A LinkedIn for LGBT Entrepreneurs

Corrects the first name of Thomas Harpointner in the fifth paragraph.

When Cathy Brooks, a strategic communications coach, was approached last year about becoming a founding member of a social networking group, she hesitated for a moment. She's already on Facebook and Twitter, she attends local chamber events and technology professionals meetings—how much could one more online network do to promote her San Francisco business, Other Than That?

Then Brooks learned more about dot429, a kind of LinkedIn for lesbian, gay, bisexual, and transgender individuals and their allies (429 spells "gay" on a telephone keypad). Dot429 claims to be unique in that it's national in scope, solicits members from across the gay community, and includes allies. Most other gay business networks cater primarily to gay men or lesbians and are regionally based or focus on a particular industry or profession. "I have been out as a lesbian for 10 years, but I saw that as something I didn't need to trumpet in my business," she says. "Then I realized I was speaking out as a Jew and as a woman, so why not this?"

For Jana Rich, a partner at executive recruiting firm Russell Reynolds, joining dot429 was a business necessity. "I'm a lesbian myself, but even if I weren't, this is part of my job. We're hired by businesses from small to very large, and they want us to find them senior-level executives. Any sort of professional networking group is quite valuable to my company if the people in it are accomplished," she says.

While she has not found any prospective clients yet—dot429 launched formally in April and currently has a mailing list of 55,000—she is talking to some potential candidates she has met in the group. Having a shared background facilitates relationships, Rich has found. "The more you have in common, the more one is likely to find the right person," she says. "If I'm not a member of an in-group and I'm trying to network with them, the odds that my efforts will be returned, or that I'll find quality people, are a lot slimmer."

Worries About Being Ghetto-ized

Affinity marketing—or what some are calling "narrowcasting"—is not an Internet phenomenon. Ethnic chambers of commerce and religious-based business directories have been around for years, founded on the premise that it is easier to sell to and buy from people like oneself, says Thomas Harpointner, chief executive of AIS Media, an interactive marketing agency in Atlanta. "Online social networking is simply replicating what's been in existence in our society for a very long time," he says.

The practice, however, can be a double-edged sword for small business owners. Yes, it's an opportunity to create a strategic message and market one's goods or services in a surgical manner, as opposed to carpet-bombing. But the Internet's ability to segment markets can also strand entrepreneurs in a kind of business ghetto, something that contributed to Brooks' concerns about dot429.

"As a woman in business, I face the fact that at the end of the day I'm already playing in a smaller sandbox," she says. "That's always a challenge when you look at any sort of niche community, whether it's based on gender, race, religion, or social experience. My concern is not putting time into something that doesn't make a difference in your business."

And while some customers are likely to flock to companies founded by members of their particular group, others opt for a broader experience. "Some will segment their lives and join a group like the Hispanic Chamber of Commerce, but others purposefully go against the grain. They may not want to be categorized as ethnic or identify themselves as part of a special interest group," Harpointner notes.

More Than Rainbows

In the end, Brooks was won over to dot429 because of its emphasis on face-to-face networking and its specific outreach not just to LGBT professionals but also to their allies. "This is supposed to be a more egalitarian place, and I liked the branding, which was not all rainbow flags and pink triangles," she says.

Small business owners can make good use of affinity groups, whether they are online or off, but they should consider them a slice of their marketing mix, not the entirety, says John McCarthy, a director at WebMetro, a direct marketing agency in San Dimas, Calif.

"The benefits of affinity marketing are that people are more accepting of what you bring to the table. You have an immediate 'in,' and once you're there you can find the sweet spot of prospects that apply to your business," he says. "When you belong to a certain group, there's an implied endorsement that leads to a higher potential conversion rate."

From Discrimination, Loyalty

Many—if not most—members of niche networking groups share a history of suffering discrimination that can be a powerful business motivator. Elliot Tomaeno, communications manager for Wyndstorm.com, has found an enormous sense of loyalty and increased responsiveness on dot429.

"There are definite disadvantages to being gay in business, [because there are] people who see the gay community in a negative light," he says. Years ago, when he worked for an automotive magazine, he had to interact with car dealers, many of them ex-military men living in the deep South. "Being gay in that situation was something I needed to keep quiet, because I knew it would bring an extra layer of difficulty into the relationships," he says.

For gay business owners—or entrepreneurs in any sort of niche—having that built-in camaraderie can be a boon. And many business owners want to reach out and support others like them who are starting businesses or struggling to keep them afloat.

"I'm 43, and I've been doing what I've been doing for 15 years," Rich says. "I would like to give back to people, specifically people who are gay and lesbian and didn't have many role models along the way. I certainly didn't."

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