Open Random and Supportive

How does a 5 member team create a social business network which as half a million members, and makes a profit- I met Thomas Power who shared his insights and the journey of Ecademy one of the oldest and the most active social network.  

Thomas Power has been always a Networker, what he does is "collects people", He was always connecting people. In 1998, Penny his wife got an idea, "Why not use the Internet for connecting business people-" Penny and Thomas saw value in this, and founded Ecademy, with the purpose of providing information, contacts and support. They teamed up with Glenn Watkins, and Julian Bond  who converted everything Thomas and Penny had in their minds into software. Thomas Power says that Ecademy is not perfect since his thoughts are not, and is always evolving. Social networks are usually associated with the young, surprisingly the average age of Ecademy members is 46, compared to LinkedIn's 33 and Twitter 28.

The journey has not been easy. In its Eleven Years of existence, Ecademy lost money for the first 6 and made money for the next 5, it was only in the end of 2008 that the team was able to clear all the mortgages and loans that the founding team had taken for the business.  Ecademy makes money on the Internet, unlike Facebook and LinkedIn where money is still far away. Ecademy's journey has been very different from other social networking sites, there was no venture capitalist involved and the total investment in creating it was $5 Million dollars, a tiny fraction of the 100s of million dollars spent on sites like Facebook, Myspace and LinkedIn. The team even now is only 5 strong, a lot is outsourced, but then most of the action happens because of the participation of members. Till 2002, Ecademy was free only, when it decided to charge $5 a month for membership. Immediately there were strong complaints from members, and in the first month Ecademy got only 38 memberships of $5, membership dropped immediately. Ecademy then opened free membership, and later introduced a $100 Black Star membership. Thomas says that in most internet businesses and in Ecademy as well 99% of the members use the service for free. Only 1% pays. Interestingly the 99% are the ones who bring in the members who pay. Another insight: "The early adopters pay nothing". Advertising contributes less than 20% of the revenue for Ecademy says Thomas. "Advertisements do not work for an online business, the only one who makes money out of advertisements online is Google" he says. Running an Internet business is not cheap, Ecademy serves 4-5 Terrabites of data, the bandwidth costs itself run into millions a year. Of course the costs would have been a lot more expensive but for OpenSource software like mySQL, Linux and Drupal that Ecademy uses.

What kept you going inspite of so many years of losses- Thomas honestly answers, "We were bust, we had mortgaged our houses, and it was either a Castle or Caravan for us. There was no other option but to keep this going." Of course what also helped was members saying that they were doing good.  There is a lot of hype around Social Networking and every year there is something which is the biggest thing happening in this space, Twitter is the latest craze, it is Easy Come Easy Go in the Internet, Ecademy like the tortoise keeps plodding along, with its small team, no VCs and just two engineers. Compare this with millions in investment, hundreds of engineers and little revenue associated with other large social networks.

Ecademy was never a favourite for Venture Capitalists. Thomas says that VC's never like a Husband and Wife team. The Ecademy team members do not have an office, they work from home, collaborate online, use Skype, they are not 22 years old (they are nearly 40). The Ecademy team, is not "hardworking, youthful, hungry, unmarried with no commitments, that the VCs can burn to the ground." Not the typical startup profile that VCs like. So the team had to rely on their own funds.

How did he build up the membership in the initial years- To this Thomas says that he just kept meeting members, he met around 11Thousand users face to face, and just asked "what do you need- The feedback that he got was, that people want to belong to a team, a group, which is multiracial, all encompassing and global. Today it is the members who are building the network, conducting around 500 offline events a year. They are part of a gang.

Ecademy, Thomas feels will prevail in the end. This is because of the approach they have towards Ecademy which others lack. Ecademy is Open, Random and Supportive. Others are Closed, Selective and Controlling, and are used primarily to connect. This possibly is the reason why Ecademy has lesser number of users than say LinkedIn or Facebook. Because Open is scary, however the world is moving in the direction of Open, Random and Supportive. Thomas says that all those systems which are Closed, Selective and Controlling are in trouble, be it large corporations, banks or Politics.  For instance, in Ecademy even harsh and negative comments on Ecademy are never taken down. He meets anyone who wants to meet, his cell number is published openly. "Stop controlling things" he says, "be Open, Random and Supportive."

The author is the Chief Catalyst of Businessgyan. He is an alumni of IIT-M, IIM-B. His areas of interest include business strategy and innovation. E mail to thespark@businessyan.com