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Summary:

Social graph data is precious stuff, and sites like LinkedIn face a difficult choice: They can open up their relationship maps and risk losing their core value, or they can turn their sites into walled gardens — keeping relationships to themselves, but constantly fending off contact harvesters.

NotchUp, a job site that pays you to interview with employers, recently went from darling to pariah in record time after it cluttered the Internet with thousands of invites. The offer itself was compelling enough: Invite others, and if they join we’ll give you a share of their revenues. Think AllAdvantage (in all its incarnations) meets job search.

NotchUp let users invite their LinkedIn contacts, which made it easy to indiscriminately invite a hundred friends at a time. Hoping for a slice of their friends’ interview blood money, they did just that — not by the hundreds, however, but by the thousands. Within a week, the upstart had the business-oriented networking site threatening legal action and reconsidering how users access LinkedIn.


Social sites like LinkedIn track relationships, and many of those relationships overlap because colleagues have many contacts in common. Each NotchUp user ran the risk of inviting a LinkedIn friend who had already been invited. As NotchUp’s user base grew, the number of already-invited LinkedIn users receiving redundant mails climbed rapidly.

What happened next tells us a lot about the challenge social search sites face when dealing with startups.

NotchUp didn’t design its application to stop redundant invites. The company needs to send multiple invites because only the person who finally convinces someone to enroll makes the commission. Within days of the launch, LinkedIn blocked the importing of contacts, citing a violation of its terms of service.

Initially, NotchUp criticized LinkedIn for doing so. “We have great respect for LinkedIn and are confident that LinkedIn will back up their public statements in regards to data portability,” Co-founder Rob Ellis told VentureBeat. They called the blockage a technical difficulty, and users were told the LinkedIn import feature would be fixed, responding:

“If your message is about the LinkedIn import profile/contacts features not working, please know that we are working on it and plan to release a new version soon.”

Shortly afterwards, LinkedIn spokesperson Kay Luo said the company was considering a cease-and-desist. Notchup subsequently removed any mention of LinkedIn from its site and capped the number of redundant invites at three.

Relationship saturation is characteristic of word-of-mouth viral marketing, where it’s known as a Bass Diffusion Curve. NotchUp should have recognized this and eliminated redundant contacts from the start, but that would have broken their business model; instead, they used it as a way to repeatedly invite the same person.

Social graph data is precious stuff, and sites like LinkedIn face a difficult choice. They can open up their relationship maps — as Facebook API or Google’s OpenSocial do — and risk losing their core value. Or they can turn their sites into walled gardens, keeping relationships to themselves but constantly fending off contact harvesters.

As the dust settles, NotchUp has attracted 900,000 subscribers in under three weeks. The cease-and-desist letter from LinkedIn will arrive far too late. With that kind of growth, others are sure to try and repeat the company’s misdeeds. And social sites will have to decide how they handle them.

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  1. Check out their Terms of Use–while they claim that they want to ensure everyone’s privacy, and they seem to have a public Privacy Policy now, their Terms of Use (that little checkbox you check when signing up) certainly seems to not only be a contradiction of much of their policy, but even their Privacy Policy states that you cannot expect much from them.

    Go on, read it closely.

    http://www.userglue.com/blog/2008/01/27/notchup-privacy-down/

  2. LinkedIn has a weakness… « Scotsman on a Horse Tuesday, February 12, 2008

    [...] Notchup, LinkedIn, and the Walled Garden Dilemma – GigaOM NotchUp let users invite their LinkedIn contacts, which made it easy to indiscriminately invite a hundred friends at a time. Hoping for a slice of their friends’ interview blood money, they did just that — not by the hundreds, however, but by the thousands. Within a week, the upstart had the business-oriented networking site threatening legal action and reconsidering how users access LinkedIn. Published in: [...]

  3. I want a walled garden and use linked in for that purpose. If i want to find someone that i have dealt with in the past, odds are they are on linked in and actually use their real name. That is what is key to users like me – do we care about portability? Sure we do – it is called something like outlook on your desktop where you have your contacts – Gee, I guess they could be all of your linked in contacts?

    LinkedIn, like any other business wants its switching cost to be high – can you blame them?

    Brian

  4. They don’t have 900,000 “subscribers”. They have 900,000 people who created an account and said, “If someone wants to pay me 75 bucks to talk to me about their company, I’m happy to listen, even though I don’t want to leave my current job.”

    What’s the value of that?

    I signed up and I just raised money for Path 101 (www.path101.com). I sure as hell am not going anywhere, but I’ll take the cash.

  5. Afternoon Report 02.12.08 : Daily HyperText Tuesday, February 12, 2008

    [...] Journal OpenID Announces Powerhouse Board: MSFT, GOOG, IBM, and others – Ken Fisher – Ars Technica NotchUp, LinkedIn, and the Walled Garden Dilemma – Alistair Croll – GigaOm EU Regulators Raid Intel Offices – The AP Yahoo Confirms Maven Networks [...]

  6. Agree with Charlie. Although I would go further and ask if ANY company is actually going to pay people for “interviews” – given that most of those 900,000 want money for nothing, who’d be stupid enough to start handing money out for nothing? With the US on the verge of recession which, unfortunately, will mean many losing their jobs, employers wouldn’t seem likely to be able to or indeed need to pay legitimate candidates. No one seems to be questioning the underlying business premise of NotchUp, excited as they are in the clash of heads with LinkedIn…

  7. One of the things I didn’t mention in the article was that, with 900,000 names, the cachet of “reach the people who are hard to reach and not looking” goes away. It’s the Krispy Kreme problem.

    A friend of mine handled operations for the donut maker years ago (sort of the opposite of high tech), and he wondered to me one day whether the fact that you could get their donuts pretty much anywhere was a bad thing. Unfortunately, scarcity doesn’t scale. What was once 48-donut sports-team purchases became one-offs, and soon people realized it was just fried dough.

    I’m convinced (though I have little evidence to back this up) that scarcity drives popularity online. Many of the startups I talk to get better adoption when they have a “beta” screen and a “click here to get on our waiting list.” It’s always the cool clubs that have a lineup.

  8. Bottom-up management « working 2.0 Thursday, February 14, 2008

    [...] 14, 2008 in examples Tags: Jyothi, Listen to my sergeants, To believe deeply in our people Jyothi sent me a challenge to provide examples of management structures that are [...]

  9. My company, Leapways.com, is also focused on Job and career market. The main difference we have from other job sites is that it is 100% free of charge for both employers and job seekers.

    We will be soon launching a Technical Screening Service which we are aiming for the hiring managers across Corporate America . The idea is to take some pressure out of the hiring manager (who’s real job is not hiring). We will take the ownership of filtering the candidates. In other words, our representative(s) take the interview and give a report report on the technology skills of the candidate. During the technical interview we will rate other skills like communication etc.

    Our interviews are real world technical architects, working in IT field for more than 10 years. That makes a huge difference. “We will help you to hire the RIGHT talent” – That is our motto.

    Regards,
    Rani

    Vice President
    LeapConcepts

  10. I found this very interesting:

    http://www.prlog.org/10063836-new-internet-service-reduces-recruitment-costs-for-employers.html

    These Applicant Tree guys have a much better deal, in my opinion, from a HR perspective. Their process should make things go a lot smoother than NotchUp’s. Not to mention, it seems there’s more ‘quality control’ as well. Sure, NotchUp has a money back guarantee, but they can’t refund my time I’ll be wasting on the interviews. This Applicant Tree checks out the candidates before I spend my money. I appreciate that difference.

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