Social Capital: How to Acquire, Save, and Spend It Wisely

Social Capital: How to Acquire, Save, and Spend It Wisely

So what exactly is social capital? It sounds fancy. Here at The Art of Charm, we define it as the value that gets created when you share the resources you have in order to help others. Here are some tips on how to acquire, save, and spend social capital wisely.
[Photo by Riley McCullough]

What Is Social Capital?

Some of you may be familiar with Stephen Covey‘s concept of emotional bank accounts. You make deposits by being on time, doing what you say you will, random acts of kindness, etc. You make withdrawals by being flaky, forgetful, and insensitive, among other things. Unlike Covey’s concept, which is relative to just two people in a relationship, social capital is an account you have with everyone you encounter. Unlike real money, the more social capital you spend, the more you get.

Acquiring Social Capital

Often when people hear the word “networking,” they think of after-hours mixers, elevator speeches, and people handing out business cards. It doesn’t sound fun and it seems to be another one of those things you’re supposed to do rather than something you actually enjoy. This is perhaps because people see networking as something to do rather than a habit that forms up part of who you are: something to be.

Think of that situation — we’ve all been there — you’re politely listening to someone give their elevator speech, you ask a few follow-up questions, and then he or she presses a business card into your hand, anxious to move on to the next target/prospect. You look down at the business card as they leave and wonder, “What just happened?” You may or may not connect with this person because they’ve set up a quid pro quo transactional relationship with you. You’ve learned nothing about who they are as a person — and perhaps they didn’t ask you about yourself — and you’re only left with the pigeonhole they gave us: that business card.

Wouldn’t it have been better to stop that whole song and dance and just get to know someone as a person rather than a profession from the beginning? Then we would be at ease — not worrying about whether we’re getting our elevator speech just so, but rather about who this person is, what they are passionate about, and how we can help.

Be Generous

By refusing to look at networking in a transactional manner, you are beginning the process of acquiring social capital. You will stand out in interactions with others as they note your manner of dealing with them: you were interested in who they were, not just in what they did (or what they could do for you), and you took the time to add value and help them. You’re also not interested in simply helping someone with one sale or one connection, but in building a long-term connection if mutual interests and respect are in place.

George Takei has become a Facebook icon precisely because of the wide variety of content he shares. He uses the site as a platform to acquire (and share) social capital with millions of people all over the world. Whether it’s something funny, an appropriate meme, or a useful article, millions of people follow George because he adds value to their lives. He isn’t asking them to join a cause or contribute to a charity — he’s simply being generous and sharing. We can learn from him.

Saving Social Capital

So now that we’ve talked about the right mindset and mentality to start acquiring social capital, we need to talk about saving it. Let’s go back to the concept of Covey’s bank accounts. Bank accounts, both actual and virtual, always work better when they have larger balances. That’s where you want to be with your social capital accounts.

As you add value to others — be it by passing on an article that they might like that’s relevant to their passions or their industry (or perhaps it’s an unusually funny cat video) — your account with them builds up. You’re saving that social capital because you earn more each time you add value.

Resist the Urge to Spend

Many people feel that urge to spend when they get some cash in their hand, but you shouldn’t do that with social capital. If you start spending before you’ve established your relationships (a good account balance), you just might overdraft that account and kill a relationship that might be promising.

Use Your Savings Period to Research

They say it’s easier for those with money to make money, because they have access to resources that can help them solve problems more quickly and efficiently. Those “resources” are often relationships that have been built over years. But all those relationships started somewhere — and they didn’t always start with someone having a large social capital account with someone else.

On Ramit Sethi’s most recent appearance on the Art of Charm podcast, he outlined an exact template from the real world in which someone who had been corresponding a few times (didn’t just email out of the blue) could offer to give value to someone else and establish a beneficial relationship:

Dear Jordan,

I have enjoyed your work and I’m sure you are working with some very talented video producers. I’d like to be one of those people who helps you, and here’s some of the work I have done (link as needed).

But rather than have you guess at the work I could do for you, I’ve touched up some of your videos here (provide link).

Thanks for taking the time to read this.

Sincerely, etc.

This person isn’t asking for anything other than the opportunity to contribute, and no matter how someone responds (he/she is likely to respond positively to such a message), we’ve shown a desire to be one of the few hands offering to give rather than being yet another one of the millions of hands asking to take.

Use Your Savings Period to up Your Game

We’ve also had Peter Diamandis and Tony Hawk on the podcast, and these were people who Jordan had targeted to interview for some time — however, he didn’t feel ready to interview them the first time a contact enabled the possibility. Rather, he used a period of correspondence to build up trust and do the appropriate research to find out how he could best add value outside of the podcast. Then, when the time was right, he asked them to come on as guests.

Spending Social Capital

So you’ve patiently heard us explain why you need to acquire and save. Now, let’s have a bit of fun and spend.

Start Slowly

You’ve built up relationships of mutual trust and respect — if it makes sense to ask for help or resources, you can start doing so. But there’s a way to do it. Perhaps it’s an introduction to someone in your field who might help you advance your career or business. Maybe it’s just asking if they might know someone who could help you out with a personal passion or side project. Whatever it might be, as you start to spend the social capital you accrue, don’t lead with a very large request first.

Don’t Keep Score

Remember that we warned against a transactional attitude. Some people may be thinking, “I’ve done such and such for them, they owe me, etc.” This may in a way be true, but it’s the wrong attitude to have because it’s not generous in spirit and it is quid pro quo understanding. It also runs the risk of lowering your relationships to a transactional level as opposed to a friendly one. If you give without counting the cost or keeping track, you’ll find you are rewarded.

You’re Actually Adding to Your Account as You Spend…

Far from making a permanent withdrawal from your social capital account, as you spend wisely, you create new opportunities to acquire and save. The friend you are introduced to via your connection introduces you to someone else who unexpectedly helps you with something unrelated, and you loop back in your original connection to let them know how it turned out. They feel rewarded for sharing a connection with you, they see that you treated their connection with respect and propriety, and your social capital account with them increases even as you build new accounts with your new connections. Your “spend” ends up being new capital investment, which can then build on their own, in time.

And So…

Social capital is like Bitcoin: its accounts, rules, and spending/saving patterns exist whether you want to acknowledge them or not. The people in the know are using these concepts to change their lives and the lives of those around them. We hope these tips will help you tune in to to these dynamics and begin to leverage them to your betterment.

But Wait, There’s More!

Reading an article not enough for you? Here are two concrete ways for you to take action:

  • Join our free 30-Day Challenge. You’ll work through ten challenges together with thousands of people worldwide in our Facebook group who are making progress every single day.
  • Listen to our podcast, which interviews top performers to help you level up in life and relationships. To get you started, here’s one in which we discuss social capital in greater depth as well as one to keep us on the “capital” theme: a discussion with the creator of Showtime’s Billions, Brian Koppelman.