In the real world, the average Joe watches the Red Sox-Yankees game from the bleachers while the affluent mingle in the corporate boxes. Everyday Eddie deals with parking and public restrooms during his day at the beach, yet the mega-rich drop their keys with the valet and settle into a reserved lounge chair at a private club.
Online, the waters are parting too.
Though it once seemed that the Web was the last place where status didn't matter, the elite are now looking for a comfortable place to mingle with like-minded people. They're leaving Facebook and LinkedIn to the riffraff.
"It's taken a while for wealthy consumers to start using networking sites, mostly due to privacy issues and concerns," says Milton Pedraza, CEO of the Luxury Institute, a New York-based research company that focuses on high-net-worth individuals.
"But now they want to leverage all those social-networking advantages. Before, they had the opportunity to network at annual international meetings, but now they can connect to like-minded people in Dubai or anywhere in the world in an instant."
According to a January survey by the Luxury Institute, wealthy-consumer participation in online social networks is on the rise. Of the 805 people surveyed (each with a minimum gross annual income of $150,000) in 2008, 60% of respondents said they participate in a social network, up from 27% in 2007.
Participation levels for the wealthy in leading social networks were 16% for MySpace, 13% for LinkedIn and 11% for Facebook. On average, a wealthy person has membership in 2.8 social networks with an average of 110 connections. Unfortunately, according to Pedraza, too many invites, "pokes" and unrequited connections, coupled with the leaks in privacy, make exclusive sites more alluring.
A new breed of social site
The wealthy are instead heading to a new crop of ultra-exclusive social networks that have blossomed over the past few years, such as aSmallWorld, which launched in 2004. This year also saw the launch of Diamond Lounge and Squa.re.
Some networks come with strict invite-only policies and a rigorous application process based on education, job title, connections and lots of virtual velvet rope. Others, such as Squa.re and Quintessentially, are more lenient, requiring simply an invite from any existing member.
ASmallWorld, by far the most well-known and well-attended site for digital A-listers, was launched in March 2004 by former Lehman Brothers banker Erik Wachtmeister. Born into a diplomat family (his father was the Swedish ambassador to the U.S.), Wachtmeister started networking at an early age.
"I realized there was an existing community of people who are connected by three degrees of separation: They stay at the same resorts when they travel, frequent the same restaurants and have similar lifestyles. They needed a platform to share and receive information--it was a huge untapped opportunity," Wachtmeister says.
ASmallWorld has grown to include 320,000 members globally (Facebook boasts 40 million, by contrast) with 65% of the members in the U.K., Italy, Germany and France and 20% in the U.S. The rest are sprinkled throughout the Middle East and Asia. Wachtmeister's site has been even called "MySpace for millionaires" by the Wall Street Journal. But Wachtmeister maintains that aSmallWorld is a niche community that doesn't allow self-promotion or aggressive networking.
Once invited to join the network (only selected members with a sturdy Rolodex are given invite powers), a member can browse the market guide (a high-end Craigslist where there are currently 500 member-listed yachts for sale), surf the luxury-travel guide and global-event guide, or participate in forum discussions--one of the site's most active and popular functions.
"Anyone with good lawyers in Phuket, Thailand?" a member recently asked on aSmallWorld's forum. He continues: "I'm building a sustainable-apartment development and need some U.K.-Thai contracts written up for an investor."
Another writes that she's "looking for recommendations for the U.K.'s and/or Europe's top cosmetic doctors to perform liposuction or the fat-dissolving laser treatment."
Participating in the forums and access to the site is free, supported by advertisers such as Cartier, Moet & Chandon and Patek Philippe--all lured on board by the guarantee of targeting a luxury-obsessed audience.
Striking a balance
Others are jumping on the bandwagon too, but finding the balance between staying exclusive and making a profit is a big challenge.
Case in point: The newly launched DiamondLounge.com. Significantly smaller, with only 150 members, the company has flip-flopped between fee-based and free, and has shifted its focus from business networking and social site to dating and fun, "like an online club," says owner Arya Marafie. He says a slow and controlled growth in these early days is critical to the site's long-term success.
"We spent a tremendous amount of time making sure that we selected the right club members, because these are the people who will invite the next group," says Marafie, adding that most of those hand-selected people are CEOs, lawyers, directors or doctors. But Marafie admits that this mix will most likely change as the site switches to a party-like environment.
"Being wealthy won't automatically get you in the door," says Marafie, "You have to be interesting and bring something to the table." He says the average age of his members is 35 to 40, significantly older than the MySpace or Facebook demographic. However, according to a study by comScore Media Metrix, 68% of the 55 million MySpace users and 50% of Facebook's 15 million users are now 25 and older.
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Next month, the Luxury Institute is also launching a network catering to the affluent. For an annual fee of $250, LuxuryRatings.com will offer access to member ratings of several different types of service providers, from wealth advisers to art dealers to yacht brokers. The fee eliminates the need for online advertising, which, Pedraza says, would be a conflict of interest.
Will it work?
"People are unhappy with the free-for-all at LinkedIn and Facebook and MySpace. They are looking for a specialized group to mingle with, and paying a fee weeds out the ones who don't belong," says Chris Curtis, director of Web Business Ownership LLC, a Delaware-based Internet consulting company.
"Exclusive sites are becoming more prevalent because not everyone is willing to network with people they don't know," she adds. "It provides a more formal type of introduction within a closed circle. [The networks] have staying power, but only if they listen to the needs of the society that they are creating."
But do the rich and successful have time to be searching the Web and schmoozing? "If it's worth their time, yes," says Pedraza. "I know people who are building a yacht, and peer-to-peer insight about where to go and who to work with is the sweet spot."
Getting to that spot, however, is the challenge. If you want to be inside these clubs, aim for one of the more lenient ones that require an easy-to-find invite where all members have invite powers. Choose carefully, though, because just like in high school, once everyone can join the cool club, it's no longer cool. The alternative is to pay the yearly $250 dues to join a site such as LuxuryRatings.com.
But if you're looking for an invite from the more exclusive groups, you simply have to know someone who matters.
"If you don't know anyone in the group, maybe it's not quite right for you," says Wachtmeister.
http://www.forbes.com/2008/05/02/social-networks-vip-tech-personal-cx_nr_0502style.html
