Four and a half years ago, I started talking about how the currency in online communities is social capital...or Whuffie...and subsequently wrote a book on the subject. I had gained enough social capital in the online community space to be blessed by a book publisher to write a book as a thought leader on the subject. I didn't even need to knock on any doors. The social capital I gained that gave me leverage was, largely, through connections. Sure, I knew what I was talking about. I was living it. Studying it. Creating it. I was fairly knowledgeable on the subject (although the subject was -and still is- still a fuzzy area, so nobody can really gain expertise in it). But the biggest reason I gained enough leverage to get a book deal was because of my connections. I could get quotes from Michael Arrington, Jimmy Wales, Biz Stone and other movers/shakers in the biz. Others blogged about my posts or sent them around to others (through my stats, I could see more of my posts were being passed around by email than any other method - and usually within organizations).
And, yes, I worked hard. And, yes, I was early enough to stand out. And all of that. But I'd say I had unique access to networks because:
- I'm a white, middle-class, educated woman
- I'm attractive
- I had a whole lot of years of opened doors behind me that came from me being the above
So when I read Jon Bischke's post "What Really keeps Poor People Poor" I cheered out loud for his cogent statements like:
"(P)eople from lower-income families aren’t able to gain access to the same networks that higher-income families have access to."
"Poverty is not deprivation. It is isolation."
I feel like I'm living proof of the advantage of the power of networks on my income every single day. I was raised in a small town in Alberta. I had never heard of the Venture Capital world. Who knew there was a rather large group of people who gave money to another group of people in exchange for a company that is worth nothing (but may be worth something someday)?
I discovered this world in the early 00's and was fascinated by it. Now I'm in the midst of raising money for my own company in this manner. My company will be valued at a guestimated amount of money based on a guestimated future marketplace. It's pretty wild if you ask me. Of course, this happens because those guestimated numbers and future marketplaces actually pay off...and sometimes in bigger numbers than dreamt up. So it's worth the gamble for the investors.
But the part of this whole world that really baffles me is the access part of it. Certain people have access and certain people don't. Not that there is some bouncer at the door that stops one group of people and allows another, but knowing someone means the difference between getting a meeting and not getting a meeting. And then there is a difference between how that meeting goes depending on the type of introduction.
Introduced by a friend of an angel/VC? Pretty good. May be more patient with you and give you good feedback. Not a slam dunk, though. Introduced by a portfolio company CEO? Pretty good. Not a slam dunk. Introduced by a portfolio company CEO with a good exit? Awesome. Depending on the level of enthusiasm from the CEO (better yet, why not bring them along), could be a HUGE slam dunk. Introduced by another angel/VC? Awesome. But only if that angel/VC says they are wanting to invest. Then it's pretty much a slam dunk. If it's a 'pass off' ("I met with them and am not investing, but you may want to"), it is not.
Y-Combinator is a slam dunk because of Paul Graham and his connections. Accelerators have been around for ages. This one is special because of the man behind it. Because of his connections. The reason why the value of many other accelerators is questionnable is because they don't have the same prestige. And that prestige has everything to do with social capital.
Why do people go to conferences? The connections. Why do people go to university/college? The connections. Sure, you can learn stuff and grow your talent, but as Bischke's article states, you can get access to all sorts of knowledge, talks, lectures and resources online, too. It's not the content, it's the connections. And when the barrier to entry is high (Conferences like TED or The Lobby - schools like Harvard), it's a signal that you now have access to those connections, too.
Over and over again, I'm observing how valuable connections are. Social classes aren't dead by any means. If anything, they've become more powerful than ever. In a world that is incredibly connected and competitive, it's getting more and more important to separate the signals from the noise and social class is an easy way to validate a strong signal.
For the record, I'm not endorsing this. I'm merely observing it. I've been told repeatedly that the web creates meritocracies, but from personal experience, I've seen that the world that controls the web also reinforces social hierarchies. It's a bit confusing. Doors are opening, but getting through them is easier for some than others. Knowing this makes it easier to break into 'the club'. Unfortunately, entry to the club is easier for some than others.
You can have the world's coolest idea, be amazingly smart and have executed perfectly, but without that 'social proof' (ex-Googler, former exit, introduced by the right people, etc.), you will have a tougher time getting through the noise. I sometimes wonder how many companies have failed because they ran out of money before they could get through the ranks. I've heard stories first hand. There are probably many more.
Hopefully programs like Angela Benton, Wayne Sutton and Toby Morning's NewMeAccelerator will go a long way towards creating connections for those previously on the outside. And personally, I'd love to answer Bischke's call for increasing access to networks for those on the outside. As I work my way inside, I'll continue to share my own experience with access, then when I exit and set up my own venture firm someday, I'll focus on finding, meeting with, working with an mentoring those with great ideas.