I’ve been playing around with Hashable since August, and have become a pretty regular user. Why?

Relationships are the lifeblood of business. LinkedIn took a first step, and then stopped innovating in a meaningful way. From my perspective, they treat relationships as a commodity, and they are anything but! Hashable is taking the next step forward, with an appreciation of things like frequency and intensity. The Hashable team also understands how important mobile is going to be.

Introductions
Hashable improves the introduction process, and I say that having been on both the receiving and giving end. So far I find the “email intro” capability on the Hashable website to be the most effective method of the various options (you can customize your text, and set to private or public). I keep my intros off of Twitter.

I like that recipients get bio links on each other, and that they do not feel a need to keep me cc:ed or bcc:ed on subsequent exchange (Hashable tells me if they connected). When I am on the receiving end of an intro, I especially like the reminders, so that an intro does not fall between the cracks due to my hectic schedule.

Check-Ins & a Personal CRM
I am more excited about Hashable’s future as a personal CRM system. When I did a stint at Broadview (now Jefferies), we had an insanely good, custom-made CRM system. The M&A business is built on relationships, with long sales cycles, and I got to see the immense power of an *effectively-used* institutional CRM app.

I want to be able to very easily and privately “check in” with someone every time I have a business lunch, coffee, meeting or phone call (I gather that this is coming with their mobile app — I have not yet figured out how to do this effectively via email without actually emailing the other person, but will update this post if I do ** See below**). I want to see analytics and visualizations around my business relationship graph. I want to be able to see who is outside my graph that I should meet, and the most effective way to meet them.

I am sure that Hashable will face a challenge around identity, but Twitter handles are becoming more prevalent in the business world, and services are getting better at mapping multiple email addresses back to a single person.

Social Currency & Leaderboards?
I have been in love with virtual currencies for 10 years now, but am a bit cautious about how currency economics can be applied in a truly effective way to something as complex as human relationships without weird unintended consequences. It shall be interesting to watch, and will be a fascinating design task for the team. The leaderboards are a fun early-adopter kind of thing, and Hashable is already making some changes to make them more scalable as their audience diversifies, but being on the leaderboard does not really drive me to use the service other than give me the occasional smile (I have to focus my competitive nature elsewhere!).

Privacy
Call me old school, but I want to keep most interactions off of Twitter, and keep many entirely private. The world does not need to know when I have coffee with a potential bizdev partner. While there will no doubt be an explosion of hashable tweets as the service takes off, this will taper off just as it has with Foursquare, and probably faster. After all, it does not sustainably help your reputation to dilute the quality of your stream, nor to give the impression of name-dropping. Thankfully, while Hashable’s growth is no doubt benefiting from public activity, the product team understands the importance of privacy and discretion.

Net-net, while Hashable is a young service, I think it is a great start and has enormous potential.

** Update: The Hashable team told me that if I email dontpost@hashable.com and included a tag like #meeting in the subject line plus the person’s email address (so subject line would be “#meeting with sample@sample.com”), that you will see the event logged on your Dashboard page.

Virtual goods have finally been legitimized as a revenue model, rather than a niche (even weird) activity ignored in favor of advertising. Now the concept is spreading beyond its game / virtual world roots, and we’re seeing large numbers of companies trying to figure out a “virtual goods” strategy.

While I believe very strongly in virtual goods as an effective business model, I also think the number of folks trying to get a piece of the market will outstrip the total share of wallet possible. We shall see attempts at virtual goods revenue streams put into place without a clear understanding of the compulsion loops and triggers that drive spend.

I’ve been meaning to write a longer post about vgood compulsion loops for a while now, but time has been limited so I’m just going to start with a few bullet points. If you are thinking about a virtual goods business model, it is worth cross-examining your design against these concepts.

And what do I mean by “virtual good”? Within the context of games and virtual worlds, it is most commonly thought of as a discrete digital item upon which a user/player can exert some level of control, even if temporary. Examples include simple 2D pictures (ex: current Facebook gifts), 2D or 3D avatar or interior design accessories (ex: clothing, animations, furniture), and game pieces (ex: swords, armor, food). They can be functional or purely visual. For the purposes of simplicity, I am also going to treat digital currency and “activity points” as virtual goods.

The Right Environment
Virtual goods businesses don’t work well for hit-and-run or extremely lightweight experiences. They thrive with a game or service with one or more of the following:

• Repeat visitors (high re-playability)
• A sense of community
• A reasonable level of social or gameplay complexity

Purchase Motivations

• Competition: you want to beat others, you are tired of others beating you, or you have strong self-competition and a desire to be the best, thus you purchase virtual items if it clearly helps you achieve that goal
• Impatience: this manifests in two separate ways — the first is a clever use of “activity points” that forces people to pay more to keep on playing (i.e. feed the addiction – this is an example where customer irritation tied with desire leads to opening the wallet); the second is a desire to accelerate progress to “elite” status (tied to competitive motivations).
• Self-expression: often related to aesthetic rather than functional virtual goods (but not exclusively), this ties into the human desire to show off a sense of style / identity / personality, show off an affiliation with a group, or demonstrate a loyalty to a celebrity of some kind
• Gifting: gifting is a strong motivator if you have a definite community (or lots of small sub-communities) — where humans seeks to foster relationships.  As everyone knows, not all gifts are equal, so in a world of free/commodity items, motivated gifters will seek out a more valuable form of expression, either through money or through time (spent earning or creating the gift)
• Entertainment: this seems to appeal more to the female demographic, but shopping (especially if there is a social feedback loop) and/or collecting (especially if there is an overlay of social cooperation or competition) can be strong forms of entertainment

There are two approaches to building a virtual goods business: you can slap them on top of your experience and hope people buy, or you can design the requisite compulsion / motivation drivers into the core fabric of your experience.  The latter strategy ensures a much greater chance of success.

A few months ago, I listened to a panel organized by Battery Ventures called “Monetizing Social Media”.  Perhaps not surprisingly for a New York-based event, the panel spent 99% of the time talking about advertising.  Still, I was surprised to see both the Facebook and MySpace representatives brush off microtransaction business models as niche and not worth discussing.

The total advertising market is certainly much bigger than virtual goods, so I can understand why they keep trying to capture ad spend dollars, but when you look at companies like Tencent and watch the rapid growth of micro-transaction based apps, the dependence on advertising starts to feel a bit like wearing blinders.  However, notwithstanding the panelists statements, both MySpace and Facebook seem to be working on virtual currency strategies, and they are smart to diversify since ad dollars still aren’t racing their way.

eMarketer now forecasts that advertising in online social networks is going to fall 3% in 2009, although they do think it will recover in 2010 and grow 10% above the 2008 levels.

After pouring so much effort into advertising, will they understand enough about virtual goods to capitalize on the new model? That remains to be seen. Facebook’s neglect of its gift system has not been a good sign, but perhaps times are a-changing.

The point is not that micro-transactions are the new savior to socnets.  Advertising will be an important revenue source.  However, as the music industry is learning, diversification of revenue streams is the name of the game.