The real network effect

From finding the right people, to creating partnerships, to sales and fundraising: a strong network is one of the biggest advantages one can have. A few thoughts on how this comes to life in the Israeli eco-system and how new players can still participate in the game.

  1. Let’s state the obvious first. The tech eco-system in Israel, including some of the best companies and most promising founders, is based on the network of alumni of a few specific arms of the intelligence forces of IDF. If you were lucky (and talented) enough to be in one of those places, you know successful founders, investors, developers. You know how to talk the talk and if you try you’ll be able to walk the walk. Your personal, immediate network, is enough to start 3 companies and this in turn creates confidence and inspire risk taking. If you were never in this group, you might be related by blood or shared background to other networks. This is good and can be made great. If you do not have that, you lack the proper network, and the sooner you face it the better.
  2. So, only the cool kids get to play? No. But the not-yet-cool kids need to work harder. Don’t shoot the messenger, I’m not saying this is how things should be, but this is how they are. Is lacking the right network a death blow? No. It does however makes life much harder. The fact people tend to deny or not be aware that they don’t have it is the worst part. One of the biggest challenges tech startups face is attracting top tier players to the team. It’s true for your employee #1, for the first VP you add, for the 50th person. It’s true starting from finding your co-founder and it never ceases to be true. Building on people you know is the best, fastest and most efficient way to overcome this obstacle, and lack of such network is a huge hurdle. Therefore, your life as an entrepreneur will be harder and facing it is the best way to start solving it.
  3. The VC perspective. On the investor’s side, network appears as a factor in decision making more than once. If the investor and the founder has mutual connections (=shared network) the will to listen and the credibility given to the founder rises significantly. After the first meeting, the investor will look for professional references on the founder, which again will bare much better results given at least some degree of shared network. Finally, most good investors would want to see that the entrepreneur can build a strong team (attract people, screen them and train them), all made much easier if the proper network already exist.
  4. How do I know where I stand? You can start by a cute little exercise: think of all the people you met with or had meaningful conversations with during the last week (/month). How many of them are capable enough to be your first ever employee? Forget availability, just think of how many of them are good enough to be trusted with your most demanding tasks and biggest responsibility. If you can’t find at least a handful, you’re in a jam.
  5. Please doctor, tell me there’s a cure. Once a problem has been identified, it can be tackled. Meeting people online is easier than ever, and f2f gatherings will also come back at some point. The easiest thing is to meet people that never do anything but go to those gatherings, and most people you’ll meet are not half as capable enough as the ones you are looking for. But, big numbers run their course and if you can meet 100 new people, chances are you can find at least a few who are relevant to you. Put yourself out there, don’t shy away, participate in online discussions, read, listen, write and comment. Talk to people and keep in touch when you find someone that seems smart. Talk to friends of friends, and find the people who can be your point of access to larger better networks.
  6. Help people understand what you are looking for. A few years back, I was looking for a job and had no idea what I want to do. This ended with meeting the person who became my co-founder and starting my first business. The best advice I got at the time, by far, came from a friend of my mother who runs a recruiting agency (note about networks: her 2 older kids work in 2 of the best software companies in the world, son-in-law has a startup). The advice was to constantly refine exactly what you are looking for, and voice it repeatedly. If there are people who actually want to help you, by making the help you seek clear, you increase dramatically their ability to assist.
  7. We are not here for the stories. There’s a great Yiddish saying, about a kid asking when’s Passover coming. “He is not interested in the story of Passover, he’s asking about the meal.” (in Yiddish: “ir ment nicht de aguada, ir ment de kneidlach”). Networking events are swamped with people that never do anything useful. Mentors, advisors, consultants, they have many many names (of course some advisors are great but that’s not the topic here). People that are looking for their next big thing for the past 5 years. People that “helped many companies succeed”. It takes some skill to know who’s a time waste, but it’s an important skill to have and you should acquire it. Keep looking for the relevant people, keep looking for the people that actually do things and are actually ready to roll up their sleeves and work. Always look for the kneidlach.
  8. Epilog. Founders tend to think they are geniuses, which can also be true, but it’s also important to realize competing on a leveled playing field is hard. Most fields are not leveled, and your competitors are not here to be fair. Creating, expanding, improving your network is a key way to tilt the scales in your favor. Spoiler: It should also be a a huge consideration when choosing your co-founder.

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Amit Mittelman

Amit Mittelman

MBA candidate at HEC Paris. Formerly, a co-founder at Approve.com and an EIR at Entree Capital. Love the startup hustle.