The old adage that “it’s not what-you-know but who-you-know” is so entrenched that we don’t question the premise. Undoubtedly, who-you-know has been important throughout history, whether in the trade networks of ancient Greece, or in the dense web of high tech companies in Silicon Valley. A good network is especially important when capital is scarce, information hoarded, and when finding the appropriate contacts is difficult. For much of history, knowing the right people was crucial if you wanted cash and cache.
By definition: a “What-You-Know” knows a lot about a certain thing. They possess a lot of knowledge, insight, and research. They usually spend a lot of time reading broadly and interacting with a few dozen select people (strong ties).
A “Who-You-Know” generally has a very large network of weak ties. The ultimate who-you-knows make money by being in a profession that introduce two what-you-knows together and taking a vig. In the 1980s, the professions with the highest prestige were the what-you-know professions (like investment banker, corporate lawyer, real estate agent, wealth manager, etc.).
Because the who-you-knows were constantly talking to smart what-you-knows, the who-you-knows ACTUALLY BECOME what-you-knows because they had access to a ton of proprietary knowledge.
Think back to the 1980s … there were no blogs and there were a very small number of news sources. Information was really hoarded and having a deep network was one of the best ways to get access to interesting and unique knowledge.
But something happened in the last 10 years … it is easier to find people, connect with them, learn new things, and get access to capital. So the what-you-know has been ascendant.
Finding people is easier. So is connecting with them.
Tools such as LinkedIn and Google, democratize the ability to network. If before it was difficult to ferret out the perfect contact, today finding a right marine biologist in New Zealand or the genetic researcher in Norway is as easy as a Google search. And social media has made it even easier to connect with that person.
Access to capital is much easier.
Today, capital is relatively plentiful and accessible. In fact, it is the easiest time in history to get capital. That does not mean getting capital is “easy” — it certainly is still really hard. But it is significantly easier than in the 1980s (and the 1980s were easier than the 1880s). It is also much easier than ever to get access to people who have money (accessing capital can be as easy as sending an email).
Access to information is easier.
Information, too, has been democratized. It used to be that if you wanted to get access to cutting-edge ideas in technology, you needed an invitation to an exclusive conference like TED … or to attend a university like MIT. Today, TED lectures and MIT courses are offered free online. The only barrier to most of the world’s best information is knowing English (and even that is changing). Some of the best information is available on blogs.
As an aside, I count myself extremely lucky to be friends with Tyler Cowen (who is truly a wondrous person). But if I knew someone like that in the 1980s, I might have 95% advantage (in getting interesting information) than people that did not know him. Today, anyone can read Tyler’s blog (which I highly recommend you do). It is chock-full of information. My information advantage in knowing Tyler may only be 15% more than those that do not. That is a huge change in a short time.
Given our hyper-connected world, could it be that “who you know,” while still important, matters a little less than in the past? Could it be that “what you know” carries more weight? The answer to both questions is undeniably “yes.”
My intuition is that “what you know” has now crossed the line to be more important … and possibly even MUCH MORE important … than “who you know.” Like Kurt Vonnegut said in Breakfast for Champions; “new knowledge is the most valuable commodity on earth. The more truth we have to work with, the richer we become.”
In today’s world, if you know something really compelling, you will be sought out … and sought out directly. In the past, the people with connections were gatekeepers who controlled access to the elite circle and got paid handsomely for that. Today, people that invent interesting things (the true What-You-Know people) will reap many more rewards than the brokers who make introductions.
Even the traditional who-you-know professions such as banking and law are becoming more specialized. The lawyer that understands the intricate tax implications of U.S.-Brazil joint ventures is now much more valuable than the generalist lawyer that introduces you to that person.
Today the professions most prized are the what-you-knows. The inventors, hedge fund managers, etc. One hundred years ago, most inventors would capture only a small portion of their intellectual property. Most of it would be taken by the who-you-knows.
All this does not mean that your network isn’t important. Of course it is. Who-you-know is still incredibly useful. But it will just be less important than it has been in the past. Even the Wizard of Oz was looking to network: just before he leaves the Emerald City he tells Dorothy that he is off “to confer, converse and otherwise hobnob with my brother wizards.”
Summation: In the new world of abundant capital, easy access to information and people with knowledge, the what-you-know skills are more important than those of the who-you-know.
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