TL;DR: Relationships are important, but a business mindset that prioritizes ‘relationships’ over real value delivery enables gatekeeping and cronyism, both of which are contradictory to entrepreneurship, and can suffocate a business ecosystem.
As I’m known to do on occasion, I’m going to get a bit personal with this post; because the backstory (my backstory) helps explain the message.
To say that, growing up, I did not come from money would be an understatement. When I was born, my parents (mexican immigrants) were selling tomatoes and avocados out of a pickup truck.
In a sort of american dream story, that pickup truck eventually became a moderately successful produce business, where I spent a good portion of my elementary school off-time sorting produce and invoices. Unfortunately, through a series of bad, misguided decisions, that business eventually ended in bankruptcy, and my parents in divorce. My sisters and I were raised by my single mother, who supported us by selling perfume at an indoor flea market; her small business, where I worked for most of my teenage years.
Yes, to get from there to where I am now took an enormous amount of work and hustle; hours a day commuting to public schools in better neighborhoods, days without sleep to get the grades that would get the scholarships that would pay for the colleges that I otherwise couldn’t afford, even while working, etc. But the real reason I tell that story, and this is where it connects to the crux of this post, is this: I would not be even close to where I am today if it weren’t for people willing to work with and support others purely because of their talent and merit, regardless of whom those ‘others’ knew or where they came from.
Those people are the reason I’m here. And the underlined portion of that sentence is what makes all the difference. Because I came from nowhere, and knew no one.
There are very few statements about business that I find more obnoxious than, “it’s all about relationships.” Not because I don’t value them. To the contrary, I think building trusting, deep relationships is one of the most important things CEOs can do. See: Burned Relationships Burn Down Companies. What truly unsettles me about that perspective is two-fold:
A. It reflects a pervasive mindset on how to achieve success that, when played out over time, concentrates opportunity in pockets of people who all know each other. People who go to the right schools, live in the right neighborhoods, etc. are able, despite being all kinds of mediocre, to leverage their ‘relationships’ to keep out those who are far hungrier, and far more talented, but simply don’t have the right ‘relationships.’
B. It creates gatekeepers, who can use their access to the right ‘relationships’ to control a market. And gatekeepers are the exact opposite of true business ecosystems. Gatekeepers, and the idea that you have to know specific people in order to succeed, are contradictory to entrepreneurship.
I’ve observed how, in a variety of markets and startup ecosystems, pockets of people have attempted to become gatekeepers. It never ends well. Influencers/connectors, meaning people who serve as ‘nodes’ of an ecosystem by knowing lots of people and helping them connect with each other, are a great thing. Every town needs them. A gatekeeper, however, is an influencer/connector who has devolved into using their relationships to cut off the market from others who won’t go through them. Rather than facilitating an ecosystem, they use the “it’s all about relationships” fallacy to artificially centralize it.
Relationships do matter. Relationship-building skills are important. But the people who most emphasize the supremacy of relationships, instead of prioritizing authentic differentiation and value proposition, are often the most mediocre. Fact. By stating that relationships are what matter most, you’re indirectly acknowledging that your success has come from whom you know instead of from what you can actually deliver.
I remember as a kid driving through the “rich people” neighborhoods (upper middle class), imagining how amazingly talented everyone living in those homes must be. There’s no way they could be that successful if they weren’t the best of the best, right? Now, I’m nauseated by how many people I’ve encountered over the years who’ve coasted into success simply by (i) being competent, yet uninspiring, and (ii) leveraging relationships they built during their childhood and college years. Because it’s “all about relationships.” When lawyers are coached on how to build up a client base, the first thing they almost always hear is “start building relationships.” And perhaps work on your sports trivia while you’re at it.
People who truly believe it’s “all about relationships” do not become successful entrepreneurs. Great entrepreneurs focus first and foremost on developing a legitimate, differentiated, and defensible value proposition, and then building the right relationships from there. Be so good that the right people – the ones who don’t think it’s all about relationships and quid pro quo – can’t ignore you. The relationships will follow.
When clients approach our firm, I am happier when I hear that they have scoped the market. It serves as a great starting point for explaining how and why, instead of following the old playbook, we’ve built our reputation by completely re-tooling how law firms run: better technology, a unique culture built through unique recruiting, billing rates hundreds of dollars per hour below market, extremely high client satisfaction, strong policies against conflicts of interest, and competitive market compensation for top lawyers who work 25% fewer hours than the firms they leave.
Many don’t realize it, but that last part has been part of my core mission the whole time. Our firm is built, from the ground up, to allow lawyers to have healthy personal lives, instead of pushing them (for the enrichment of partners) into workaholism. So that they don’t end up overworked and divorced. Like my parents. I told you the backstory mattered here.
Yeah, we’ve got relationships. But they were and are earned; not given, and not bought. To this day, I shut down any suggestion that we establish economics-driven (as opposed to merit driven) referral arrangements with anyone. Not everyone is happy about it. You can’t make everyone happy. It is not all about relationships.
A true business ecosystem cannot be controlled. And true entrepreneurs cannot be held back by gatekeepers; they find a way around them, eventually. It’s what they do. Give people a chance if they are hungry, and can demonstrate real skill. Even if they come from nowhere, and know no one.
Also published on Medium.