Ugh. To put this advice in context, social capitalists raise money based on reputation, hackers raise capital based on results of their startup / product. Pragmatically, success needs to be a mix.
To me - this is very clear distinction in Bay Area. The guys I know that are most impressive (and build the best startups) shut their doors, code like crazy and don't waste time with what other people other than their customers think of them. The product speaks for itself.
Then you have another set of entrepreneurs leveraging credentials, friendships and their previous successes to 'hack' the fundraising process, it detracts from delivering user experience.
Don't fall into this fundraising mindset - "if you want to raise money, there’s no substitute for working hard on your reputation". There is a substitute - its delivering measurable benefit to customers. Work hard on delivering value to the rest of the world. Its an important distinction because thinking about what investors think of you detracts from a maniacal focus on product.
Its pre-mature reputation optimization. You want to build your rep after you've proven delivering value to customers.. the product should speak for itself.
I consider social capitalism an evil because it creates conflicts of interest, and detracts from goal-oriented thinking. However, like politics and bureaucracy - it is an evil that startups have to confront at some point, or be confronted with. I balance this with a maniacal focus on delivering value while staying at low profile - its tough to create a professional persona in line with your startup before you have accomplished measurable customer value. Without this kind of timing, its very easy to detract from your startup goals because you personally have to conform to a misinformed notion of a professional persona. I'd be curious if others have had challenges along this line..
One last thought, social capitalism gets multiplied by orders of magnitude when you leverage the hub. ie, relationships for finance, advertising are going to be much more valuable in NYC. In optimizing reputation, spend cycles where they have the highest return.
> c) Only recently have they learned that a best-in-class product isn't enough to get investors excited without talking about the market.
Isn't the whole point of there existing a separate class of tech-oriented investors and investment managers, who get paid pretty well for their work, that they are knowledgeable and well-positioned to evaluate things like market prospects? If who they fund depends so heavily on social proof and slickness of the pitch to investors (as opposed to the actual product and market potential), seems like capital is being allocated pretty inefficiently...
Thanks for the note - I was disagreeing with the message / sentiment of article. I meet so many first-time entrepreneurs and worked at funded startups where the founders think it is about impressing investors.
Kudos to Stormpulse for the hard work and the cool product. I just did not like the message of the article because I was considering how it would be interpreted by other startups..
your social capital is not useful only to raise money. it is useful to market your product. marketing your product gets it used which is the best way for it to improve.
that you can use social capital to help raise money is a great side-effect of the real reason it is necessary for startups: marketing.
"Its pre-mature reputation optimization. You want to build your rep after you've proven delivering value to customers.. the product should speak for itself."
There's another side to this story. Once you've built the product, have the customers, cash flow, and earnings, you're left with a vacuum in the social sphere. You don't know anybody other than your customers and vendors.
And if you try to raise money at that point( expansion, growth, acquisition, etc ), you can't get so much as a single introduction because you don't know anybody. The reality is that product does not speak for itself.
To me - this is very clear distinction in Bay Area. The guys I know that are most impressive (and build the best startups) shut their doors, code like crazy and don't waste time with what other people other than their customers think of them. The product speaks for itself.
Then you have another set of entrepreneurs leveraging credentials, friendships and their previous successes to 'hack' the fundraising process, it detracts from delivering user experience.
Don't fall into this fundraising mindset - "if you want to raise money, there’s no substitute for working hard on your reputation". There is a substitute - its delivering measurable benefit to customers. Work hard on delivering value to the rest of the world. Its an important distinction because thinking about what investors think of you detracts from a maniacal focus on product.
Its pre-mature reputation optimization. You want to build your rep after you've proven delivering value to customers.. the product should speak for itself.
I consider social capitalism an evil because it creates conflicts of interest, and detracts from goal-oriented thinking. However, like politics and bureaucracy - it is an evil that startups have to confront at some point, or be confronted with. I balance this with a maniacal focus on delivering value while staying at low profile - its tough to create a professional persona in line with your startup before you have accomplished measurable customer value. Without this kind of timing, its very easy to detract from your startup goals because you personally have to conform to a misinformed notion of a professional persona. I'd be curious if others have had challenges along this line..
One last thought, social capitalism gets multiplied by orders of magnitude when you leverage the hub. ie, relationships for finance, advertising are going to be much more valuable in NYC. In optimizing reputation, spend cycles where they have the highest return.