Stating the obvious, building and managing a strong network is a critical component of success in business. And within the world of Venture Capital, network signal strength frequently serves as the determining factor between moderate and resounding success.
Unfortunately, while most people are proficient at building a network, too many miss the mark of what it means to manage an effective network. It’s not hard to understand why. After all, offline (conferences) and online (LinkedIn) networking opportunities create new connections daily, making it tougher to determine where to spend the most valuable asset we have – time.
Candidly speaking, it’s something I’ve always struggled with. So, earlier this year I decided to do an exercise where I scoured through my entire LinkedIn connection network (nearly 2000) of them. While exhausting, it helped me surface the following observations:
1/ 1% of my connections brought me significant personal or professional value.
2/ 10% of my connections brought me any degree of personal or professional value.
Perhaps I was overly myopic in my assessment, but I did force myself to think within some rather strict parameters of what value meant.
From there, I checked my calendar and looked at all my appointments in the prior month. What I found was startling. Roughly 70% of the meetings I took were with unknowns (new connections) or with individuals that fell in the 90% bucket!
Yes, only 30% of my time was being spent with the partners that were meaningful to me. I also determined that the concept of reciprocity is an important one – Most of the value I drove was to the same small group of individuals within my network.
Without going into laborious depth, I’ve found that 2 things are required to have a meaningful relationship:
1/ Professional and personal compatibility – Professionally, this is easy to describe. It’s someone that has a role that’s synergistic to your and there is clear definition as to how both parties can benefit from knowing one another. Personally, it’s a bit trickier. For me, the airport bar example still serves as the best litmus test. If forced to be stuck at an airport bar together for several hours, would both people genuinely enjoy each other’s company? This is usually only the case when you have two people that share similar lifestyles, personalities, and interests.
2/ Capacity and motivation to be reciprocal – Simply put, both individuals have the ability and desire to help each other (sidebar, read the book Give and Take by Adam Grant). I’ve often met people that have the capacity to help me greatly, but with no fault to them, lack the motivation to do so. Too often, people their spin wheels trying to build a relationship with an individual they feel they can derive substantial value from, only to realize the individual on the other side has very little interest of ever driving value back for whatever reason. Within your network, it’s important to identify where true reciprocity already exists, or may develop.
Every single one of my 1% network connections had both of the elements listed above. Of my 10% network connection grouping, all had at least one of the above. Perhaps your numbers aren’t 1% and 10%, but I suspect that they aren’t too far off. Identifying can be tough, but worthwhile.
These days, I use the following rough formula to manage my relationship network:
– 75% of my time goes to my top 1%. These are the people I genuinely love to be around and constantly want to find ways to collaborate and help. I strive for at least 1 meaningful interaction with these people every month.
– 20% of my time goes to my 10%, some of which of course may transition to the 1%. I strive for at least one meaningful interaction with these people every quarter.
– 5% of my time goes to meeting new connections, many of which are referred in by my top 10%.
Your role and experience may dictate different percentages of course (i.e. those starting off their careers may spend 80% of time developing new connections) but developing and managing an effective network requires continuous and work and attention. The odds for success rise dramatically in those that master the skill.