The Impact of Time Zone Difference on Social Networks of Entrepreneurs

Dr Linas EriksonasInternational Business School at Vilnius University

Linas.Eriksonas@tvm.vu.lt

Sunbelt 2013 Conference, University of Hamburg

Introduction

• Interpersonal relationships, as a cornerstone of social capital, influence one’s ability to access information that facilitates discovery ofentrepreneurial opportunities (Aldrich and Zimmer, 1986; Baron and Markman, 2000)

• Capital seekers and providers often find each other via social networks

• A U.S. Small Business Administration survey found that 75% of new businesses find and secure financing through their social capital

Time dimension in venture growth

Adopted from Entrepreneurial Finance, Leach & Melicher (2011), 3rd ed

Time difference: initial assumption

Dis

tanc

e (t

ime

diff

) Social networks

Seed stage:Family, pre-seed

Growth stage:Seed, VC rounds

Exit stage:Exits viaIPOs, M&As

Capital networks1 hr

2-3 hrs

>3 hrs

Experimental model for analysis

Dis

tanc

e (t

ime

diff

) Social networks

Seed stage:Family, pre-seed

Early stage:Seed, VC rounds

Growth stage:Exits viaIPOs, M&As

Capital networks1 hr

2-3 hrs

>3 hrs

Gap?

Gap?

Research questions

• Is there a gap between social networks and venture capital networks in terms of time difference between its members?

– In other words, is venture capital rooted in social networks? (P.Bourdieu)

– If so, can social/capital networks be time-zone dependent when using social media (Twitter)?

– If so, how can we get around it?

Previous work on geo distances

• Liben and Nowell (Liben-Nowell et al. 2005) constructed a model for predicting friendship link formation based on the observation that the probability of forming friendship links is inversely proportional to the geographic proximity and to the number of people who are geographically close

• Geographic distance has a pronounced effect on the number of reciprocal relationships created between users, but little effect on the likelihood of users following back each other (Tiancheng et al, 2010).

Previous work on Twitter

• (Java et al. 2007) and (Krishnamurthy, Gill, and Arlitt 2008) examined and discovered differences between the properties and growth of the networks of Twitter users in different geographic regions

• (Takhteyev, Gruzd, and Wellman 2011) found that geographic distances, national boundaries, and languages hold considerable influence on the formation of social ties on Twitter

• (Kulshrestha, Kooti, Nikravesh and Gummadi, 2012): even though users preferentially connect and exchange information with other users from their own country, more than a third of all links and tweets are exchanged across nationalboundaries

Research design

Top VCs online (rankings*)

Research questions

Seed->Early stage actors

Top success. 20 VCs (rankings#)

Early stage->Growth stage actors

* - Top 10 influential VC firms and venture capitalists on the web (openview, 2011/2012)

# - The Top 20 Most Successful Tech VC Firms (PrivCo, 2012, based on number of exits)

Twitter via API

scripts

Analysis

Model check

Seed lists for data collection

1. Intel Capital, Santa Clara, CA2. Felicis Ventures, Palo Alto, CA3. SV Angel, San Francisco, CA4. Sequoia Capital, Menlo Park, CA5. First Round Capital, San Francisco, NYC, Philadelphia6. Battery Ventures, Menlo Park, Waltham, MA, Israel7. Draper Fisher Jurvetson, Menlo Park8. Greylock Partners, NYC9. Ignition Partners, Palo Alto, Bellevue, WA10. Google Ventures, Mountain View11. True Ventures, Palo Alto, CA12. Benchmark Capital, Menlo Park, San Francisco, CA13. Lerer Ventures, NYC14. Menlo Ventures, Menlo Park, CA15. Polaris Venture Partners, Boston, MA, San Francisco CA, Dublin16. Accel Partners, Palo Alto, CA, London, India17. Bain Capital Ventures, Boston, MA, NYC, Palo Alto, CA18. Redpoint Ventures, Menlo Park, Los Angeles, CA, Shanghai, China19. RRE Ventures, NYC20. Focus Ventures, Palo Alto, CA

Top 20 VC (2012, openview)Top influential 10 VC firms (2011/2012, PrivCo) Online:• Accel Partners• First Round Capital• Greylock Partners• Sequoia Capital• Union Square Ventures

Top influential 10 VC capitalists (2011/2012, Privco) online:

• Brad Feld, Foundry• Bill Gurley, Benchmark Capital• Chris Dixon, Founder Collective• Charlie O’Donnell, Brooklyn Bridge Ventures• Charlie McClure, 500 startups• David Hornik, August Capital• Fred Wilson, Union Square Ventures• Josh Kopelman, First Round Capital• Mark Suster, GRP Partners• Paul Graham, Y Combinator• Paul Kedrosky, Kedrosky Capital

Consolidated 35 unique Twitter handles

Friends (25942 counts)

Followers(1770908 counts)

Confirmed edges (6687 counts)

Shared 20% of confirmed edges <10 (21 counts)

Analysed data

Friends/confirmed edges share, corr.

Number of shared edges, time zones

Network of top venture capital firms and venture capitalists, entrepreneurs

The density of the network was such that it was impossible to make much sense; Visualisation done with R thanks by Thomas Metz, Freiburg uni., Sunbelt 2013 conf.

Graph Distance:•Diameter: 5•Average Path length: 2.77• Number of shortest

paths: 166817Modularity:•Modularity: 0,61•Average Degree: 1,28• Number of

Communities: 18•Weakly Connected components: 2•Strongly Connected Components: 1294•Average Clustering Coefficient: 0,083

Core of the network, time zones

Density of CORE NETWORK is: 0.1239

Density of CORE NETWORK ALL but PST: 0.0588

Density of CORE NETWORK in PST:0.2329

Density of CORE NETWORK in EST: 0.0627

Density of CORE NETWORK ALL BUT PST & EST: 0.0719

Twitter limitations

• half life of a link on twitter was 2.8 hours

Bitly.com

GMT Pacific Mountain Central Eastern Santiago Brasil GMT Europe Eastern EurGulf Moscow Central Asia

8:00 AM 0 3600 7200 10800 14400 18000 21600 25200 28800 36000 39600 43200 46800 50400

9:00 AM 3600 7200 10800 14400 18000 21600 25200 28800 32400 39600 43200 46800 50400 54000

10:00 AM 7200 10800 14400 18000 21600 25200 28800 32400 36000 43200 46800 50400 54000 57600

11:00 AM 10800 14400 18000 21600 25200 28800 32400 36000 39600 46800 50400 54000 57600 61200

12:00 AM 14400 18000 21600 25200 28800 32400 36000 39600 43200 50400 54000 57600 61200 64800

1:00 PM 18000 21600 25200 28800 32400 36000 39600 43200 46800 54000 57600 61200 64800 68400

2:00 PM 21600 25200 28800 32400 36000 39600 43200 46800 50400 57600 61200 64800 68400 72000

3:00 PM 25200 28800 32400 36000 39600 43200 46800 50400 54000 61200 64800 68400 72000 75600

4:00 PM 28800 32400 36000 39600 43200 46800 50400 54000 57600 64800 68400 72000 75600 79200

5:00 PM 32400 36000 39600 43200 46800 50400 54000 57600 61200 68400 72000 75600 79200 82800

PST Pacific Mountain Central Eastern Santiago Brasil GMT

8:00 AM 28800 32400 36000 39600 43200 46800 50400 54000 57600

9:00 AM 32400 36000 39600 43200 46800 50400 54000 57600 61200

10:00 AM 36000 39600 43200 46800 50400 54000 57600 61200 64800

11:00 AM 39600 43200 46800 50400 54000 57600 61200 64800 68400

12:00 AM 43200 46800 50400 54000 57600 61200 64800 68400 72000

1:00 PM 46800 50400 54000 57600 61200 64800 68400 72000 75600

2:00 PM 50400 54000 57600 61200 64800 68400 72000 75600 79200

3:00 PM 54000 57600 61200 64800 68400 72000 75600 79200 82800

4:00 PM 57600 61200 64800 68400 72000 75600 79200 82800 86400

5:00 PM 61200 64800 68400 72000 75600 79200 82800 86400 3600

Twitter time zone limitations

Time zone coverage during best “tweeting” hours in PST and EST

Time zone coverage during best “tweeting” hours in PST, EST & GMT

Total number of reachable time zones at best twitting hours:- PCT (65), EST (GMT), EST (39)

Preliminary conclusions

• Is there a gap between social networks and venture capital networks in terms of time difference between its members? –The hypothesis has not been confirmed

• Is venture capital rooted in social networks? (P.Bourdieu) –Confirmed

• Can social/capital networks be time-zone dependent when using social media (Twitter)? Confirmed

• Time zone difference can help to understand the constrains on social network growth and the impact it can have on the growth social/capital networks

Afterthought: How can we get around it?• Answer suggested by Masaki Shimada, Tokyo, during a Sunbelt 2013 conf.

participant: Yes, we can by having physical presence across the time zones spread out in an optimal way* (a similar approach being used by the syndicated VCs such as Canaan Partners, see chart below)

Twitter friends and followers of Canaan Partners, top 5 socially connected VC firms (Activate Networks 2012) with offices in Menlo Park, CA, NYC, London, Tel Aviv, India.

* - the functionality of rescheduled tweets was implemented by Hootsuite and Bufferappas of 2012; they do not ensure the full real-time experience of tweeting around the globe

References

• Java et al., Why We Twitter: Understanding Microblogging Usage and Communities, Joint 9th WEBKDD and 1st SNA-KDD Workshop ’07 , August 12, 2007, San Jose, California

• Krishnamurthy B., Gill P., and Arlitt M., A Few Chirps about Twitter, Proc. of ACM SIGCOMM Workshop on Online Social Networks. Seattle, USA. Aug. 2008

• Kulshrestha, Kooti, Nikravesh and Gummadi, Geographic Dissection of the Twitter Network, Proceedings of the Sixth International AAAI Conference on Weblogs and Social Media, 2012

• Liben-Nowell et al., Geographic routing in social networks, www.pnas.org/cgi/doi/10.1073/pnas.0503018102

• Hopcroft, J., Tiancheng L., Tang J., Who Will Follow You Back? Reciprocal Relationship Prediction, CIKM '11 Proceedings of the 20th ACM international conference on Information and knowledge management, p. 1137-1146 (2011), http://dx.doi.org/10.1145/2063576.2063740

• Takhteyev, Y., Gruzd, A., and Wellman, B. (2012). Geography of Twitter Networks. Social Networks, Special issue on Space and Networks, 34(1): 73-81. DOI:10.1016/j.socnet.2011.05.006.