Would you rather do business with someone you personally know, or with someone whom you know is a proven entrepreneur?
This was one of the questions in an entrepreneurship questionnaire that a friend (and prospective business partner) gave me a few years back. I answered the former. Surprisingly, I was wrong. It turned out it was supposedly better to do business with someone who has a proven track record rather than someone whom you simply trusted and knew personally. Looking back, I think this concept is valid to some extent, but it’s also has its shortcomings.
Business can strain personal relationships. At one point or another, I’ve joined up with a family member or relative in some small business (mostly online ventures). And whenever we faced problems with our enterprise, it took a toll on our interpersonal relationships. This is true especially when it comes to money matters. Sure, you can be lifelong friends, but when it comes to accounting for who gets how much, and when, it’s a whole different ballgame.
You can trust someone with your life. But perhaps it’s not always the case with money. And when you fight about business decisions, money or even small and trivial things, the trust factor tends to diminish. And once you have a hairline crack in your personal relationship, it might lead to a crumbling business enterprise, as well.
You tend to be complacent with close friends and relatives. When you’re working for your boss, your main goal is to impress him and show how well you perform. But when you’re working for a parent, a sibling, or your best friend, this might not always be the case. Friends and relatives tend to be more lenient and forgiving with each other. While a relaxed atmosphere might be conducive to creativity in some industries, it might not always be the best environment in all business enterprises. How would you feel if you hired your brother or sister as a business partner (or as a manager in a business you own) and he often just slacks on the job. See point #1 above, and you’ll know why partnering with someone you know closely might not always work.
However, going for the track record might not necessarily be all that good, especially when the trust factor is nearly zero. How sure are you that the new millionaire investor will not just leave you hanging in the air when things go sour? How sure are you that your new business partner is trustworthy when it comes to finances and the legal aspects of your business?
A good business relationship is built on trust. Many people I know forego the usual contract signing and agreements when they start new business ventures. To some entrepreneurs, a handshake is as good as a contract. Verbal communication is as good as black and white. This is where a proven entrepreneur, but a stranger, might not be the best fit. You need someone whom you could trust, but who also has the right attitude and mindset for business.
So I ask you, would you go for trust of track record?
I’d go for both.
New media mavens would have you believe in the concept of the Long Tail as a religion. It’s no longer just the big things that matter. But those little things on the fringes, when aggregated, add up to a big thing. A lot of online entrepreneurs subscribe to this ideal. You set up several small sites or services, and try to market and monetize each of these. This is one model in network blogging. You try to run blogs in different niches.
When I was working in the corporate world, I had to scold myself whenever I had the urge to blog during office hours. Sure, writing was my passion and my hobby. But of course, doing this on company time would be tantamount to stealing! That was until I found myself shifting jobs, in which my new job actually involved blogging. Not only was I authorized to blog on the job, but it was also my main responsibility to get the word about the company’s products and services through blogging and word of mouth.
Don’t you sometimes notice that a lot of tech companies are simply reinventing the wheel? Take for instance search engines. Long before Google was king, there have been several search engines that have pre-dated it (and perhaps now we can say Google has “predated” those other search engines in another sense). And even after Google took dominance in the search industry, a host of other search outfits are trying to get into the game. Some are small, but some are arguably giants in themselves. Take Microsoft, for instance.
In the realm of new media, development is everywhere. It’s so fast paced that what’s hot right now may not exactly be the in thing after two weeks. There are trends, there are fads, and then there are those projects that go on a winning streak. These not only make their millions overnight. They also tend to be sticky. They tend to gain mindshare and these brands stick to our consciousness as if we’re born with them.