Babson Entrepreneur Experience Lab

Elements of the Entrepreneur Experience

Social Capital

The (Social) Network is Everything

Everyone knows that networking is a conspicuous component of the entrepreneur experience, but the spectacle and connotations can obscure the true value.  Networking is fundamentally about building social capital and creating trusted communities through which you have access to an extended body of actual and potential resources. Entrepreneurship is inherently unpredictable and it’s nearly impossible to forecast what obstacles and hurdles will arise. By encompassing a range of individuals and experiences, a robust social network enables one to more easily adapt to unforeseen issues and create opportunities for serendipity.  In fact, social capital is the most important tool for accessing the full range of critical resources necessary for entrepreneurs. This includes funding, but also knowledge, talent, expertise, community membership, and experience. In short, it’s a way to amplify individual capabilities.

In addition to developing broad networks, entrepreneurs cited the importance of smaller, more intentional micro-networks. These could be groups based on mutual interest or an accelerator program, but they involve pooling collective resources for mutual benefit. These networks become a place to quickly say “I’ve got a question about X, what should I do?” and access the trusted expertise of others.

In the continual process of building social capital, there’s a turning point where entrepreneurs transition from having to proactively reach out through their networks and actually begin to draw resources towards themselves. This transition requires experience, reputation, and demonstrated success. But with traction and a body of social capital, the resources begin to move towards you.

Opportunities

  1. How can we help entrepreneurs gain access to useful micro-networks?

  2. How can we build stronger networks for peer mentorship?

  3. How can first timers develop social capital more quickly?

  4. How can we create non-competitive entrepreneurial networks and communities for sharing?

Track records attract social capital

Track records attract social capital

Diane

Diane has a proven track record, so she feels even if she had a lousy idea, she could get investor support.

http://blip.tv/play/h7YEgszgdAA.html

Serial entrepreneurs possess a distinct advantage by having existing and well developed social networks from which to draw. To start a venture with an established network and not have to work as hard to build social capital at each stage of a venture is immensely valuable. Moreover, prior startup success (and even sometimes failure) generates significant social capital in and of itself. Having a track record, especially a successful track record, can nearly guarantee a degree of success in the early stages of a new venture. People are far more likely to extend resources and support. Alongside having practiced entrepreneurship, this is a primary reason why the process becomes easier and more
fluid with time.

For instance, Diane runs one of the fastest growing companies in Massachusetts, a company that offers an innovative web-based marketing research platform for engaging customer communities. In the beginning, fundraising and garnering support was tricky as the company experienced slow or nonexistent growth for many years. However, today Diane is heralded as one of the state’s top entrepreneurs and, as a result, has a large stock of social capital. “I can have a lousy idea and most of those twelve VCs would give me money this time. I’ve been there and done that. Now they may not love the idea, but ultimately I think could get funding for a bad idea now.” She has social capital to burn.

Without robust networks, entrepreneurship is much more difficult

Without robust networks, entrepreneurship is much more difficult

Bennett

Bennett almost lost a contract because a new client didn't "know him." However, his banker stepped in and vouched for him and saved the contract.

http://blip.tv/play/h7YEgsrzdgA.html

Mark

Mark talks about entrepreneurs not having access to the "right" capital.

http://blip.tv/play/h7YEgszHBQA.html

Kamal

Without many support services, Kamal feels like he’s “on an island."

http://blip.tv/play/h7YEgs2pRgA.html

Kamal

Kamal doesn’t feel like he has very many resources within his communities.

http://blip.tv/play/h7YEgs2pSQA.html

The flip side is that without robust networks and access to potential networks, entrepreneurship is much more difficult. If social capital is a way for entrepreneurs to build and access experience they don’t have, then not having a rich network to draw on can undermine their ability to overcome obstacles. This is the most striking feature of weak ecosystems. Entrepreneurs don’t work in a vacuum and social networks are critical for both envisioning new ventures and for achieving success. So if you’re an entrepreneur practicing in a place where access to potential resources, expertise, and other entrepreneurs is limited from the beginning, then the challenge to build and grow a company is that much more difficult.

Laura, an entrepreneur herself, works with an organization supporting emerging entrepreneurs in Texas border cities, areas known to be economically depressed. According to her, the most limiting factor in these areas is the lack of resources within the ecosystem. It’s tough to get started because there are very few role models inspiring and modeling productive entrepreneurship. And then there is very little local support for emerging entrepreneurs. As one example, Laura explains that “you could have creative ideas, but again your network of people, even if they think you have a great idea, might not have available cash of  $150,000. Whereas your suburban, white man with his parents and where he grew up.... private school, his network has that kind of cash. He still has to have a good idea, but at least his network has that kind of cash to get him going.”
 

Micro-social networks equal instant access

Micro-social networks equal instant access

Meg

Meg talks about the importance of community; mainly the importance of her investment community.

http://blip.tv/play/h7YEgsuPHgA.html

Tina

An incubator opened up a lot of networking doors for Tina.

http://blip.tv/play/h7YEgsv3HAA.html

Startup Chicks

Being part of a particular group can have a cascading effect on social networks and access to resources.

http://blip.tv/play/h7YEgs3LTwA.html

Eileen

From the very beginning Eileen was a building a team – the so-called kitchen cabinet – and leveraging her social networks to develop the business model.

http://blip.tv/play/h7YEgs6dYAA.html

Brian

Brian talks about the value of Y-Combinator.

http://blip.tv/play/h7YEgs6uewA.html

Brian

Brian talks about the importance of micro-networks from accelerator programs.

http://blip.tv/play/h7YEgs6vDAA.html

Micro-social networks are shortcuts to the full range of resources required in navigating the entrepreneur experience. Despite social media networks, face-to-face interactions are still key to building social networks, and events are one of the prime draws for this activity. However, many entrepreneurs cited the pitfalls of too much networking. In cities with robust ecosystems, there are often so many networking events that they can hinder productive activity and make it difficult to create opportunities for truly purposeful networking.

Herein lies the distinct advantage of being accepted into a micro-social network such as an technology startup accelerator program—it creates instant access to a network rich with resources and social capital and confers credibility and status within the community. Brian, a young entrepreneur and recent transplant to Silicon Valley, gained instant access to an incredibly valuable network through his participation in the YCombinator and 500 Startups accelerator programs. (It’s not uncommon for entrepreneurs to hang out in more than one accelerator/incubator program officially or unofficially). Within weeks he developed multiple micro-networks that are a rich source of knowledge, capital, and further connections for his proprietary eye tracking technology venture. “It’s an unbelievable experience in that you’re presenting to people–the net worth of that room is more money than you’ll ever see in your life.... Then you have this big networking experience and that’s where you get a ton of introductions.... where you generate your buzz and that’s where people write about you.... The connections we made there are immensely, immensely valuable.”