The Rise of Social Capital

Last week, my wife and I were invited last-minute to our new next door neighbor's 60th birthday party. Reticent, we accepted the invite. We're both much younger, we didn't know them, and besides, I often feel the stress of trying to explain what I do to someone double my age. Inevitably, we connected with a lovely couple and the age-old question emerged: "So what do you do for work?" I always try to answer this differently - it's free market research as far as I'm concerned. And I shot back, "I help founders unlock their social capital."

Did I know what I meant? They certainly didn't. And yet as I've reflected on this answer more ― I really believe this is at the core of what I do. This is what communities are meant to do for founders.

What is Social Capital?

Nearly 25 years ago, Harvard Professor Robert D. Putnam coined the term "social capital." It describes how connections among individuals are just as much an asset as human, financial or other forms of capital. Specifically, he studied how social networks create reciprocity and trustworthiness. These networks act as a form of hidden capital, much trickier to quantify than how many LinkedIn connections you have.

Most, but not all, founders and executives possess more social capital than they use. They have extensive reach into impenetrable networks, varied work experience, religious connections, mentors, familial ties, and more. In fact, this is true of most humans. It's the equivalent to having $150k in your savings account instead of investing it. Big mistake.

Invest it or Lose it.

Different from other forms of capital, social capital naturally depreciates over time. Much has changed since Putnam coined the term 25 years ago in a pre-social media landscape. In today's world of algorithms ― if you're not using your social media properly, you're wasting your capital.

However, here's where things get tricky. Not everyone can leverage social capital, because most folks don't have enough of it to see the benefits of it. Here's where I've seen a few founders go in the wrong direction and where I've failed myself.

Launching a community without a significant audience will likely fail. There is a growing graveyard of fantastic community ideas that died prematurely for this reason. They didn't have enough reach, depth, or most important, enough social capital to launch. Their ideas were sound ― but they needed more social capital for it to gain traction.

Growing Social Capital

So how do you grow something so elusive and invisible as social capital? It's not through Lemlist configurations, ad spend, or sneaky marketing tricks. (Perhaps there is justice in the world after all.) Social capital demands your brain, effort, and curiosity in order to develop. 

Social capital isn't reserved for extroverts. It may help, sure, but to grow one's social capital, it requires trust and value more than reach alone. Again, where financial capital is measured by dollars, social capital is measured by value.

To grow in social capital is to lead with value. To give selflessly and to know that through offering free value, you are winning others over. As you generate trust, you create ambassadors of your brand. Super-fans. People who can't wait to see what you'll say or do next. This is a product of value and curiosity.

By the end of 2024 - I predict most companies will begin asking if launching a community is right for them. Few will succeed.

Communities run on social capital, not dollars and cents.