Like many marketing people in the business world I have been watching Facebook very closely since they recently opened up to people beyond college and high school students. (I actually "snuck" into Facebook a year ago using an alumni .edu email address.)
There are a lot of reasons why Facebook is poised to be pretty successful in the business world, even against entrenched competitors like LinkedIn. The key reason is that Facebook is a platform - an open network that allows others to develop applications for it - and because of that there are thousands of ways you can use Facebook because thousands of people have developed applications for it. By contrast, LinkedIn is a relatively closed system.
But, being a platform is not enough. Facebook has a number of big challenges before it can cross the chasm into mainstream business use the way LinkedIn has (about 5% of my contacts are on Facebook, but 50% of my contacts are on LinkedIn, and I tend to have pretty "early adopter" people in my contacts).
1) Integration with Outlook. Business people live in Outlook. We use email the way college kids use SMS (text messaging) or IM (instant messaging). I have actually had a credible & intelligent venture capitalist tell me that he did text messaging, when he actually just sent emails on a Blackberry. LinkedIn does a great job of integrating with Outlook. I can just click a button to tell it to scan my Outlook contacts to find people, and there is even a LinkedIn toolbar that makes a lot of cool stuff from LinkedIn accessible from Outlook.
For Facebook however, there is no integration. They have a place where you can upload a contacts file with some instructions, but to get it to work the process took me over half an hour. The default format that I exported from Outlook was not readable by Facebook, so I had to play a bunch of games in Excel to make it work. If I weren't writing a blog article about this, I would never have actually spent the time to finish.
2) Better company search functionality. We have a number of HubSpot employees on Facebook, and I was trying to connect with them. So I tried to search for people who work at "HubSpot". I got no results and was puzzled. Apparently Facebook does not have an automatic database of companies that builds based on people entering new companies (like tagging). It seems like there is some manual process to add companies to the list of companies that you can search for. This was probably because Facebook started at a few colleges and then expanded from there, and it is not that difficult to manually update that list of organizations. I am sure they copied the methodology for companies from what they did for colleges. But there are over 25 million small businesses in the US, so I don't think that method is scalable in the business world. So for now, when I search for HubSpot employees I get zero results on Facebook, when it should be a lot more than that. This limits their growth.
3) Branding & Experience. Facebook is really meant for college students (and now high school kids too). There are a lot of parts of the application that are clearly built around a brand and image that is appealing to students. But I join social networks for business purposes. So, why is it that on Facebook I get the following screen when I accept someone as my friend?
I am married and not looking online for people to "date" or "hook up". LinkedIn uses a "worked with", "managed", "reported to", "business partner" paradigm for defining the nature of relationships, clearly more relevant for business.
Another problem with Facebook for business is that the design of the profile is based on what a college student would want, not a professional. Facebook lists your sex, your current relationship status, if you are interested in men, women or both, what you are looking for on Facebook (options include "a relationship", "dating", "random play", "whatever I can get"). Not only is most of this not appropriate for a business social network, some of it is actually illegal to ask during a job interview.
I think that this branding or user experience problem is Facebook's biggest barrier to being successful in the business market. But, there is a cool opportunity here for Facebook to "skin" or provide a "theme" based on what type of user you are. For instance, a college student could get the current version, but I could get a version with a little different interface and data fields. This would also provide an interesting way to keep people on Facebook once they graduate, you could just allow them to change from a "student" to a "business" account so that their "looking for random play" setting would be hidden from their potential and actual employers.
Have you tried using Facebook for business networking? Let me know about your experience, good or bad, by leaving a comment below.

Travis 3:25 PM on September 24, 2007
I agree with you. I think the best way for Facebook to position itself as a useful business networking tool is to enable "business" profiles. Perhaps your business profile would be visible to everyone, but your personal profile could be limited to only your "friends" (separate from business contacts), and perhaps people that are one friend connection away from you (or some other variable that could be user-defined).
Niel 2:45 AM on September 25, 2007
I'm not sure if Facebook wants to be looked at as a business networking tool. It would lose it's current appeal. One already gets the impression that Facebook is growing faster than it can handle without having to set out a business version for post university users. Is this an opportunity for them to grow - yes, it is.. but I fear that they're on one big roller coaster ride at the moment and it will be some time before they can actually settle down and look to consolidate and thereafter expand.
Tom 4:14 PM on September 25, 2007
I just found your article off of Digg. Very interesting and right up our alley. We just launced a facebook application that makes facebook's business professionals 'findable'.
Sarah 11:10 AM on September 26, 2007
I see Facebook's purpose as SOCIAL networking whereas LinkedIn's purpose is professional networking. Even though Facebook's niche demographic is high school and college students, some of the best features of Facebook (e.g. Photos, Events, etc.) are relevant to all ages. As Facebook gains older and more mature users, they too will see the value of these tools as enablers for social networking. Also, I think it's important to note how customizable Facebook is. If you don't want to show your "relationship status" or "looking for", you don't have to. You can make your profile as professional or unprofessional as you want. Overall, I think the key difference is social networking vs. professional networking and that the majority of Facebook users don't want it to become a professional networking tool. I use Facebook and LinkedIn on a daily basis and love them both, but I use them for such different purposes. I do think there's an appropriate amount and way of including professional information on Facebook but if you add too much, similar to a LinkedIn profile, you've lost your concept. Maybe it's not a Facebook issue, and rather you want to be able to add more personal and social information to your LinkedIn profile?
Travis 11:55 AM on September 26, 2007
Tom, I checked out your facebook app and installed it. Looks like a great concept. I still think facebook should incorporate something that caters to business users, but in the meantime (or if they never do), I think you've got a great solution.
Jan 9:50 AM on October 02, 2007
It seems to me that Facebook is still evolving. Give it some time, I am sure most of the features we would will be incorporated.
Mark Mayhew 9:18 AM on October 26, 2007
Facebook has just about crushed LinkedIn, by now!
Jay 7:00 PM on March 13, 2008
Facebook and LinkedIn have different target audiences. Asking which is better is like asking "What is better? Air or water?"
Nicole 5:20 PM on July 03, 2008
Facebook was not built for businesspeople, but many businesspeople find LinkedIn a bit limited in terms of actual social interaction, so many turn to Facebook to make up for that deficiency. I actually like www.octopuscity.com since it combines the social networking functions of Facebook with the business focus of LinkedIn.