Learning the difference between social and financial capital and how these resources can help a founder make the leap into founderhood was very captivating. In the Founder’s Dilemmas by Noam Wasserman, I learned about which capital is better to accumulate that the other between social and financial capital. Social capital is the social and professional relationships that founders have established over the years and help them have access to resources through those relationships. When you are talking about social capital, youth is often at the disadvantage because they have not built as many relationships because they have not been around as long.
Financial capital is the cash cushion that a founder establishes that will keep them going after leaving their job to pursue their startup. The amount of money that a founder needs will depend on a variety of different factors such as: the length of time that is needed for the startup, the amount of stress, energy, & urgency the founder will need to become cash flow positive, and the decisions that need to be made in order to build the startup. It is not surprising that over 50% of people who are seriously considering becoming entrepreneurs do not end up pursuing their dreams because they do not have the financial capital to do so.
Wasserman talks about the accumulation of one capital can spark a successful cycle that can help launch their startup. Social capital is the most virtuous types of capital to have because it is able to attract more human and financial capital which is needed to launch your startup and do so much more quickly. In terms of social capital, I believe that with the rise of social media in recent years has helped many entrepreneurs open doors that they would not have access to otherwise. Entrepreneurs now have millions of other entrepreneurs, venture capitalists, and consultants at their fingertips within seconds because of a single post on social media. Social media has become our best networking tool if we choose to use it to our advantage.
I plan to build my social capital before completely launching my startup. I want to stay behind and build as many relationships as I can and add as many people to my virtual Rolodex before I take the fateful leap into founderhood. I also plan to stay at my job until I can no longer adequately balance my two jobs. I have always had the dream of going to my boss and telling him that I must leave because my business requires my full attention now. I would be lying if I said I did not think about that day a lot and get a little excited when I think about the conversation. For now, I will continue to chip away at my business and build it into the beautiful startup I imagine it to be. But a girl can dream, right?
I learned some interesting things while reading this section and I enjoyed it. I hope that you learned something in reading my post. Leave me a comment below telling me your thoughts on social media, is it good or bad for business?
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Until next time,