Monthly Archives: December 2008

people take happiness cues from their own gender

there has been a lot of talk around last week's NY Times article Strangers May Cheer You Up (and thank you to the dozens of people that sent me the article).

but even more interesting … and buried mid-way through the article … is that "people take emotion cues from their own gender" according to Nicholas Christakis (physician at Harvard Medical School and author on the reported study).  

if that is true, it could be really interesting in marketing.   do people more heavily weigh over queues from their own gender too?

(Summation: read the study above if you want to get a better insight on how to make society happy)

The 150 Myth

You actually know more people than you think

All the literature and studies that claim that people can only build relationships with maximum of 150 other people is only half true. The “150” number is often referred to as the Dunbar number after anthropologist Robin Dunbar. As covered in Gladwell’s Tipping Point and CommonSenseAdvice:

Dunbar has developed an equation, which works for most primates, in which he plugs in what he calls the neocortex ratio of a particular species – the size of the neocortex relative to the size of the brain – and the equation gives us the maximum expected group size for each species. For humans, the max group size is 147.8, or about 150. This figure seems to represent the maximum amount of people that we can have a real social relationship with – knowing who another human is and how they relate to us.

Dunbar’s number is often misinterpreted to mean that you can only remember information on 150 people. But that’s not accurate, especially with the help of technology and other social utilities. Traditionally this 150 number meant the average person can only have a deep and meaningful relationship with 150 people.

But most relationships aren’t deep and meaningful … and they need not be bidirectional. If you just want to keep up on someone’s life (and know the ins and outs of where they are working, who they are dating, and when they are doing, you can easily keep track of thousands of people … and you do.

Even outside of using any external or web utilities, the human brain has the capacity to keep billions of discreet pieces of information. To better understand this, we can look at vocabulary:
According to study by Paul Nation and Robert Waring, most educated people in the United States have a vocabulary of at least 20,000 English words. Each word has a denoted and connoted meaning, many have a story (past tense, plural, etc), and often they invoke a picture. We have relationship with words much like we do with people, yet have a connection with 20,000 of them is not uncommon.

And not only do we keep track of words, we keep track of people.

Are you a sports fan? When I was in high school I could tell you the stats of almost every major league baseball player. I had a “relationship” with all of them (even though none of them ever heard of me).

And any avid reader of Us Magazine or Pop Sugar has an intimate relationship with hundreds (if not thousands) of stars. Many people know more about Britney Spears than they do about their next door neighbor. Or maybe you are a political junkie. You’ll know the ins and outs and the total biographies of Bill Clinton, Winston Churchill, Martin Luther King, and George Washington.

A person even has direct relationships with thousands of people over the years from your teachers in grade school to members of a softball team. My guess is that the average educated person can track over 10,000 people (though it would be tough to do a study to prove it) and people who are connectors and use internet tools might be able to track 30,000. and yes, that’s a lot more than 150!

Back to Dunbar … Dunbar’s number is probably a minimum, not a maximum, number of social relationships a human can have. If you are in a “tribe”, splitting into 150 person units makes sense. But if you are a social human, you can potentially be a part of many “tribes” and build different relationships and experiences in all of them. Back in prehistoric times, we may have only had the opportunity to be a part of one clan, but today we can be a part of many.

lack of leverage in 2009 might increase, rather than decrease, venture capital financings

2009 may go down as the year of more, not less, venture capital financing.

Here’s what could happen …

Traditional VC firms will be investing less. They will all be under pressure from their LPs to either make the find size smaller or at least not aggressively draw down their capital. And, given the comparables in the public markets, valuations will decrease.

That said, their might be a lot of new actors in the venture capital world — especially in the growth stage (C rounds) of $10+ MM. Here we might see many mid-market private equity firms come down the food chain and compete with more traditional venture capital firms. These private equity firms — while also facing similar capital constraints as the VCs — won’t be able to do many deals they traditionally do because leverage is gone (they will not be able to borrow). So they might start looking for deals without leverage — and might start looking to invest in start-ups. Venture capital is essentially a no-leverage business.

Of course, given the mind-set of these larger private equity firms, they’ll likely be focusing on companies that are already proven and so the cream of the crop companies might actually have stratospheric valuations in 2009 (that have no reflection on the bear market) while we might see valuations of other companies wither.