Perspective, Pontification and Propoganda about Entrepreneurship and Venture Capital, brought to you by David Hornik of Lobby Capital.

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Well David, I'm hoping I have some social "capital" with you :)

You make a very good point, if these networking sites promote only the act of finding contacts that can help oneself... pretty soon the ones giving the most will give up and stop using it.

This is why I like Ryze where there's a larger portion of social in it. You can begin to casually know a person by writing in their guestbooks and seeing what their interests are by what they in turn post in others' guestbooks and discussion groups. And from the information you gather maybe even give them some advice or pointers.

Once a person starts to know you, then they can decide whether to help you out... rather than the fact that you're a "friend" of a "friend" of a "friend".

Timothy Grayson

David (if I may -- having no such social capital in use between us),

Not having read your previous expositions on the topic and being reluctant to have an opinion on social networking software, I find your point and position interesting -- even agreeable. But, probably not by the same logic. [Reviewing prior to posting, I note some ;-) rambling. Excuse me.]

First to disagree: continuing the "capital" metaphor, while you are correct that it is easy to waste capital through dissipation, it is also very easy to render that capital irrelevant (for value creation) by non-use. That is, capital can only create value if it is tendered or employed for some value-expanding purpose: a stockpile of gold hidden away is a useless treasure gaining its possessor nothing by psychic pleasure. Similarly, social connections have to be used. (I think your concern is that social software presently ensures that capital is ABused -- I concur.) Moreover, whether the number of social connections and hence capital any one individual can possess is finite or infinite depends to a great degree, I would think, on the person in whose hands that social capital of connections rests. (I wonder, as well, whether the "social" aspect of this type of capital ought to imply an asset held by a group and not attributable to any one individual who, logically, can have no social capital without a group. Anyway . . .) To wit, the Rolodex (quaint, no?) of someone like former Canadian prime minister, Brian Mulroney, is vast to the point of infinite and, important here, well utilized both for reasons of personal gain and for the purpose of making creating additional social capital among others (e.g., introductions, etc.) Mulroney is a major hub -- in his world of geo-political commercial affairs -- in the language of network science. The phenomena that is "small worlds" and loose ties suggests that -- ironically -- it is the loose ties that are most valuable for marketing, networking, connecting over a broader space.

Regardless, and I think this is my point, social software does not by itself do anything but create an opportunity to visualize the depth and dare I say it, "worth," of those otherwise invisible social loose ties. So the idea behind social software has merit because for the most part even those who are disciplined at networking substantially rely on serendipidous connection with a "good" contact (i.e., one that can help because of a strong tie to a well-placed, loosely-tied contact with us) who can be of value to us (and us to her, perhaps). At its best, social software displays a more graphically understandable topography of one's place in a social network. It could allow for more efficient networking and all that implies (dissemination of information, connections, commercial and personal gain, etc.). Sadly, typically, social software is going through a frenzy of interest and abuse by all parties around it from those looking to find a "friend of a friend of a friend" with the misunderstanding that the simple linkage is adequate to generate a connection of value (your point, well made) to others hoping to fund and profit from the next big thing.

As with any new tool, toy, or technology, the explorers and amateurs are figuring it out by abusing the idea to the extreme. I think we need to have faith that the value will be found eventually -- probabably not where we're looking either.

Just to make it clear: I'm not shilling for social software or its various creators. Don't even use it; just enjoy the idea.

Giff Constable

I agree with your skepticism, David. People desire to have a strong rolodex, but we also work to keep "access" (those who can contact us) to a minimum. Furthermore, referrals have to be done with care, for the quality of the referred reflects on the reputation of the referrer. Human issues of trust and reputation are very difficult to bring online (as much as we tried at Ithority and

Social networking for anything more serious than flirting suffers from dis-economies of scale. The larger the group, the less useful. Quality gets overwhelmed by noise.

In the late 90's I was part of an interesting web-based community (mostly Bay area people) called Addapt, built by Rich Persaud. It worked partly because it was well designed, but mostly because it was *small*, invitation-only, and had really interesting people.

I can see these newer sites getting lots of members and seeing decent usage, not unlike, but I have a hard time seeing a real business proposition. The cynical eye would say the current hype is fueled by investors looking for a quick flip via purchase by yahoo/ebay/google/MS/AOL.

By the way, I never thanked you for referring Kat McCabe all those years ago. She was great to work with. Hope you are enjoying working with the August crew. Cheers, Giff Constable (giffc - at - constable - dt - net)

Derek Woolverton

Social Networking Products are valuable for other effects they support, such as connecting people that don't live in the center of the universe (take your pick: Silicon Valley, New York, etc.). I'm an experienced programmer (probably the top 0.1% of my field) and a serial entrepreneur; but because of some strange choices like initially going into the computer graphics field where competition and technologies are chewed through on a regular basis; and later moving away from California into the high mountains of Arizona; I found myself left with a rather lean network.

Web logs, social networking tools, and other real-time collaborative technologies (VoIP, Skype, IRC, IM); have helped me reconnect with the world out there and attempt to build out a network of connections that I can use going forward (both for finding opportunities, and for finding other resources to help me develop opportunities that I create).

Interesting people are a scarce resource and finding new ones has been a journey, but these social systems have created a new level of exploring relationships, which I have been able to use to forge new contacts (strong and weak). With the variety of human interests, personalities and even the dynamic of changing interests in an individual; even if networking is a zero sum game, perhaps there is value in shuffling a few of the cards once in a while, reaching new people or discovering new aspects of casual contacts.

Christopher Allen

It just happens that yesterday I too posted my problems with over 6 months of experimenting, at "Social Software -- Problems & the Definition of Friends"

I also note that Scott Loftessness has similar issues in his blog post "Social Networking:

Yet it is interesting that we all are giving it so much effort. We know something interesting is there, even if we can't figure it out quite yet.

Ian Grove-Stephensen

Two counterpoints:

1: The 'use it or lose it' principle has been well explored by previous commentators. One might put some numbers on it by looking at sales-cycle research. Frequently sales people find themselves scratching around for excuses to contact customers; they might find the making of an introduction a satisfyingly rich way to do this.

2. A well-connectd VC may be at his limit for viable contacts, but most people are very far from it. It is amongst these less well-connected that the true potential of social sofware lies. The 'capital' metaphor lets us down here; it might be better to talk in terms of 'social potential'.

Auren Hoffman

David -- relationships are not a zero-sum game.

To a particular person, your network of contacts is only as good as the last contact you put them in touch with.

Your contacts are the opposite of cash. If you spend cash, you lose it �- but if you keep cash tucked away in the bank, you earn compound interest on it.

If you keep a contact tucked away, it goes stale and you'll lose the ability to call on the person in the future. But if you "spend" the contact by contacting that person or putting them in touch with others in your network, you earn interest.

The more contacts you have that know each other, the more you gain because of the amplified network effect. If you are more than two degrees of separation from someone, then you are too far to utilize that person. So it is in your best interest to get your contacts to know as many people as possible. If you know 100 people and they each know 100 people, even if there is a 30% overlap, you still are now connected to over 7000 people.

Alex Salkever

David, I wrote something along these lines a while back with regard to Friendster. I find it very interesting that everyone assumes we can replicate in the virtual world what is an exceedingly complex pecking order exercise in the physical world. The flattening effect of social software renders it far less informational and useful than, say, going to an O'Reilly conference where you can pretty much tell after talking to someone for 30 seconds whether you want them in your network. All IMHO.

Simon Bates


This is a very interesting article. I think the issue you raise actually goes wider - to the whole web-based interaction arena and one's own 'time' capital and leaves me personally with very confused views.

For example I like the way that via the internet I can find out what other people think, without having to be guided by what I read in a newspaper or hear on TV. But, and its a big but, it all takes time. Recently while I was eating my lunch, I read through a load of comments that had been posted on the BBC website about a new article. After about 10 minutes (during which time I may have only viewed a fraction of the comments) I could see that there were broadly two or three viewpoints and that they were repeatedly coming through. In the 'old' days, I would have gleaned those two or three perspectives in a well-written newpaper article, possibly in about one or two sentances and hence in under a minute.

Multiply that over for web-based interaction on local politics, work issues, personal hobbies etc etc and am I going to achieve more with my time or less?

Additionally one's time is wasted by the totally loony or aggressive contributions that some people make to web-based discussions.

Fundamentally, even though on the internet, the activity is seen as many-to-many, from an individuals perspective content creation is still one-to-many and interaction is only one-to-one. It may help you find more interactions to have, but it doesn't give you any more time to have them.

(This venture blog is great by the way - one of the most stimulating blogs I get to read)

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