What two social networks founded in 2004 have registered users numbering 9-digits, have been profitable for 3 years, are based in Silicon Valley, and focus on connecting people through status updates and social gaming? If you’re reading this, you probably have an account on one of them. The other one has been flying under the radar (and right under our noses) for years.

Tagged.com has always held a parallel course with Facebook. They’ve simply been on a slightly different road ever since it became apparent they would not be able to beat Mark Zuckerberg’s mammoth social network. Unlike MySpace, Hi5, Friendster, and others that waited too long to pull away from the futile effort of taking on Facebook head-to-head, Tagged saw into its own future and changed paths early enough to carve its own path.

That foresight is the reason that the site continues to grow while others in the Web 2.0 world are getting crushed under the weight of Facebook, Twitter, LinkedIn — and now Google+.

The Detour

When the rush to create a better social network than MySpace started in 2004, hundreds of startups volleyed for domains, coded like crazy, and tried to put enough flair into their websites to differentiate themselves and beat MySpace in the arena it had built. Most who analyzed MySpace even in its heyday realized that the site’s poor infrastructure and high-school demographic were weaknesses that could be exploited. They saw a world where other networks could beat MySpace to the older demographic who actually had money, faster than MySpacers would be able to grow up.

Tagged was amongst the group of contenders and offered services and a design similar to MySpace to aid in familiarity while giving it a more adult atmosphere. By early 2007, the writing was on the wall. Facebook was picking up steam and would fly past MySpace. They were growing faster than the others and had struck a cord with features such as “poking” in a way that demanded a change in direction. Tagged was the only on in the group that took the detour.

They were able to differentiate themselves through a simple concept – social discovery. While Facebook was the place to find real-life friends and family and share with them, Tagged became the place to make new friends. If Facebook was the high school reunion, Tagged was the cocktail party. Most everyone who went to the party did so to meet people rather than to see people they already knew.

It was a risky move. Facebook was proving that people attract their friends and family, who bring more friends and more family – it was a domino effect that proved to be the winning recipe for success. Fast growth yielded faster growth. Only in recent weeks has the site shown signs of slowing down – with nearly 800 million users worldwide, the “low hanging fruit” have already been picked.

In taking on the discovery niche, Tagged would not have a built-in growth model. They would need to grow through effort and exposure. They would need to generate the users rather than let the users generate more for them. Word-of-mouth was not as strong. If the goal of a site is to meet new people, who are you going to tell in real life? In many cases, they wouldn’t necessarily want their real friends and family on the network.

Despite the risks, Tagged has clawed its way into the enviable position of taking over MySpace’s soon-to-be vacated spot. Facebook and Google+ are focusing on connecting the familiar. LinkedIn is all about business. Twitter is, well, Twitter. With 100 million registered users, steady growth, and MySpace shifting gears (and owners), Tagged is poised to make the next big splash. To do it, they’ll need more talent.

The Need

There’s no shortage of money or dreams in Silicon Valley. The only resources that are hard to come by are talent and parking spaces. There is an underground war between hundreds of tech firms and startups vying for the brightest programmers, designers, and developers in the world.

Compared to larger social networks, Tagged is relatively light on people with just over 100 employees. That will be changing in the months ahead as they push forward in recruiting top-notch talent through a provocative compensation package and a world of potential. While Google, Facebook, Paypal, and other tech companies have deeper pockets, Tagged is uniquely positioned to offer something the bigger companies cannot – substantial stakes in a growing and profitable business.

With zero turnover in the last 9 months, Tagged has shown it can keep its people happy. If they can secure more talent, making the jump from profitable to rich could happen by 2012.

The Future

Trying to predict the future in tech and particularly in social media is like predicting the weather. Forecasters are only able to see into the near-future and atmospheric conditions can change drastically. There are a few questions who’s answers will help determine the future of Tagged and social networks in general:

1. Will Google+ be able to mount a true challenge to Facebook’s supremacy, or is it a hot (okay, extremely hot) flash in the pan? If so, this can be a huge win for Tagged which needs them focusing on the war over old friends and family while Tagged focuses on helping people make new friends.
2. Is social gaming something that only Zynga and, as a result, Facebook able to truly command, or is there room for alternatives? History shows that when it comes to gaming, people prefer variety over bulk. It doesn’t matter whether there are 100 or 100 million farmers on Facebook. The need for more options opens the doors to companies who can build and market new games. Tagged is one of those companies and is focusing strongly on it.
3. Is the “best of the best” talent in Silicon Valley looking for security and a steady company or are they looking to be part of building something? The answer varies, of course, from individual to individual. The better question as it pertains to Tagged is whether or not they’ll be able to get the word out about strong salaries, a high level of current talent (as the best like to work with the best), and benefits such as daily catered lunches and unlimited paid time off. If they can, the talent will come.
4. What’s next? What’s coming up and around the corner that nobody sees? What deals are being made, what companies are being started, and what big idea will emerge to spark the next big boom in Silicon Valley?

These are questions that nobody can fully answer. There’s a reason that it’s called “venture” capital. Tagged is well beyond the venture phase of the company, but until you’re Apple, Google, or Facebook, the risk of failure is always present. Even those companies, as silly as it may seem now, can fail. In Silicon Valley, there’s no such thing as too big to fail. Thankfully for the rest of the companies making moves, there’s no such thing as too small to succeed.