Way Too Good for Facebook or MySpace?

For the rich and well-connected who don't want to rub elbows with those who aren't, exclusive social networks pledge to keep out the riff-raff

Roger Allen Conner Jr. has little use for the common folk who frequent MySpace (NWS) and Facebook—you know, the clubs anyone can join. "A lot of social-networking sites are very low-quality," says Conner, the 22-year-old founder of a North Carolina consulting firm named SiloIQ. "The type of individuals that are on these social-networking sites are generally not well-networked themselves."

Not even a business-oriented network like LinkedIn will do. To put it bluntly, Conner wants powerful friends: the kind of people who board private jets after cutting business deals. People who don't get stopped by the bouncer at New York's Bungalow 8 nightclub. People with connections who can open doors and get his company noticed. People with log-ins to aSmallWorld.

Better known as "aSW" to its members, aSmallWorld is one of a handful of private online social networks where big is bad.

Online Country Clubs

Membership in these networks, not unlike the exclusive country clubs where the rich and powerful hobnob, is carefully guarded. At aSW, only a subset of established members have the power to invite new users to join. In developing the site, founder Erik Wachtmeister rejected the prevailing Web 2.0 business model of attracting large audiences so you can sell ads to big brands. Instead, he confines membership to the relatively small group of people who travel in the same elite, often moneyed, social circles. "One's network on the site is less useful if it is diluted by people you don't know," says Wachtmeister. His goal was "to create a private place where people could be much more forthcoming with information."

Critics are split into two camps: Some call aSW dreadfully elitist, while others say it's not exclusive enough. Nonmembers have nicknamed the site "Snobster," arguing that its invitation-only policy contradicts the premise of open communications upon which the Web was built. Then there are those on the inside who complain that, in an effort to become profitable, aSW is accepting less "valuable" members.

While there's little argument that aSW is growing fast, what constitutes too fast is open to debate. In the three-and-a-half years since its launch, membership has grown from 500 users to about 260,000. But MySpace has grown to more than 100 million members over a similar timeframe, making it a major recipient of the $900 million that research firm eMarketer estimates will be spent on social-network advertising this year.

For now, aSW appears to be an online gateway to the upper echelons of the social stratosphere. Although Wachtmeister won't name-drop when it comes to aSW users, a search of the site's member lists reveals plenty of twenty- and thirtysomething investment bankers, fashion-industry types, CEOs, and recognizable last names: Firestone, Rockefeller, Forbes, Trump (see BusinessWeek, 8/20/07, "High-Net-Worth Networking").

Cheating Discouraged

On InviteShare.com, a site where users seek invitations for Web services that are in testing or aren't open to the public, there's a 647-name waiting list for invites to aSW. Conner is among those hoping that an aSW member will invite him. Some would-be members would even be content to borrow a member's log-in—an offense worthy of expulsion to Big World, a section of aSW where your privileges are sharply curtailed.

Luxury advertisers, many of which shun the mainstream social networks, see aSW as a place where they can reach wealthy consumers and promote their products without losing brand cachet.

Notably, the site already features classified ads where people sell classic Jaguars, yachts, and Cartier watches. Advertisers include champagne producer Moët & Chandon (LVMH) and private-jet company Sentient.

Yet to make aSW a financial success, Wachtmeister has to balance demand for exclusivity against an advertiser's hunger to reach more eyeballs. Wachtmeister says aSW, which has 35 employees, is nearing profitability. And he rejects any suggestion that standards are being lowered as it grows. "The new members we get today could be as good, if not better, than some of the members we got a year ago," he says. "We can go a long way before we have to worry."

Some aSW members disagree. They argue that the site has accepted people who don't have much in common with the original group of 500, hand-selected by Wachtmeister, an investment banker and the son of a Swedish diplomat.

Disgruntled Jet Set

On one of the site's discussion boards, a member lamented that a real-world party recently promoted on the site was attended by people whom he didn't recognize as aSW members. In response, another member wrote: "I've been to a few aSW-only events that one would have thought were Facebook (or even MySpace) people." Another complained: "Here in Spain, a great share of people becoming members nowadays do not match the original profile of 2004, 2005 [admitted members]. At all."

Naturally, discontent among some aSW members has encouraged a handful of would-be competitors to launch social-networking and event sites pledging to be even more exclusive.

BeautifulPeople.net promises members the "most beautifully, exclusive little black book in the world." The site asks potential members to submit photos and profile information for review by existing members. Members pay subscription fees.

DiamondLounge, which bills itself as a private members' club for the rich, famous, and powerful, plans to launch Oct. 1. Arya Marafie, DiamondLounge's managing director, says members will be accepted by invitation or by submitting a Web application. Rival sites, Marafie says, bill themselves as networks for "for millionaires and beautiful people, and then they let everyone in. DiamondLounge is a whole lot more exclusive."

Rather than seek ad revenue, DiamondLounge will rely on subscription fees and extra charges for premium services, such as the use of online conferencing services. Marafie says the club will shoot for 5,000 to 20,000 members and plans to host members-only, "red carpet" events in the real world, perhaps with sponsorship from advertisers.

Mainstream in Disguise

Real-world events are a key attraction of aSmallWorld. Every day, happenings are listed for people in hot spots such as Beijing, Cannes, Dubai, Paris, New York City, and the Hamptons. Some events are intimate gatherings thrown by aSW members simply to connect with others in the network. One recent event, a Hudson River sailing expedition, brought together about 10 people who sipped white wine and socialized while cruising up and down the river. "If you are a member, it gives people the impression that you are vouched for," says aSW member Dennis Lin, a 30-year-old project manager for a Manhattan financial-software company. "It allows people to let down their guard a little bit, and they are more open to going out."

But some events listed on aSW are just mainstream events in disguise, posted by publicists who have gained access to the site's message boards. These soirees, like a recent one held at a large New York lounge called the Forum, can be indistinguishable from any other event. Most people at the Forum that night—including the bouncer—had never heard of aSmallWorld. They had simply heard that the sponsor was giving away rum-based drinks for the first hour.

While some aSW members are peeved, there are plenty who like the idea of aSmallWorld that's large. Some are eagerly awaiting the day they might get invite privileges so they can move over their Facebook contacts. "What's wrong with meeting new people?" wrote one member. "What did you use to do before the Internet when you had to rub shoulders with all the common riff-raff? Don't be such a snob."