Friends With(out) Benefits

You've stumbled on an amazing opportunity, or maybe you've been working tirelessly to bring it to life. But now you need help. Who are you going to choose to help build your idea into a viable business? It's a simple question without an easy answer: there are issues of expertise and availability, trust and goals, working styles. There's also a wealth of research suggesting that choosing the right partners makes a world of difference for both firms and individuals. And that's what makes a recent study of the venture capital industry by three Harvard researchers so interesting. Paul Gompers, Yuhai Xuan, and Vladimir Mukharlyamov assembled a dataset of 3,500 early stage investors and the 12,000 deals they collaborated on. The goal was to determine what factors made investors likely to work with one another, and how that affected their financial performance.

Their first big finding is that investors prefer partners with whom they have something in common: having worked together in the past made them 60% more likely to co-invest, and having the same alma mater or belonging to the same ethnic group each gave a 20% boost. These findings are in line with a general theory in social networks known as homophily, which refers to the fact that we generally like spending time with people who are like us. Homophily governs a lot about everything from how people find friends to how firms make alliance decisions, and it makes sense: having similar backgrounds and cultures allows for more effective communication, increases the likelihood of having common goals, and cultivates trust between partners.

But it's also dangerous. After all, as we've discussed in earlier posts, diversity is a big component of creativity and innovation. Homophily, by virtue of pairing similar partners together, limits access to diverse information and skills. And that's exactly what our Harvard team finds: the odds of a startup having a successful IPO are 22% lower if the investing pair are from the same university, and 18% lower if they share a past employer. Ethnicity has no impact on performance by itself, but when a pair of investors are from the same ethnic minority their startup is 25% less likely to succeed.

What this means is choosing partners is no simple task. On one hand, we need to find collaborators that we understand and trust. On the other, we need to find partners with complementary skills and diverse perspectives. Performing well, be it on a collaborative music project or a VC investment, means balancing these two factors. And that may take some creativity.

Check out the full paper here, or the brief Economist writeup that led me to it here.

T-5 Days 'til MAKER CAMP!

Want to have some fun from July 16th to August 24th? Well, MAKE Magazine has teamed up with Google to put on Maker Camp. It's a free, open, online summer camp featuring a project-a-day for thirty days. Each week has got four days of projects, followed by a live-cast field trip to some crazy place like CERN, the Ford Motors R&D Lab, and the MakerBot homebase. Expert counselors will lead each project, and campers can tune in via Hangout to ask questions and share stories. It's technically intended for teens, but nobody's gonna tell me I can't build a chemical rocket or a desktop biosphere. All you need to do to be part of the fun is sign up on Google+ (clever, Google, clever) and then check back in when you want to build something. The projects are all kid-friendly and can be built (mostly) from household supplies.

In the spirit of keeping this blog somewhat professional, I should probably say that this is an exciting event because it's got potential to get kids thinking, inventing, and working with their hands. The opportunity to tie together a broader community of Makers and tinkerers is pretty cool too, given how important networks are for bringing creative ideas to life. At the same time, I could just be honest:

Rockets. Like woah.

To get in on the fun, head over to Google+ and follow MAKE.

You Should Go Home Early Today

I've been told we're in the middle of "the most important five day weekend of the year", but for the millions of us that are back at work this morning that won't ring very true. And for the millions more who, like me, don't have an office to be in but rather just the omnipresent crush of work to be done, that will sound decidedly unfair. Life is busy. Crazy busy. Tim Kreider, author of We Learn Nothing, had a great NYTimes Op-Ed on that subject earlier this week. "Busyness," he wrote, "serves as a kind of existential reassurance, a hedge against emptiness; obviously your life cannot possibly be silly or trivial or meaningless if you are so busy, completely booked, in demand every hour of the day." And these hectic schedules are often self-imposed. We aren't combat medics or case detectives; we're students and consultants and coders and volunteers and athletes and a million other things, all voluntarily and often simultaneously. As a result, we're busy. Crazy busy.

And the funny thing is, we don't necessarily even want to be, but we see people around us working themselves to the bone so we assume that we should be too. We're engaged in some sort of sisyphean arms race, keeping busy to stay busy. Who among us wasn't a little bit jealous when France mandated a 35-hour work week? I find myself enjoying the occasional headcold, just because it forces me to slow down for a day.

And that's admittedly pretty crazy. The effects of stress on the human body and mental health are well documented, running the gamut from headaches to heart problems to depression. At the same time, stress doesn't do much for our creative lives either. As I discusssed in an earlier post, creativity takes time, focus, and freedom. We aren't as creative under pressure, or in hectic, distracting environments. The space and quietness that idleness provide, as Kreider suggests, are a necessary condition for the "wild summer lightening stikes of inspiration."

As we get busier, we get more done, even though we know that doing so may not make us any happier. I wonder how being so busy affects our ability to create, to creatively explore, and to find beauty in the world. Maybe today would be a good day to take the afternoon off.

Caffeinate to Creativity

It only seems natural to follow up yesterday's post on grogginess with one on caffeine, picked up from Lifehacker by way of Guy Kawasaki. The buzz is all about an excerpt from Chris Chatham's book Caffeine: A User's Guide to Getting Optimally Wired (no word yet on when it gets to Amazon). Given that caffeine is the most widely used and abused stimulant in the world, people perked up a bit when a neuroscientist offered some thoughts on optimal consumption. The basic story is that consuming 20-200mg/hour delivers the best mental boost. Given that an average cuppa joe contains between 100-150mg of caffeine, one cup (or less) per hour is more than enough. He also notes that to use caffeine effectively, you should play to its (and your own) strengths: caffeine makes it easier to work harder and faster on tasks that you already had under control, but it doesn't make challenging problems or abstract puzzlers any easier. Building on yesterday's post, caffeine is going to help with the analytical tasks, but probably not the creative ones. One last interesting finding: mixing in a bit of sugar may actually be a great idea, as some studies have shown that caffeine-glucose cocktails provide cognitive benefits not seen with either one alone.

Of course, caffeine isn't just about the chemical brain boost. There's the placebo effect, and the fact that sometimes a morning isn't going to start itself without a cup of the delicious. Some studies have also suggested that long term ingestion is associated with a variety of health benefits such as a reduction in the risk of Type 2 Diabetes, Alzheimer's, and Parkinson's. As if we needed more motivation.

Scientists and true addicts should check out the Scienceblog excerpt to keep learning.