How to successfully build connections in the startup world

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I remember years back, when a good friend from university was desperately looking for a high level finance job. She asked me to introduce her to my contact, Uncle E, who was a high-level senior in a local bank. He was an old family friend and I willingly did the introduction, since I knew that my friend was qualified. But I failed to ask whether she sincerely wanted the job.

Due to our long-time friendship, Uncle E took the time to personally interview her and gave her a job with great career prospects. To my horror, she quit two days later. Apparently, she had simply been waiting for another job offer, and dropped this job without caring about the impact it had on me.

It was with great embarrassment that I sincerely apologised to Uncle E for wasting his time and for not realizing that my friend could take my introduction so lightly. Uncle E accepted the apology and explained the power of reputation capital.

“Relationships and connections are the blood of business in Asia. Use them wisely,” was the jist of his explanation. A lesson learnt. Till today, I have not asked Uncle E for any more business introductions, being too embarrassed of other potential introductions that might turn sour.

Asia – the power of reputation and connections

The topic of guan xi (i.e. “relationship” in Mandarin) has been well-documented over the years. Here in Asia, it is even more pronounced.

When you ask someone for a business favor to help you, especially a big favor on which he has to stake his own reputation and career, the person will assess the risk of doing that favour, how deep your relationship is with him, and an optional consideration of whether he will benefit from it.

Here is an example: I had a startup who wanted to start banking facilities, but it was rejected after being assessed by the bank. The founder scolded the bank officer, showing proof of banking facilities of other startups which were in the same risk category and vertical as his startup was.

“Must I be your high school chum in order to get the same privileges?” The answer is yes, to a certain extent. I knew the CEO of the bank, and asked him about the difference in treatment.

He told me that “the risk to grant this startup banking facilities is just too high and we don’t know him. But if you are willing to put your name on it, I will grant him the facilities, but it is your reputation on hand.”

While he did not say it, I knew that if I signed the recommendation, that will become part of the bank’s future assessment of me should I want to take on banking facilities for myself. Suffice to say, I did not recommend the startup for fear of my own reputation being affected if the startup screws up.

Building connections

As an entrepreneur, you will always need to build connections and work with different people all along the value chain. It can be connecting to an associate or to the top boss of a large MNC (multinational corporation), all of which can give you access to a strategic asset.

You could be working with fellow entrepreneurs across borders, or verticals to provide a stronger solution to a large client. The bottom line is: you need useful trusted connections that can help you grow your business. But how do you grow them, especially if you are young and lacking in such connections?

Cold calling or LinkedIn are possible ways, but chances of people responding is likely a hit-and-miss. So a good way would be to rely on friends, close associates or mentors to be warm connectors to the person you are trying to be introduced to.

A cost to reputation capital

Respecting the introduction

Gratitude