Transcription
Networking is about building relationships before you need them. Keith Farazzi, how do you improve the quality of your business and social network? What is the correct and genuine way to network your way into higher classes?
Welcome to Analyzing Finance with Nick. And in this video, I'm going to be talking about networking. I think most networking advice out there is quite frankly very bad. It's mainly just saying show up to as many events indiscriminately as possible and hand out as many business cards and hopefully something will stick. I don't really think that is the best networking advice in general.
And there's this good book about networking like a boxer or something like that. But it's this idea that I got from that book is that two-thirds of the people you talk to at any event are just not going to click with you for reasons you cannot control. And instead of trying to focus on universal appeal and trying to be liked by everybody is not really an effective networking strategy at all.
And the other question is, especially if you are say, like institutional professional class and above, is why do I need to bother with networking at all? Isn't networking just social climbing? Isn't it just a way for precarious to try to get jobs or unemployed people to try to get back on their feet? I think that assumption is quite wrong too, as well, because the best networking generally happens when you have no immediate need for it.
So the other thing really importance of networking is not necessarily to try to find people of higher classes and climb your way up. If you're in like the professional classes and above, networking is to help find people who are your actual peers that you could genuinely connect with at your level because the masses or the pros, as we like to call them on this channel, tend to fill up most public spaces. And once you have moved up past the middle class, you're not going to just serendipitously run into people who you will genuinely connect with or who are at your level. Even if you live in a high trust, high-income community, the median of the general crowd drifts pole.
And so if you want to build genuine connections with people, whether for friendship, whether for business, whether for community involvement or advance your personal goals, networking is a skill that is needed and can be very valuable. And I've pivoted on this multiple times throughout my life. So, I've tried every bad networking strategy in the past, starting from basically when I was in college trying to find my first job to now where I run a business that is built a lot on personal connections and referrals. So, it's and I had to learn over time what actually worked and what actually does not work. And this is somebody as a disclosure, is below average for a millennial when it comes to social skills and have made probably every bad social faux pas in the book. I won't really go into all my embarrassing moments on YouTube, but if you ever come to one of the private dinners, you can ask me about those.
Then where do I start? What what kind of events do I need to go to or environments I should put myself in to be the most successful for networking? First, you need to figure out what is your objective. Why do you want to network in the first place? And this might seem contradictory to the fact that I said the best networking happens when you don't have an objective, but it's not. It's the thing is, is that everybody has long-term goals in their life. Whether that's starting a business, whether that is having a family, whether that is having a successful career, moving up the corporate ladder, whether that's a career in electoral politics, whatever it is, you have a long-term goal. But especially for younger people, you might not have either the resources or the experience or the confidence to yet do directly that goal and you don't have the connections either.
And so what you do is you network for things that you will need maybe six months, 12 months, three years out from now. And you can go into these conversations being like, I don't actually need anything from you. So you don't come from a place of desperation or neediness, but at the same time, you can casually get to know people who can be helpful for your goals in the future. Let's just say, for example, you are a coder at a big technology company and you want to start a business eventually. You don't have your idea yet. You don't have enough savings that you can leave your job and feel comfortable, but you know that this is a long-term thing you want to do. So instead of just like grinding away your job and not really socializing at all, you can go to like venture capital events and talk to the people who are the VCs and just learn, get to know them as people. Learn more about what businesses who do get funded, what minimum viable product they have, like what level of traction do they need to prove, what do they look for in a founder's team. And you can meet also not only VCs, but you can meet people who could be your potential co-founders. You can meet people who can be potential vendors or suppliers for whatever business you are or even potential customers and you say like, you know what, if I need to be these people in the future, I know them and you just get to know them as people when you don't have any sort of agenda. And you know what again, like I said with the six, the two-thirds rule, two-thirds of them you may never interact with again or you may never need whatever it is again, no matter what career path you pursue, but you're giving yourself the chance to make connections that can be helpful.
The other thing you need to do is make personal friends. And maybe anybody at these events that you meet may not be able to help you directly now, but they may help you in the future or they may be the one who knows somebody else who can help you in the future. And that's the second thing when it comes to networking is you should keep a record. Maybe not, you could do a spreadsheet, but a mental record probably works as well as people you can know to help that can help other people with problems that you may not have, but could still be a benefit to them. Example would be like in my profession, I have a lot of clients who need help with taxes and estate planning. My firm doesn't do taxes or estate planning, but through my years of being involved in the community and networking, I have gotten to know personally and professionally several high-quality CPAs and estate attorneys. And depending on what region of the country my client lives in or what specific need they have and what specialty these professionals have, I have somebody who can be of help to them. So even or if I meet somebody at networks, even if they can't be a client of mine, but they need the estate planner that I know or the CPA I know, I'll make that referral just to help somebody out. And one, you have made a positive difference. You've helped somebody out find like somebody who they need professionally to advance their goals. And you also provide a client to a potential referral partner you have in the future. And so next time that somebody comes and they think, oh, I need an investment manager or whatever profession you do, since you gave them business, you'll be first to mind.
A lot of this networking stuff is you generally have to give to others first before they will send you people. Sometimes I've gotten referrals directly just from people, but generally that's the case. You need to be usually the one to take initiative and go out and help others before they will come and help you. So that's another real thing is you just keep track of people that might be helpful. There are formalized groups that you can do this. They were called referral roundtables. There are some organizations that do these, whether it's chambers of commerce, whether it's like BNI groups or other organizations. Quality is variable. Some chapters are great, others are a waste of time, and you really won't know until you have a chance to interact with these people and see if you connect with them on a personal level and if the type of clients they have would be people who would be your clients or would your clients actually benefit from any of their products or services. So, that's one other thing to kind of keep in mind. Though you have to go into it just more about longer-term connections and not having an immediate agenda. Like it's very off-putting to walk up to somebody and just literally hand them a business card.
But again, if you basically, if you want people to talk about and ask you about your business, when you go to one of these type of things or even just socializing, if it's not a purely business networking event, just ask them about themselves and their business. And if they have any genuine curiosity, they will ask you. If they don't have any genuine curiosity, then they realize that they're probably not going to be a useful connection or prospect to you because they couldn't care less about who you are. And so you're saving yourself the awkwardness. Um, the other thing too is you can is you can introduce yourself as a way that is more the more interesting side of your personality. I'm not saying make up things, but I've noticed when I've gone to networking events, when I tested this out, I've introduced myself as a wealth manager. First, people say, "Oh, another financial advisor, money manager." But then when I introduce myself as the host of Analyzing Finance with Nick, they're like, "Oh, that's interesting. You have a YouTube channel. Can you tell me more about that?" And then I talk about this channel. And then once they learn about what the channel's about, then they ask me, "Oh, well, do you do that for a living or what's your main profession?" Then they ask, I tell them about Spearhead. And then it's a more organic way of generating interest. You are an accountant, but you are also a semi-competitive skier. So when you go to like a social event or networking event, you don't introduce yourself as Bob the accountant. You introduce yourself as Robert the semi-professional competitive skier. And people will ask you all about that and you can bond over skiing if they have an affinity for skiing. These kind of more unconventional stories be interesting and it will naturally go to like, so is that how you primarily support yourself? And then you can go and talk about your main business after you've developed a more connection on that. Other thing, that kind of is how you break the ice generally.
But how do we sort what events are worth actually going to? Or how do I actually run into circles that I actually want to genuinely socialize with or network with? Because first of all, most events are not worth going to and it's not just a cost thing, but generally there is a negative correlation between the price of the event and the crowd that shows up to the event up to a point. Like I would put like for events that are often just free and have no commitment, you tend to have a very variable crowd and there's no real barriers to entry. So it could really just be anybody. If you have a nominal price for an event, that will weed out a lot of people who have really no purpose of being there, but also it will attract a lot of people who have a spray and pray networking strategy. There are several professions. I'm not going to go into them, but their whole strategy of getting business is just to show up to anything that any sort of event that's under a certain price and they will go and hand you a business card and pitch. So, this is what you generally find at like the $20 to the $10 to like $40 price level for events. And that's assuming there's no membership attached to it. This this is also what you find at a lot of more generic networking events or places where people go more for the free drinks because a lot of these often have like happy hour food or cheap or free alcohol and so you'll have people want to go for a party and not really be a helpful connection to you.
So the next level, let's just say like the $100 plus price ticket is where you weed out maybe 95% of the people who are there for more proish reasons, for a lack of a better term, or people who are just trying to shoot their shot just all over the place from a networking perspective, or people going just because they want something to do versus people who have more intent. Tier two, like the next really level above that is probably like the $250 plus level. Like if you're going to pay $250 or more to show up to event one, it means you're probably going to show up because that amount of money is a big barrier to entry for somebody where it will really hurt financially, at least modestly. It'll be a for you to not show up. So, if you're going to spend the money to go to an event and it's spending at least $250, you have some skin in the game. Second, if you're not going to take the event or activity seriously or if you don't want then you're not going to pay for that event. And also, there's an affordability level. If you large chunk of the population simply can't afford to spend $250 to $500 going to an event. And this is typically the level the professional classes can afford. This is like the $250 to $500 level. The next level would be like $500 plus events or like the $1,000 plus events. These are usually like the successful business owner tier or the Ivy League class or above that go to these ones because there are you can or if you have a business with big enough of an expense account that you can do the spray and prey strategy at an institutional level marketing budget and you just consider it part of your marketing budget to go to all the top charity functions in your community that have $1,000 tickets. If you are a very good salesperson and you have accurate levels of your conversion rate, the math could make sense. But I know for most professionals, particularly the independent professional class level, the the numbers generally do not make sense.
So at that level, you're going to have a much lower amount of people who are trying to sell you and you'll have more people who are genuinely care about the cause or the purpose of the event. And then the last tier, like the $10,000 plus events, and honestly, I haven't really gone to any of those that I wasn't sponsored by an employer. So, I don't really have a lot of direct insight on that, but I assume it's just a magnitude version of the $1,000 event barrier, which again, it's an implicit class signal for people who can afford to spend that much to go to an event, particularly if there's no celebrity tied to it. Like some people spend a lot to see like a celebrity, but if there is an event like that's not tied to a particular person or if it is, it's more about the ideas of the person than like a celebrity like parasocial vibe, then it's probably people who are very serious about whatever the subject matter is and/or those above a certain social class who can afford to go to those kind of events. So in general, the higher the price of the event, the more exclusive the crowd generally is, especially if it's not like a particular status symbol to go.
So is the answer simply, you have to buy your way to networking in higher classes? No. Because I think the $100 barrier does about 95% of the work in terms of being a price buffer. So that's not the answer alone. And also if you are going to these events and spending a lot of money just to be around people of a certain class, it will come off very transparently that you are social climbing if you don't have a genuine reason to be there. And that kind of goes to the second part of this. You need a genuine affinity for whatever the event you are going to. When I was first trying to start my business, I would try to go to certain charity events that there were good causes, but I had real no real interest in the event. And I thought that since I had a marginal interest in the activity, like for example, like a charity golf tournament for a cause that I really I thought just simply liking golf would be enough for me to connect with these people, but it wasn't. Or I would go to like a charity dinner that I would just search them on the internet and I would go to this just because I thought it'd be a good way to network for my business. But then I realized the underlying cause I had no real interest in the event was an implicit like company party for a particular company. It was implied but not directly stated and I was one of the few people who was not employed by that company going to this event and I felt extremely out of place and I got basically no ROI from a business perspective or a social perspective and decided I learned the hard way that you need to go to events where you have a genuine affinity for the group. It's why like if I'm going to go to charity functions, I generally prefer going to Catholic charity functions or I'll go to political functions associated with my ideology or I'll go to like local community things from my own city which I feel pretty invested in just because I grew up here and have been very involved in my community or things that I genuinely care about the underlying reason to be there and it makes such a difference because you can immediately start a conversation topic instead of trying to figure out what you can network out of this like why does this other person care about the same cause as you do? What are they doing about it? What are their thoughts on it? And you can build more organic genuine connections that way.
And also this doesn't apply just to events. This applies to groups too. And like I have members of various type of groups and membership groups are a great way to socialize with higher caliber people because high agency people are more likely to be involved in other high agency community groups or event or organizations that are trying to either promote a cause or or likeminded group of people who are going through similar experiences. A low agency person is most more likely to stay at home or just go to the default way of socializing which was like either just going to a nightlife venue and grabbing a drink or just hanging out the main downtown square or park or going to a like a friend's house from work or proximity and not really being proactive of filtering for values or shared interests for their business and social relationships. And so if you want to meet more high agency people, you need to be more high agency about how you select what type of events and what groups you affiliate with or the choice to affiliate with really any kind of groups. And I've met some of my good personal friends and people very useful for my business through groups that I did not really expect to that I wasn't really trying to get any sort of financial or economic agenda. But when you're out there and representing yourself in a way that is in line with your values, people will notice and they will ask you about what you're doing. People like to help out and collaborate with people who are on a similar wavelength.
There are a lot of advantages to this approach for networking. One, it is in line generally with your values. You don't have to pretend to be somebody else or waste your time in uncomfortable environments just to try to hopefully meet a useful contact. Second, you are able to be authentic because you are networking before you need people. You don't go out there to just hunt for something. You do this as a little bit long-term plan and you're playing the long game to make connections that could be helpful in the future and or can refer you to people that are helpful in the future. This applies to business or personal life. And three, you'll have fun because you'll only go to events that you actually enjoy being at and are aligned with your values or long-term goals. And four, you can scale up this strategy with your own success. So as you become more successful as a business owner or you are advancing your career, you will have a bigger budget for networking and therefore you can go to places or participate in activities that you might not be able to in a previous step of your career. And so it compounds on itself. And also you can practice and develop your social skills in lower stakes environments. And then by the time you've mastered that and you can go to the higher stake environments, you'll get much more ROI than if you just try to buy your way into networking into certain circles and you just spend all your money and energy and you get nothing out of it. So I think it's a mix of authenticity and a more gradual learning curve is the main advantage of having kind of a long-term high agency approach to networking.
And just when you do socialize with people, just keep in mind either ways that you can help people directly or way people you know people who can help other people and where you have a genuine connection opportunities. Like yeah, there are certain circles where being yourself will be a liability, but why would you waste your time trying to fake that? And if you are authentic, you're not going to give off social climber vibes worthwhile. Then it's either a self-confidence issue or you can improve on those aspects. So, and work on yourself until you are ready to get out there. And you again, you could start with lower stake networking and then it you don't do this when you need to. You do it when you want to. It's kind of like buying insurance. You don't buy insurance after the event happens. You buy insurance well before. So when you the event does happen, you file the claim right then.
And also the other advantage really for this. The other key thing though is you should if you're going to pursue this kind of long-term community building networking strategy, you need to find a city or a corner of a metropolitan area that you want to live in and plant your flag and stay there because moving around becomes a major disadvantage for a networking strategy because you have every time you move, you have to start from complete scratch. And if you're not a social butterfly, this can take years to rebuild your status in the community and your circles and knowing where to go and what to do and your business network. Like for me to get to the level I'm at, and I'm not even close to the end game of all this, it took a good five years of deliberate effort. And really most of the effort started to see results of networking. Now I started in the middle of 2022. So it's been a long game and these things always will take longer than you expect at the beginning. But you'll be surprised how far you come when you look back. It's like that whole phrase that people overestimate what they can do in one year, but they can underestimate what they do in 10 years.
And so that's overall my take on networking. Um, the only real fast tracks to this is if you get into elite universities or out of school, you get a job at the top firm in your given niche or industry. This might be able to speed up because that's an automatic self-filtering. But even within those circles, you still need to find people who are on your team or are on your side and or you genuinely connect with because if you go say to Harvard but you never leave the library, you're not going to get really any ROI.
Um, thank you guys all for watching. Let me know if this is helpful. You have any other questions related to networking or community development, feel free to respond. I might make a part two because this little primer went way longer than expected. Thank you guys all for watching.