2008 Will Be The Year of Business Networking

In this post we will give you three reasons for that prediction, plus six specific predictions and one interesting dark horse. First, the three reasons why 2008 will be the year of Business Networking:

1. The US consumer economy will slow (maybe into Recession). Specifically this will weaken business models based on consumer advertising. Advertisers, entrepeneurs and investors will switch their attention to B2B.

2. Consumer-focussed Web 2.0 start-ups are in a “digestion phase“. We don’t really need more innovation. We want innovation, its fun and interesting, but what we need is monetization of existing innovation. Entrepreneurs will turn to the quicker monetization options within B2B.

3. Advertisers (and the media that serve them) will seek increasing diversification from ‘faith based advertising’ (aka CPM); and business markets will offer better options for subscription and transactional models. There is room for ‘quick payback innovation’ in this area.

Now for the six specific predictions about Business Networking:

1. There will be a globalization roll-up. There are business networks in Germany (Xing) and France (Viadeo) where LinkedIn does not play well, for simple language reasons. The same may be true in other non-English speaking markets (if not, the land grab is still open folks!). The globalization roll-up will be driven by two facts:: a) switching cost is high in practice – ask a German to switch to LinkedIn or an American to switch to Xing to find out why; b) there is tremedous business value in building business contacts internationally, so the network that can make that happen will do very well.

2. LinkedIn will either do an IPO or will be acquired. The reason: a globalization roll-up requires a public currency. If they don’t do an IPO, then LinkedIn will be acquired by a company like Newscorp that has a public currency and can make this happen.

3. Facebook will stay consumer NetGen focussed and will not be a major player in Business Networking. This is controversial and already the subject of a specific prediction (see our recent poll).

4. Business Networking models and services will evolve and there will be a lot of room for innovation. Reducing the cost of B2B business development is a really, really big deal. Today’s services are only scratching the surface of the potential. Niche feature-specific start-ups will be acquired by the big networks.

5. Some of the smarter traditional B2B Media firms will wake up to the fact that Business Networking can be their core proposition online and that they can leverage their niche audiences. They will need to do this before the big networks cross over into their niches.

6. Plaxo and LinkedIn will merge. This will be enabled by a common VC owner (Sequoia) and will be driven by the need to bulk-up pre the IPO that is needed to win the globalization land grab.

Now for the “dark horse” – Xing. They are the LinkedIn of Germany. My random one person survey of my nephew who lives in Germany found that he is a committed user who gets real value. They are a dark horse because they are already publicly traded. Their stock only trades in Germany and you cannot find their information on Yahoo Finance or Google Finance, so they are effectively invisible to US investors. However it is a relatively simple for them to get listed on NASDAQ as well. If they do that before LinkedIn does, a Xing IPO could get interesting!

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