Do Weak Ties Create a Strong Entrepreneur?
Grannovetter’s theory regarding the strength of weak ties is often illustrated by the fact that a person is more likely to receive help finding a job from an acquaintance rather than a close friend. The article above by Jan Jenssen examines if this theory holds true in the fast paced world of startups as well.
From the article (especially table 2), we can see that the amount of capital a business has access to has the largest effect on the success of the business. Startups, however, generally do not have access to a lot of capital. Large businesses have networks in place to collect capital, while those in startups must rely on the employees’ personal networks to find investors and acquire capital of all types. While Grannovetter says that novel information is more easily gained from weak ties, Jenssen provides statistics that show having more close personal ties makes it easier for a business to find financial capital.
Because startups are so small, the employees’ personal networks are often just as important as the company’s professional network. Because financial capital is so important for a startup, Jenssen’s article makes it clear that in a startup it is better for employees at a startup to have dense, tight knit networks. As a business grows it relies less on its employees networks and begins to develop its own business relationships. This theory could show why many startups tend to migrate to the same area to develop networks (i.e. Silicon Valley).