- Demonstrate the value of networks for entrepreneurs [SLIDE 1] An entrepreneur is required to interact with potential employees, resource providers, and other stakeholders. Keep in mind that in a networking group of 20 to 40 people, the amount of possible referrals and leads that you could obtain from this group is almost incalculable. Here's a quick example. Brian Pallas first realized the power of networks when he joined the Family Business Club at Columbia University, a club for students who came from high-net-worth families. However, with only 70 members, it was quite a limited network. By collating the clubs from Harvard, London School of Economics, and INSEAD, Pallas expanded the club globally, providing its members with the opportunity to network with trusted contacts all over the world. This global club eventually became Opportunity Network -- an organization that partners with top financial institutions to connect the "best banking clients" all over the world, giving them the opportunity to conduct very large, lucrative deals. The company aims to unite business leaders on a single platform to make it easier and more comfortable for a CEO in Manhattan to potentially partner with a senior manager in Africa. [SLIDE 2] There are three main advantages to networks: private information, access to diverse skillsets, and power. Private information is the type of information that is not available to the general public. Gathering unique information from network contacts, such as the release date of a new product, or what investors look for during a pitch, can give entrepreneurs the edge over the competition. The value of private information increases when trust is high in the network. Secondly, networks provide access to diverse skillsets. A highly diverse network of contacts gives you a broader perspective of certain situations and allows you to trade information and skills with people who have different experiences and backgrounds from your own. By actively taking part in events and seeking out new contacts at meetings, you will be able to find people with complimentary skills and experience to help you grow your venture. As the late Nobel Prize winner Linus Pauling said, "The best way to have a good idea is to have a lot of ideas." Finally, networks can give you access to power-people in senior or executive positions who can provide expert advice and introduce you to other powerful people in their network. Additionally, given the depth and breadth of your own network, you may actually have power. [SLIDE 3] Let's take a closer look at our personal networks and the different types of roles people play. First, people in your network can help you to progress by offering information and instruction, especially when trying to learn complex tasks. They can also refer you to others who might be able to assist in achieving difficult tasks. Second, people can help protect your venture by giving you advice when you are confronted with high-risk situations or are going through a rough patch. For example, when Mark Zuckerberg experienced confusion about the direction of Facebook in the early days, he sought advice from Steve Jobs, who urged Zuckerberg to take a trip to India to help him reconnect with Facebook's original mission. Zuckerberg took Jobs's advice and credits that trip for giving him clarity about the future of Facebook and his mission to provide Internet connectivity all over the world. Third, people can provide personal and emotional support by listening to your concerns, empathizing, and offering advice when required. Finally, people become your role models. You can be inspired by their achievements, and in many cases, they represent what you would like to be when you progress as an entrepreneur. In sum, networks can provide three types of support: career support, psychosocial support, and role modeling. [SLIDE 4] Despite the value of networking, many new entrepreneurs fail to take advantage of networking opportunities. What stops them from networking effectively? Poor impression management and lack of confidence are the biggest inhibiting factors. Impression management is paying conscious attention to the way people perceive you and taking steps to be perceived in the way you want others to see you. When people interact with you, they form opinions. For example, the social cues that venture capitalists cue into are things like the following: How much does this person believe in this idea? How confident are they when speaking? How determined are they to make this work? Research shows that entrepreneurs who display strong social competence are more likely to receive outside funding. You can manage the impressions others form of you by the way you dress, being aware of your body language, being polite and courteous, and being confident and open. Your attitude is also part of impression management: making an effort to interact with and learn from others goes a long way toward making a positive impression. Lack of confidence also makes people reluctant to make connections with others. Fear of failure, of not asking the "right" questions, and insecurity about themselves and what they want to achieve are factors that may prevent students from approaching guest speakers and asking questions. In some cases, networking is regarded negatively because some people may think of it as an insincere way of gaining a personal advantage. While in college or even in this course you are taking, it may not seem important to network with your classmates. However, never underestimate the value of networking with your peers. The students you sit next to in class might become your cofounders, your partners, your advisors, your employers, your stakeholders, and even your mentors one day. Interact with them, learn from shared experiences, make connections, and use them to expand your network. Keep in mind that many of the most successful ventures are built on forging relationships at the university level. Dropbox founders Drew Houston and Arash Ferdowsi met at MIT; Instagram founders Kevin Systrom and Mike Krieger met at Stanford; and Stacey Bendet and Rebecca Matchet, founders of contemporary clothing company Alice and Oliva, met at the University of Pennsylvania. Without being immediately conscious of it, these founders had become self-selected stakeholders before the venture had even existed. In the next section, we will explore the concept of self-selected stakeholders and their value to entrepreneurial ventures. [SLIDE 5] Usually, entrepreneurs do not think about stakeholders such as employees, contractors, suppliers, customers, and the like until after the business has started. However, entrepreneurs need to understand the importance of a particular type of stakeholders called self-selected stakeholders. These are the people who "self-select" into a venture in order to connect entrepreneurs with resources such as subject-matter expertise, funding, advice, introductions to others, new perspectives, feedback on concepts, acting as mentors, sharing war stories, and so on in an effort to steer the venture in the right direction. The first step to finding self-selected stakeholders is to think about the people you already know: your family and friends, people you have met at work, and people you encounter in school and social activities. These stakeholders may not even be part of the eventual founding team, but they are a valuable source of information and, potentially, investment. A stakeholder self-selects into your venture to offer some type of short term or long-term commitment in an effort to steer your venture in the right direction. Unlike venture capitalists and other investors, your self-selected stakeholders do not need to be pitched to or sold to. They are helping you because they feel motivated to give you access to information and resources that you didn't otherwise have. When people self-select into your network without any hidden agenda or motive, there is a huge opportunity to collaborate with them to build a better business. [SLIDE 6] Self-selection also ties in with the concept of enrollment as discussed as at the beginning of this course. Key to building the network is the idea of enrolling people in your idea rather than selling them. You aren't asking for favors. You are sharing in hopes they want to be a part of your network. They have something to offer, and you have something of value to provide. Building your network is not a sales job. It's not about trying to convince someone to do something that he or she may not ordinarily do. Rather, people join your network because they want to. People enroll in your vision because they're moved by your enthusiasm or idea. They see something that they want to become part of. Peter Senge, founding chairperson of the Society for Organizational Learning, offers the following three guidelines for enrollment:
  1. Be enrolled yourself. If you're not buying the future vision, opportunity, or team, others won't, either.
  2. Be truthful. Don't inflate the benefits beyond what they really are.
  3. Let the other person choose. Don't try hard to "convince' them. That comes across as manipulative and ultimately hurts enrollment.
One of the best ways to form a range of diverse connections with self-selected stakeholders is through shared activities. This might include joining sports teams, clubs, community service ventures, and voluntary and charitable associations. These activities bring together all sorts of people from different experiences and backgrounds. Remember that new ventures require a variety of talents, from marketing to technology to finance; and confining yourself to a particular group whose experience mirrors yours is unlikely to expand your skillset. Your goal is to learn more about the talents of acquaintances to find areas of mutual interest. Participating in a shared activity builds trust and passion and allows for people to be themselves outside a formal environment in the attainment of a common goal. Team members can build a loyal bond that may transfer into a working relationship. For example, the franchised indoor rock climbing business, Gravity Vault, was founded by Lucas Kovalcik and Tim Walsh, who met through a mutual love of rock climbing.