I'm a partner in the advanced analytics group at Bain & Company, the global management consulting firm. My primary focus is on marketing analytics (bio). I've been writing here (views my own) about marketing, technology, e-business, and analytics since 2003 (blog name explained).

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January 17, 2008

Thomson Buys Contact Networks

Thomson announced today they bought Contact Networks.

Back in late 2003/ early 2004,  I spent some time helping out at Contact Networks.  I had worked with two of the founders at ArsDigita, and had been Contact Networks' second customer when I was at Razorfish.  This was right around the time of the first social networking bubble:  Friendster was white-hot, LinkedIn was getting going, along with Tribe, Ryze, Plaxo, Spoke, Visible Path, and a little outfit called Facebook which we bumped into when we poked our nose into the educational market.

The Contact Networks offering was rat-simple: it was Google for people behind the firewall.  Enter a company name, and back comes a list of peers at your company who *might* know someone at the target company.  The list was ordered, Google-like, in terms of the quality of your peers' contacts, according to a variety of factors that we could infer.  Once you found someone on the list you felt comfortable asking for an introduction, you clicked on a button to send a request.  The person with the contact would then receive an email from our system with your request, and contact information for all the people he or she knew at the target company.  If the recipient wanted to share he could.  If not, he could make up some graceful excuse like "data's old, person's moved on, don't know him/her that well", etc.  And what was even more ingenious was how the guys had figured out how to relate Company X to Company Y, so you could see a full view of relationships with a family of organizational entities.  But, you never knew whom that colleague of yours knew, unless he wanted to share with you, or unless the system was configured to share in ways that everyone was comfortable with.  Your peers with contacts could also choose to remain anonymous on the list if they chose, or opt-out altogether if they didn't want to participate in the system.   Because of how well we handled privacy, virtually no one chose to opt out.

The beauty of the system is that it required ZERO manual input and training -- it scoured a firm's email log files, network-stored address books, and a few other sources to build an index of "who knows whom at Company X" overnight.  It installed simply and quickly -- sometimes in 24 hours -- and integrated seamlessly with a firm's intranet or even into desktop mail clients and such.  It could be run in a firm's own data center or as SaaS.    There were other clever features, too numerous to mention, but all useful.  We priced it as a subscription, so you only kept paying if you got value, and people always did.  As a customer, I can attest to that, and I ended up voting with my feet.  In short, it was probably the most elegant software application concept and execution of a concept I have seen in my career so far, and just a killer value proposition: one incremental sale a year would cover the nut.

Nonetheless, in that time we were "vox clamante in deserto", evangelizing away in a highly conservative corporate market.   But we had some wins with visionary customers, and terrific support from advisors.  The team stuck with it, by smarts and good fortune raised some but not too much money from good investors who themselves had been entrepreneurs, and eventually found the sweet-spot vertical where the team could leverage its early wins into greater market uptake.

In joining Thomson, it becomes -- as far as I know -- the *only* social software firm of its generation to have a successful exit.  (LinkedIn still might; Facebook's got a $15 billion valuation to grow into, so we'll see.  Spoke, Visible Path, Zero Degrees all restarted or joined the Dead Pool).  Also, in joining Thomson, Contact Networks makes its offer even more compelling (now that it has a firm of that stature behind it).

So congrats again guys, and good luck.  Congrats to Thomson on a great acquisition.  And if you're a potential customer reading this, click here.


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How much did they get acquired for?

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