Fast Interview: Tech observer and former VC Eric Litman, who recently founded Medialets, an ad delivery platform for native mobile applications, discusses why a million friends can be more valuable than a million bucks.
Can't get that VC firm to return your calls? Don't despair! Startups can increasingly scale up by taking advantage of another type of capital -- social capital. Litman, a prominent entrepreneur, says it's easier than ever to leverage relationships into business success, and you have to spend social capital before you can profit from it. In fact, such networking helped him launch his new company in six weeks.
Why is social capital so valuable?
The one thing I've consistently seen entrepreneurs do that has significant measurable impact on everything they do -- more than any other factor -- is manage their relationships and manage their social capital. Folks that do that really well are bound to find some measure of success in some area of their life. It may not be the course they set initially, but there's invariably some positive that comes from it. So I've made it point throughout my own endeavors to continue to find ways to improve my own ability to manage and maintain relationships and to learn from others.
More importantly, to maximize the value that one gets from a relationship, one has to give a great deal. I spend a fair amount of my time making introductions, providing referrals, providing connections and generally engaging with the breadth of the community to benefit the business and personal lives of others. It's like an investment strategy: the more social capital that you spend, the more your network appreciates and the more social capital you ultimately have to spend in future endeavors.
Why is social capital becoming more of an alternative to traditional venture capital?
It has everything to do with the power of the communications networks at our disposal today -- the instantaneous nature of communications, the lack of barriers between people at different levels of career and industry, and the ease and rapidity with which messages can spread. I can go into the office in the morning, determine some new business or personal need and, almost invariably, within a matter of hours be directly connected to someone at the top of whatever related field and have a dialogue about how I'm going to solve that business need. I'm an enormous believer in the power of all the online social tools. And I use every one of them. On any given day, I find myself in utter amazement at just how transformative these tools have been to my business and personal life.
How do you leverage friends into a business that makes money?
Last week, I made a decision that I wanted to form five new significant relationships in the marketing and communications world. I sent out a message on Twitter -- I have 800 plus followers on Twitter. I received somewhere around 40 responses. I have significantly overstepped the goal and have some fabulous new relationships that are turning into business opportunities.
The odds of getting funding through the traditional VC route aren't great, are they?
It's a fairly grim picture. Depending on the year and economic conditions, there are somewhere between 3,500 and 4,000 venture capital professionals available to service deals in the USA. The opportunities for startups to get in front of those are exceptionally limited. A venture capitalist is typically going fund anywhere between one in a hundred or one in thousand deals. There's not a lot of room in there for startups to find access to capital.
(Lea el Resto de la Entrevista...
http://www.fastcompany.com/articles/2008/09/interview-eric-litman.html)
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