Clara Shih, creator of the Faceforce (now Faceconnector) application and Director of Social Networking Alliances and Product Strategy at Salesforce.com, is launching her new book The Facebook Era: Tapping Online Social Networks to Build Better Products, Reach New Audiences, and Sell More Stuff (Prentice Hall) on Monday.

Everyone seems to have a Facebook profile nowadays, but Shih draws upon her experience creating a pioneering business application for Facebook (plus plenty of other research) to explain how you can use Facebook and other social networks for business. I interviewed her a week ago about her book, what Facebook means for business, and how Facebook is changing society as a whole. If you’re interested in hearing more, Clara will be speaking at the Harvard Business School on Monday at 3pm.

VB: Maybe you could start by telling me how you came to write the book and why?

CS: Sure. I wrote The Facebook Era because I felt like it needed to be written, and I was one of the people who might be qualified to do so. Specifically, my background is that I developed the first business application on Facebook. It’s called Faceconnector and it integrates Facebook profiles and friend information into Salesforce accounts, leads, and contacts.

The book started off being about Facebook and about technology but as I wrote, the more I realized that at its heart, it’s just as much a book about a sociocultural paradigm shift that we are all witnessing.

VB: Can you also talk about this term “the Facebook era” and what you mean by that?

CS: I titled the book The Facebook Era because I do think it’s a new era that we’re entering, just like the Internet was a new era 10 years ago, and the PC 10 years before that. Facebook is the largest and fastest-growing social network out there, it remains to be seen whether it will be the one to dominate indefinitely, but regardless it has brought on a transformation in human behavior and relationships. But it’s just one example of social networking, albeit the largest, and my book talks also about Twitter, MySpace LinkedIn and a number of other social networking services.

VB: But when you say it’s a broader social shift, what do you mean?

CS: I think what we’re seeing with social networks like Facebook and Twitter is a change in the way humans interact with one another, and therefore a change in the kind and quantity of relationships we’re able to have across our personal and professional lives. From a business perspective, there’s an incredible amount of information now available on social networking sites that can be implicitly or explicitly mined — obviously respecting privacy controls and user preferences — for purposes of sales and marketing. I believe the last decade was about the world wide web of information and the power of connecting content and web pages. This decade, the new era we’re about to enter, is about the world wide web of people and the power of the social graph, and knowing who is connected to whom, and how.

VB: Like you said, a lot of people are still trying to figure out how to use social networking for business. In that context, what was it like to research this book? How did you determine the best practices that you recommend?

CS: I felt very fortunate because, number one, this book opportunity really came to me after I developed Faceconnector, and, number two, as a result of Faceconnector’s popularity I had a lot of the research sitting in front of me. Faceconnector was an independent side project that I did with the help of my friend Todd Perry, who is an engineer at Facebook, and as a result we don’t have a big team to help us. It was me and it was Todd. So whenever a user had an issue, whether it was a sales question — and it’s a free application, so “sales” in quotes — or a support question, they called us. It was great, because all of this front-line experience helps me understand the specific ways in which people are using services like Facebook in their organizations and how it is really changing their business and having a genuine impact on their bottom line.

So that was a lot of the initial research that came even before I started writing the book. As I sat down to write it, I was very fortunate to have access to a number of executives across a wide variety of industries that are starting to think about social media, as well as a lot of the thought leaders, mostly in Silicon Valley, who are executives at Facebook and LinkedIn, etc. to hear their vision for their companies and what the experience and implications for business might be.

VB: Can you walk us through the process of deciding to make Faceconnector and what it was like to actually launch it?

CS: I developed Faceconnector because of a perfect storm of three events. The first event, which I write about in my book introduction, is that I went back to Hong Kong, which is where I’m from, to visit my grandmother. We were in a small diner in the back corner of Wanchai. This was the kind of place where locals go, and I had been speaking Cantonese for a week straight and nothing else. My grandmother and I were eating our congee, and all of a sudden out of the corner of my eye I see these two older gentlemen, they were sitting in the table next to us, and they were talking about Facebook. I was completely floored — I mean, these guys must have been in their 70s. It was the most unexpected occurrence, because up until then, most of the world and certainly I didn’t take Facebook seriously, in the sense that I thought it was just for college students. And having that moment made me realize that Facebook, if it hadn’t already, would very soon become mainstream.

Event number two was coming back to San Francisco the following week and attending the first f8 Facebook developer conference, where they unveiled their platform. And I saw really great applications like iLike for music, and Slide for sharing photos, and so on and so forth, but I didn’t see any business applications. Of course, working at Salesforce.com, I live and breathe enterprise. In my mind, I felt like, “Geez, this is perfect, the social graph is perfect for business and collaboration, there should be something here.”

So the third event, which is closely tied to this, is I the more I thought about Facebook, the more I realized that it’s personal CRM. And certainly for me, it’s been a CRM database to manage my contacts across Stanford and Oxford and Google and Microsoft and now Salesforce. To be completely honest, I know I wouldn’t have had the capacity to maintain as many relationships as I’ve been able to without a tool like Facebook. And what Facebook has done is it has provided CRM to 200 million people and that has really interesting and profound implications for our relationships.

VB: I’d like to go back to that question you asked at F8: Where are all the business applications? How have you seen things developing since then? In the book, you do talk about ways enterprises are using Facebook. Has there been rapid increase in awareness? Or have only a few companies started to catch on?

CS: I think we’re seeing a movement underway where social networking is going into the enterprise. I think a lot of the established players, though, they’re still trying to bring old world concepts and paradigms to the new world, and it just doesn’t work. So there is a movement, but I would say it’s in the early days, which makes it very exciting and full of opportunity.

VB: What’s the old paradigm that needs to be tossed out and the new paradigm that needs to be embraced?

CS: The old paradigm is a web that’s anonymous. The new paradigm is the death of the anonymous web and the emergence of a social web that has online identity controlled by the user, and has the social graph where information flows through social filters and gets socially distributed.

VB: If you’re a big company, and you’re used to thinking about the anonymous web, what are the smart ways you can embrace the new paradigm?

CS: I think it’s to look at their various constituents, be it their employees, their business partners, or their customers, and see what’s possible when you can have a much more personalized interaction with a very large number of people.

VB: You also suggest that social networks also help to flatten hierarchies. How do social networks accomplish that?

CS: Well, on social networking sites, every connection is one-to-one. The power of social networking sites is they’re bidirectional between any two people that are connected. Twitter is a little bit different, because you can have one person following another, where it isn’t mutual, but most of the social networking sites, it’s bidirectional. What that means is, to get from point A to point G, maybe G is the CEO of your company who’s five levels up, you don’t have to go through B, C, D, E, F. That’s really powerful for everyone involved. That’s powerful for A because it gives them access, and it’s powerful for G because I think a lot of the best information gets lost as it goes up the chain. Now executives have a way to really connect with their frontlines without going through heavy layers of middle management. It’s all made possible because of the social filters and the voting and the news feeds that make it more efficient to absorb lots of information from different people.

VB: And it sounds like this is something you think is happening already.

CS: I do. And not just because of social networking, but in general. Steep hierarchies are out-of-date. They don’t work anymore, they don’t fit today’s culture and technologies.

VB: In the book, you talk about how we’re probably entering this period of consolidation, but right now, it still feels like there are so many options out there. If you’re a company surveying that landscape, how do you cope with that variety, that fragmentation?

CS: Social networks particularly will tend to converge and consolidate over time, especially because they’re inherently governed by network effects. So the bigger ones will just get bigger, their value will multiply exponentially, and the smaller ones will become less and less relevant . So my advice to a business and to individuals is to go with the big guys.

VB: Even though there are so many people using social networks now, I still find a lingering sense in some people that social networks are just sort of fad. How would you boil down your response to that?

CS: The first thing I would say is, some people thought the Internet was a fad. Frankly, a lot of the same criticisms that are said now of social networking were said about the Internet. How do you measure it? What’s the ROI? Does this make sense for my business? But it’s not true. Technologies and specific vendors may come and go, but massive cultural transformations and new kinds of relationships? Those don’t go away.

Think about the increased network capacity we were able to have once phones were invented. Before, you had to visit somebody in-person or write them a letter. That was extremely time-consuming, so our networks were pretty small. With phones they expanded dramatically. With the Internet — I mean, the cost of sending an email is so much lower — they again expanded dramatically. This is another step function that we’re seeing, where casual communication modes made possible by Facebook wall posts and pokes – are again giving us greater capacity to cultivate our weak ties. But it’s even more powerful this time around because Facebook makes the communication emotional – you can see the individual’s photo, profile, and your mutual contacts. Suddenly, it is not just a name. You get to know or get reminded of the person behind the name. This is an incredible tool at our disposal. And I don’t think that behavioral shift is a fad at all.

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