Silicon valley is generally considered by most as the best place to build a technology company, due to the large concentration of talent and capital, unmatched anywhere else in the world at that scale. But it's the valley's dirty little secret that it's really the network of people that make it all happen.
Every successful person in the SV tech scene is highly connected to talent and capital through their network. It is that network that makes seemingly random M&A deals, capital investments or recruiting top talent happen on a daily basis. And it's that network, more than anything else, that makes Silicon Valley so special for building high-growth companies.
Why a network is important
I've recently found myself quite often advising founders who are new to the valley or are thinking of moving there. The most common questions generally revolve around how to raise money. I've already collected my thoughts and experience on the topic of raising a seed round, so I have a few prepared answers, but in person I'm definitely putting much more emphasis on network building compared to everything else.
The best opportunities happen organically through mutually beneficial interests, instead of being artificially manufactured. The best way for that to happen is to get to know and make yourself known to as many people that could help you. Many inexperienced entrepreneurs just want to get meetings with high profile investors they've been stalking online on blogs and news sites. But even if they get those, a random meeting in unlikely to materialize into anything substantial. Similarly, founders might want to get to know the head of bizdev at tech giant x, in the hopes they can close the "one" deal or collaboration that will make them an overnight success. "If only we can get Apple to feature our app, we're gold!"
Just like you don't ask a girl to marry you on the first date, asking for a major investment of time, capital, resources or trust from someone you don't even know is more often than not a losing proposition. If you play a pure numbers game, you might get 1 out of a 100 to say yes to what you're asking, but you might have gotten your first choice and most ideal match if you had the right connections.
Most entrepreneurs are always talking about grand visions and outcomes for their companies that are not backed by concrete proof yet. It's much easier to get buy-in to your vision when you either know someone well, or when you have someone they hold in high regards vouch for you (the so called "warm intro"). Getting to that stage with people who can help you is the core of building a business network.
Building a network
What makes the valley special is how eager most successful people are to help newcomers. If you are passionate about your product, and are not too weird socially, most founders and investors will take a meeting with you even through a via a cold Email, and without a doubt with an introduction from someone they know.
Though I wouldn't consider us successful yet, I know I'm personally excited to be helping people who are in the same place we were a few years back, and I'm sure it's the same for the people who helped and are helping us right now. There's a feeling of "paying it forward" in the valley, that I have not seen as prominently elsewhere.
So how do you build a network? you could start by going to the various meetups and tech events that are so common here in the valley. Unfortunately, you might find that you run into a lot of people in a similar position as you, and very few people who can actually help. With the ratio of people looking for help to people who can provide it at those events, you might find yourself being drowned in the crowd.
Personally, as a mostly introverted person, I find those events very energy draining and not very effective. I'm much better at one-on-one or small group communication, and I also believe you can create much more meaningful relationships this way. Reach out to people that have successfully done what you are trying to do, and see if they would be willing to meet with you or even just discuss over Email the challenges you are facing now. You will be surprised how many will be respond positively as long you keep in mind the following:
- Be very clear on what you want to talk about, and why the person you are contacting is the right person to talk to. This also means you need to figure this out yourself before making the initial approach.
- Be respectful of their time. A part of that is doing your research on them beforehand and having a good answer to the previous point - don't just ask for general help with "everything". Another is not being too pushy to immediately have an in-person meeting if the other person is not yet convinced that he can help you. You might want to first see if there's interest in what you are doing.
- Show that you know your shit and are going places. Why is your company interesting? why are you the right person with the right team at the right time? a short introduction with your most relevant and impressive credentials / background would go a long way.
- Don't be weird. Don't stalk people repeatedly on social media, don't send them dozens of unanswered Emails, don't show up at events and do some real-life stalking. In short - don't let your desperation get the better of you. Yes, you really want their help - but consider that the people you are contacting likely have a very busy schedule and a multitude of other people demanding a piece of their time. As much as people are willing to help in the valley, everyone is dealing with their own stuff. Be mindful of that and let things take their natural course.
For founders looking to raise money, I advise to start shortlising founders of companies in the same industry that are a few steps ahead of them in the process. Companies that already raised significant capital and / or have significant traction or revenue. Reach out to them through Email or visit events they organize. The best introductions to investors come from successful founders they invested in - not other investors or mentors.
Getting founders in your industry interested in what you are doing is the first step in building a solid network. Founders of companies that are further along than yours will most likely already have their network to which they can introduce you to, if they like you and the product you are working on.
We felt the network effects most strongly when we joined 500startups. Suddenly we had a huge network of mentors, investors and most importantly - founders - to tap in to. It's that network effect that makes accelerator programs such as 500startups and Y-combinator so valuable. It is not the small investment amount or the mentoring sessions - those help a bit too - it's the huge network of founders and other helpful people that provide such a big boost to companies joining those programs.
Helping others is also a part of building a network. Aside from the feeling of fulfillment of helping someone who is experiencing the same challenges as you once did, you never know when that relationship will become beneficial both ways. I think it's the general awareness of that fact in the valley that makes it such a welcoming place for entrepreneurs.
Today we had lunch with one of our 500startups batch founders, Ben of POP, a mobile prototyping tool. On the surface, our companies are doing completely unrelated things, but just meeting randomly as friends, we found they are working on something that ties very nicely to something that we've been working on recently, and now we have a very interesting collaboration in the works.
This kind of thing happens all the time when you have a network of talented and motivated people who are all trying to build new companies. If you wonder how all the team and product acquisitions materialize in the valley, it's all the result of having a good network and talking to the right people at the right time.
It's similar for fund raising - raising with a network is vastly different than raising without one, as we learned the hard way in the past. Aside from getting introduction to investors when you need money, getting to know investors when you don't need it and building a real relationship is key in the later funding rounds. I keep quoting him on that, but Mark Suster said it best - Investors like to invest in lines, not dots. Getting to know investors and adding them to your network, will help your funding rounds happen when you need it.
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