Building Social and Financial Capital (ENT 600)

I agree with Wasserman that “while people are building relevant human capital, they are often also building the social capital they hope to leverage as founders (The Founder’s Dilemmas: Anticipating and Avoiding The Pitfalls That Can Sink A Startup by Noah Wasserman).” Where I disagree with Wasserman is that “youth is often at a disadvantage (The Founder’s Dilemmas: Anticipating and Avoiding The Pitfalls That Can Sink A Startup by Noah Wasserman).” Buzz Marketing Group, compiled a “Professional Organizations Study 2015”, where 93% of respondents said they value social capital, but respondents under the age of 40 view professional organizations are “old school.” It goes on to note that 37% of those under 40 did not see value in professional organizations. (Entrepreneur.com).  People under 40 are considered part of the Millennial Generation and this will have a significant impact on the economy in years to come, as it is a larger generation than Baby Boomers.

Learning how millennials value social capital is integral in the success in improving the social capital of any business. Tina Wells, CEO of Buzz Marketing Group, believes that professional communities are the places were millennial leaders and business owners engage to build social capital and enhance their professional goals (Entrepreneur.com).  I believe that this concept is why so many companies, old and new, have invested in social media across the board. Companies understand social media is not just a means of casual communication, but is also a space that millennials use professionally to build and establish relationships. In my experience, traditional professional organizations are limited because many of them lean on interacting with people in-person and have limited or no touch points with members outside of the in-person interactions. Professional communities, like a Linkedin, allow for constant touch points for professionals and professional groups within a larger community. Sixty-seven percent of millennials noted that they would “prefer to join a organization founded by peers of similar age, such as YEC and FounderSociety (Entrepreneur.com).” Even Facebook has utilized this trend to their advantage. Facebook users can create groups, public or private, for numerous reasons, one of the reasons being to bring professionals together (Facebook.com). Recently, I was added to an invite-only group for black professionals in student affairs. The Buzz Marketing Group survey reported that 52% of the millennials they surveyed are “more likely to join a group that is invite only (Entrepreneur.com).” This information leads me to believe that contrary to Wasserman’s notion that youth are at a disadvantage, I would dare to say that they are at a greater advantage for building social capital in today’s times (The Founder’s Dilemmas: Anticipating and Avoiding The Pitfalls That Can Sink A Startup by Noah Wasserman).

The latter section of Building Social and Financial Capital in Wasserman’s The Founder’s Dilemmas, focuses on financial capital (The Founder’s Dilemmas: Anticipating and Avoiding The Pitfalls That Can Sink A Startup by Noah Wasserman). The founder of RTriad, built a “cash cushion” or “walk away” savings to be able to leave work and focus on the startup, just as Wasserman describes many other founders have done (The Founder’s Dilemmas: Anticipating and Avoiding The Pitfalls That Can Sink A Startup by Noah Wasserman). In addition to the savings, each founder of RTriad submitted a capital contribution of $1,000. The savings and contributions combined covered enough of the companies expenses until we were able to establish  clients and generate revenue.  Our human and social capital have been integral to the success of the company thus far.

References:

Rampton, John. “Millennials Have Rediscovered the Benefits Rejoining a Professional Organization.” Entrepreneur. https://www.entrepreneur.com/article/246691#. Accessed 9 September 2017

Wasserman, Noah. The Founder’s Dilemmas: Anticipating and Avoiding The Pitfalls That Can Sink A Startup. Princeton University Press, 2012.

Resources: 

Facebook – Creating a group https://www.facebook.com/help/167970719931213?helpref=about_content

YEC https://yec.co/

Founder Society https://foundersociety.co/

14 Comments Add yours

  1. Clarence Wooten says:

    I believe human capital in itself is greatly undervalued as an asset. From a personal perspective, I was able to gain employment at a couple different places due to human capital previously gained. A couple of friends that I had provided good references for me and I received the job because of their recommendations. If you think about it, Washington DC is one places where human capital is probably the greatest asset, perhaps outside of money, that an individual can have. Money is important in DC, but without human capital money only gets a person so far. You made an excellent point about sites such as LinkedIn being a social network building site as it provides opportunities for interaction and meeting like-minded individuals together. Really, it provides potential applicants for all phases of management and planning. I do not believe I fully appreciated the resource that it is until just commenting on it.

    1. chirpsendeavors_u5za5l says:

      Thanks for you sharing your thoughts Clarence! Yes, I totally agree with everything you said, and that DC is a great example of why social capital is so important. I have found the same to be true in even small rural areas. Everybody knows each other, and if you don’t you will not get much done. Your relationships are extremely important and can impact your progress.

  2. Awesome take on Wasserman’s text. I agree in part about youth not being at a disadvantage, but as a younger entrepreneur (28…so it’s not like I’m right out of college, but I still feel like I am playing catch up with some of the ins and outs of startups), I do agree with Wasserman that it is difficult to get a business off to a good start without building up sufficient financial capital. I do not have “walk away” savings yet, and while I have some social capital, it’s taken several years to be considered seriously by counterparts within the equine industry (I plan to create a horse training and riding lesson business).

    LinkedIn is a great resource, however perhaps I am more old school in my thinking that nothing really compares to the value of face-to-face conversations when attempting to build up social capital. You get to know people so much better and they may feel more comfortable in attesting to your business and recommending you to others. Just my take, and at the very least, it is quite fundamental in the equine industry, since most people are still old school there and do not rely on LinkedIn to get to know people. It’s more about getting to know people at horse shows, training events, clinics, etc. So I think the value of technology for networking varies based on the industry.

    1. chirpsendeavors_u5za5l says:

      Thanks for sharing Kristen! I agree in an industry such as yours that person to person interaction is more valued than online. The one thing I have found helpful though is that even informal streams of networking online are useful. I view social media as the new “middle man.” It is your connection to people that prior to the platform were not tangible or accessible. I wasn’t a fan of networking through social media and other online platforms until I realized this. For example, one day I was on twitter and simply engaged in a conversation about education with friends (no hashtags or anything). From that conversation, Dr. Steve Perry tweeted me directly. He is not a person that most people would describe as accessible, but we were able to communicate directly. Our conversation led to me being able to meet him and have dinner, as well as help him setup two events here in North Carolina. While many people have social media, I think it is extremely under utilized to our benefit.

      I know nothing, and I mean nothing, about your industry, so this an example of what could, and I emphasize could work, in your favor. I looked up the American Horse Council Staff. The President is Julie Broadway, who to your point does not have a LinkedIn (if she does, it is not searchable), but she does have a Facebook (Seems like many people within this industry are on Facebook actually. If they are older, as you mentioned, this makes senses that they prefer Facebook.) Through Facebook I learned that she is a fellow Tar Heel and finished her MBA from Meredith. You may have people within either of those networks who could help make the connection for you. The American Horse Council also has a twitter, that’s active which is important. I looked to see who they follow, and most tend to be organizations. There are a few individual people they follow though too. Looks like Alex Waldrop, President of National Thoroughbred Racing Association, and Jennifer Wood are active tweeters and people they follow. Julie Goodnight seems to be active as well. Follow them if you have a twitter, and I would say even tweet them from time to time. It could lead to conversation or opportunity that may have never happened. All in all, I do agree with you that how you build social capital does depend on the industry you are in, and that both present pros and cons. The more of us who can take advantage of both, will be better off for it.

  3. sabrarch32 says:

    Hi Dexter,
    I like the perspective you bring to the table when you analyze how to build social capital with regards to baby boomers and the millennial generation. As we connect and share ideas through blogging and social media we may never see each other face-to-face, but by sharing our ideas we are able to connect and grow together.

    1. chirpsendeavors_u5za5l says:

      Thanks for the input Sabrina! Yes, I believe networking is extremely important to both groups, but the values each generations places on who, when, where, and why are different. I didn’t give either option much thought until the assignment made me reflect on my own preferences. I do engage a little more with professionals online than through an organization, however I am a member of a few traditional professional organizations.

  4. Brad Tanner says:

    I’ll follow up your very insightful posting with my post to further your argument. Your posting is inspiring. Keep up your great ideas! I think you’re right on track. I look forward to reading more.

    As I pointed out in my blog your analysis for the above commenter was stellar. I’ve always struggled with the potential that social media could be a huge waste of time. I still think it can be. However, your analysis above demonstrates that the careful use of social media can rapidly and efficiently achieve robust results.

    Here is my blog which references yours. Thanks for the inspirational blog!
    http://blog.medstudentlearning.com/2017/09/building-social-and-financial-capital.html

    1. Dexter Robinson says:

      Thank you for your response Brad! I was just speaking with a student the other day who told me he no longer uses twitter. It was a waste of time he said. I encouraged him to add it back, and explained the approach I sometimes use to further my network. With the right mindset, social media can be a powerful resource. LinkedIn is essentially a digital resume that’s available twenty-four seven to people to view. It is working for your while, even when you’re not. The recommendations confirm your credibility and vet you to others who may not be as familiar with you. It’s another great resource to identify talent and expand your social capital.

  5. Arjay Sutton says:

    I’m envious of millennials when it comes to social networking. It’s never not existed for them. It’s like the telephone or cable TV to my generation. There are just so many platforms out there that serve so many different purposes. It would have been nice to have more than just Facebook for the past 5 years. Now I have to learn how to use all of these other tools like Linkdin and Reddit and a bunch of them I know nothing about, but having them as tools now is mandatory for success. Unless I could afford to hire a social media specialist…..

  6. Rakib says:

    Nice writing, I truly agree with your last sentence that ” Our human and social capital have been integral to the success of the company thus far”.

    1. Dexter Robinson says:

      Thank you Rakib! I’m a big believer in social capital and think it can provide you with the other types of capital your business may need through relationships.

  7. Taisir El-Souessi says:

    I appreciate your comments about how building social capital has changed. As an introvert, I kind of hate the face-to-face marketing I have to do for my company if it’s in large social groups but it’s easy to do in large groups in social media.

    1. Dexter Robinson says:

      I totally agree Tasir. I’m an introvert as well, even though many assume I’m an extrovert. It can be easier to interact with large groups via social media.

    2. Dexter Robinson says:

      Thanks Taisir! I’m an introvert as well, even though most people don’t realize it. I find it easier to deal with large groups via social media. More importantly, I am more easily heard and less likely to have to compete with extroverts to be heard via social media.

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