Technology and Business Relationships

Human relationships are the basic fabric of any economic transaction. Whether a 1-to-1 handshake deal or a complex, multi-year merger process between multiple corporations, markets run on personal relationships between people. Relationships may be transitory or durable, physical or virtual, tacit or contractual — but healthy relationships are the soul of any economic order. In today’s data-driven world, new technologies are imperative to building open networks and leveraging business relationships in more effective ways.

Academics frequently describe the economy as an automatic, self-regulating machine that adjusts elastically to supply and demand conditions. This perspective elides the fact that every market decision boils down to some group of people. An economy is nothing more than human beings coordinating to solve their mutual problems and satisfy their needs. More than ever, triangulating the right people or teams of people to hire, invest in, and consult for advice requires a deep network of strong relationships.

As a partner at 8VC, I handle relationships with hundreds of LPs, identify potential partners and business opportunities for our portfolio companies, and evaluate whether to invest in startup teams. Typical due diligence on a company means talking to a couple to dozens of industry leaders who are among the best, most knowledgeable members of their fields. I am also a co-founder and board member at multiple companies. My team and I are actively engaged in many philanthropic and social endeavors, and consistently communicate with students and faculty at over a dozen universities and policy organizations. Supporting and learning from this top talent as we scale our network occupies a lot of our time.

The British anthropologist and evolutionary psychologist Robin Dunbar demonstrated that an average person only has the bandwidth to maintain social relationships with around 150 people (known as “Dunbar’s Number”). Nobody is really connected with their 12,000 connections on LinkedIn. I am considered to be an outlier, but even I only maintain cordial relationships with 300–500 friends, and perhaps 1500 more acquaintances. Much of my success as an investor and builder derives from the way in which I organize my alliances and shared networks, and conceptualize how they relate to our teams’ most important tasks and pipelines — not the sheer number of people I know.

Those who are able to carefully organize and harvest value from their networks and have outsized control over how to coordinate people and information are known as “super-connector” individuals, and they play a large role in determining the career arcs of those around them. In order to make the economy grow smoothly, it’s critical to empower these individuals to develop, manage, and metabolize relationships into new economic opportunities. But managing relationships is equally vital for business people who aspire to work their way up the ranks. In my experience, most jobs — even those not usually considered relationship driven — require that you draw upon the skills of your network as much as possible to accomplish your core goals and elevate your peers. In any context, being the best means working in concert with your community to discover what’s possible, and to ask others to guide how you solve problems and build value for your organization.

Maintaining useful, trusted relationships has always been essential in business. The key difference between the early modern period and today is that the pace and volume of communications have accelerated drastically. More recently, since the Gmail API became public in 2015, we have been able to access a trove of communications data and structure it in a way that provides real-time action items for each relationship. We can use these insights to keep track of people in our networks and to discern which relationships are the most important.

There are three main dimensions of relationship data:

  1. The simple facts of who knows whom, and how many degrees of separation there are between one person and another. This dimension of relationship data may help coordinate warm introductions, which are better than cold emails to a person you’re trying to reach. Products such as LinkedIn, which display this kind of information, are essentially virtual rolodexes.
  2. Information about how often people are communicating, when they have last spoken, which events they have attended, and other temporal facts that can be viewed and shared by a team. This kind of data may be useful for personal introductions and referrals, but is more useful in the context of outreach — managing a given relationship over a period of time.
  3. Analysis on the value of a relationship for your particular business. For instance, in the context of a VC firm like ours, we need to know whether a particular connection has helped secure a deal with one or more startups, generated an LP partner who will contribute to future funds, or helped negotiate an M&A deal for one of our portfolio companies. Mapping dealflow and pipeline data to information about relationships reveals these secondary insights, as can automated mining of email data to uncover introductions, etc.

Data intelligence can unlock these three dimensions and help amplify relationships in the business world. I’m proud to be a co-founder of Affinity, which identifies who to contact for various endeavors, and helps determine which relationships to invest in with regards to various goals. Affinity helps our team at 8VC harness our alliances — aligned friends and colleagues — to get things done. For any other business that relies on relationships, Affinity powers actionable processes tied to core goals using a dynamic, evolving relationship graph, allowing them to unlock their network to accomplish their goals.

The real economy is comprised of relationships; it consists of people working together to deliver the products and services that run our modern world. To succeed in business today — or in many other areas such as academics, politics, or philanthropy — one must use close relationships to inspire the right people to help at the right times.

Technology has become critical for thousands of knowledge workers of all stripes who can now draw upon the latent critical experience, decision-making authority, and ability of those around them to achieve their goals and help make the world run better.

Joe Lonsdale
Partner, 8VC


8VC is a San Francisco based venture capital firm investing in industry-transforming companies. For more information, or to sign up for our newsletter visit www.8vc.com

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