another rental service, HomeAway, which acquired Second Porch five months ago.
Friends of Friends
Entrepreneurs who build their businesses and websites around social networking say it offers a big advantage: Customers get unusually engaged with the business, sharing favorite products and services with friends and often turning them into buyers, too. In the best cases, entrepreneurs say, customers see the business as a kind of social activity in itself, interacting with other customers and making recommendations that will stream on the Facebook news feeds of all of their friends.
Yardsellr.com has built its entire business around its customers’ chats about products. The San Francisco start-up lets Facebook users sell products to people with similar interests. Members join groups, or “blocks,” representing their niche interests, from “Star Trek” collectibles to guitars to purses. When a member lists an item for sale, it shows up in the news feed of other people that have subscribed to those blocks and allows them to participate in ongoing conversations.
The comments on those listings “are where all the action happens,” says founder and Chief Executive Danny Leffel. “More than 100,000 followers regularly comment on products that they love, and that creates entertainment value that can also promote educated purchasing decisions.”
Members then follow links back to Yardsellr’s own site to make their purchases. The company makes money from a buyer’s fee and from optional marketing services available to sellers. The company is private, so Mr. Leffel won’t disclose any financials, but he does say that Yardsellr has 3.9 million members and is adding more than 20,000 new ones every day. Its parent, YellowDog Media Inc., recently launched a similar site called Style.ly that focuses on clothing.
Bringing It Back Home
Facebook won’t disclose how many companies are combining its core features with commerce. But a spokesperson says that more than 7 million apps and websites are integrated with the social network, allowing visitors to do things like share a site’s content with their Facebook friends. And most social-networking sites, including Linkedin, Twitter and even YouTube, offer similar abilities.
Small companies have never had this level of customer access or ability to track behavior, says Charlene Li, founder of Altimeter Group, an advisory firm in San Mateo, Calif. “You know their names, what they might like and so much more than you did before,” says Ms. Li. “That kind of knowledge can help you accelerate a new business because you understand what customers want and need.”
But companies need to tread carefully, she says. When businesses bring customers in so close, they need to forgo the hard sellâor else risk alienating those buyers and others in their networks. They also need to be extra responsive to requests and complaints across all social-media channels, especially if they are made in public forums.
That may mean having staff members dedicated to the job, Ms. Li says. Companies can’t simply hand the task off to “a junior personâ¦who is snarky to customers.”
Mr. Nishi is a writer in Los Angeles. He can be reached at email@example.com.