Danielle Gualtieri

Social capital.

It’s one of those business terms that sounds a little more complicated than it really is.

People.

Relationships. Connections. The people you can call when you need something.

In The Founder’s Dilemmas, Wasserman argues that social capital is one of the resources founders build before they ever launch a company. Barry, an entrepreneurial profile introduced in the book, is a good example. He spent years building relationships with potential employees, customers, advisors, and investors. By the time he started Masergy, 25 years after starting his network build, he had a robust reservoir of social capital he could actually tap.

But in a chronically online era, such as the one we find ourselves in today, has social capital changed?

What if Barry just went viral? Would he have had to build all of these connections out “in the wild?” Could he have done it faster?

What does social capital look like now?

The Shift

Wasserman’s examples are built largely around traditional careers and years spent in an industry.

But… you don’t necessarily need that anymore.

LinkedIn. Slack. Discord. Reddit. Substack. Online communities.

A young founder can find a mentor across the country. Meet a potential cofounder online. Find their first customers through a community they joined years before they ever had a business.

Has technology compressed the time it takes to build social capital?

I think it has.

At least when it comes to access.

But access and trust are not the same thing. And followers are not always the people participating in the market.

Connection ≠ Capital

You can have 5,000 LinkedIn connections and still only have five people you would call when things go sideways.

Would those 5,000 people invest in your company?

Join your startup?

Send you their best customer?

Maybe.

Maybe not.

Many younger entrepreneurs have grown up building friendships, communities, and professional relationships online. That gives us access to more people than previous generations could have imagined. But I think it also creates a new question:

Do digital connections create the same kind of trust as relationships built over years of working together?

I don’t think the answer is a definite yes.

And then there is something else.

Audience Capital

Today, founders can build an audience before they build a business.

A newsletter. A podcast. A LinkedIn following. A social media community.

That audience can become customers and, further, a source of feedback, brand awareness, or even potential employees or partners.

So is audience capital becoming a new form of social capital?

Maybe. Probably. Yes, even.

But having an audience isn’t the same as having people who actually know you (no matter how much your brand is ~authenticity~).

So What?

I think this changes the way we look at young founders.

They may not have Barry’s decades of industry relationships, but they have tools Barry didn’t have.

They can find people faster. They can reach outside their geographic area. They can build communities before they ever launch.

So the problem is no longer finding people.

It’s the ability to build relationships that those people actually trust.

Wasserman’s point still holds. Founders need people.

The way we find those people has changed.

But the way we build relationships hasn’t. Not really.

It is easier than ever to make connections. But social connection isn’t necessarily social capital.

The difference is whether we’re just collecting touch-points or building relationships that will still matter when we really need them.

References:

Wasserman, N. (2013). The Founder’s Dilemma: Anticipating and avoiding the pitfalls that can sink a startup. Princeton University Press.