Sep. 7, London: How Professional Investors Elicit Maximum Information in Minimum Time from Industry Sources

I’ll be speaking in London next week and hope that you will join us:

Straight from the Horse’s Mouth:
How Professional Investors Elicit Maximum Information in Minimum Time from Industry Sources

Sponsored by the Harvard Business School Club of London
Thursday, September 7, 6:30pm
Offices of McKinsey & Co., 1 Jermyn Street near Piccadilly Circus, London
RSVP and prepayment: http://www.hbsa.org.uk/cgi/hbs?do=index&page=event&event=222

Cost: £10.00

“Interviewing industry sources requires a broad range of skills which I didn’t learn in business school: rapport-building; how to open a conversation to start off on the right foot; how to close a conversation and keep the door still open. Nitron Advisors has helped me to interact with experts more effectively, learn more from them, and make better trading decisions. Nitron showed me how to ask the right questions… And how to help an expert teach me how to ask the right questions! Any investor without this skill set is at a significant disadvantage in the war for alpha.”
– Partner, Multistrategy/Convertible/Credit Arb $500M fund, New York, NY

As a professional investor, you speak every day with corporate management, with industry sources, and with other knowledgeable experts. However, are you getting as much information as possible? Do your sources pro-actively contact you with new investment ideas? Do you have access to the right sources for your business?

David Teten, CEO of research firm Nitron Advisors, will fill the gap. Come learn:

+ How can I learn the most information possible from industry sources?
+ What questions should I ask?
+ What are the killer phrases NOT to say?
+ How do I build a pool of knowledgeable sources in the industries in which I invest?
+ What questions prompt sources to share their most valuable information?
+ What are the legal and ethical guidelines that I should think about when speaking with sources?

There are countless books on how to read a balance sheet or an income statement. However, when you actually measure how professional investors spend their time, they spend perhaps half of it talking with management, attending conferences, and in other ways learning from industry sources. Yet, there’s not a single book on Amazon or course in business schools on how to do that effectively. We fill this gap.

Who is Nitron Advisors?

Nitron Advisors provides professional investors with precise answers to their questions about specific companies and industries, by tapping our exclusive Circle of Experts of thousands of knowledgeable industry insiders. You can learn directly from the Experts through private telephone consultations, in-person customized surveys, and interactive events. We provide access to senior executives, local managers, technologists, suppliers, customers, and regulatory observers. We specialize in connecting you with executives in transition.
By the nature of our business, we have developed an in-house expertise in elicitation, and developed this training program for our clients as a “User’s Guide” to our services.

“By talking with a Nitron Advisors expert, our…conversation led to north of a million dollar profit for us and our clients. Within 48 to 72 hours, I was trading facts with the actual person we wanted to be connected to, and that allowed us to form an extremely fast, investable idea.”
– Lyron Bentovim, Managing Director, SKIRITAI Capital,
New York Post, August 7, 2005

Biography of Speaker

David Teten is CEO of Nitron Advisors. David is also the lead author of The Virtual Handshake: Opening Doors and Closing Deals Online, the first business book about how to use online networks to accelerate sales and raise capital. He runs TheVirtualHandshake.com resource site and blog and co-writes a monthly column for FastCompany.com. David recently was named a “2005 Future HR Leader” by Human Capital magazine for Nitron Advisors’ unique use of social software for recruiting. David serves on the Advisory Board of the Word of Mouth Marketing Association and of Accolo, a recruitment process outsourcer.
David is a frequent keynote speaker at finance and technology industry conferences and at such universities as Wharton, Columbia Business School, Yale, and Princeton. He formerly was CEO of GoldNames, an investment bank focusing on serving the internet domain name asset class. He has worked with Bear Stearns’ Investment Banking division as a member of their technology/defense mergers and acquisitions team, and was a strategy consultant with Mars & Co. David holds a Harvard MBA and a Yale BA.

Advancing in your career without experience

From Harvard Business School Working Knowledge:

The researchers identified four successful tactics for obtaining stretchwork that were common to both groups:

* Differentiate competence. Anyone hoping to advance must distinguish his or her performance on the job. This is particularly true, however, for contract workers—because they are paid for each short-term job, their employers are likely to subject their work to close, frequent evaluation.
* Acquire referrals. Because high-tech contractors tend to work with a number of clients, brokers, and fellow contractors, they enjoy a broader social network from which to draw referrals than most permanent employees. In the film industry—where most hiring is done based on a production manager’s previous experience with an individual—referrals are a vital aspect of getting any job, particularly if it stretches a worker in a new direction.
* Framing and bluffing. “This is one of the most creative attributes for obtaining stretchwork,” O’Mahony notes. “People who are good at presenting their prior experience in a way that allows for an easy translation to the desired job can narrow the gap between their past experience and future capabilities.” Adopting a hybrid job title to identify oneself—”director-screenwriter,” for example—can also help establish authority in more than one area.
* Discounting. Accepting pay below the market rate is a temporary disadvantage some contract workers are willing to accept, if it means gaining the experience and exposure that will lead to a new position. One technical writer put it this way: “I turned down solid offers from three companies, all paying over $100K a year…I would take a job at $55K if they’re using a totally new technology so I learn something…It’s like playing pool…You hit the green ball with the white ball, and the point is to place the white ball to get the next shot. So I take that job in order to learn skills for my next project.”

More…

Granovetter's Weak Ties – How Weak Is Weak?

Many business users of social networking sites have heard Mark Granovetter’s 1973 paper, The Strength of Weak Ties, which concluded that “weak ties”, rather than “strong ties”, were more helpful in finding a job. This is often used as an argument to justify connecting with as many people as possible in social networking sites, even with no more interaction than the connection request and its acceptance.

Granovetter’s study is great, but we have to know what the definition of a “weak tie” is that he was using for the purposes of his study. We can’t make our own interpretation of “weak tie” and then use his paper to justify our actions if we’re not using the same definition of “weak tie”.

So what does Granovetter himself say?

It is sufficient for the present purpose if most of us can agree, on a rough intuitive basis, whether a given tie is strong, weak, or absent. [Unfortunately, he was apparently wrong, as people actually don’t seem to be able to agree.] […] Included in ‘absent’ are both the lack of any relationship and ties without substantial significance, such as a ‘nodding’ relationship between people living on the same street, or the ‘tie’ to the vendor from whom one customarily buys a morning newspaper. That two people ‘know’ each other by name need not move their relationship out of this category if their interaction is negligible.

Every single person you meet doesn’t elevate even to the level of “weak” in his definition, nor do people whose “interaction is negligible”. No interaction = no tie.

Let’s look at what another expert has had to say on the topic. Valdis Krebs is one of the world’s top experts in Social Network Analysis (SNA) – the creator of InFlow, a software tool used for analyzing relationships within organizations to help teams improve their effectiveness.

From a March 2004 InfoWorld interview, Capitalizing on Communication:

IW: These projects were about strengthening ties within groups. Where does Stanford University Sociology Professor Mark Granovetter’s “strength of weak ties” idea fit in?

VK: People have a wrong impression about what a weak tie is. It’s not just a casual acquaintance. A weak tie used to be a strong tie; there was trust and shared knowledge. If I go to a conference today and meet somebody new, people will say “That’s a weak tie.” I say no, it’s an acquaintance tie. But if I also run into Peter from Disney, who I used to work with, that’s a weak tie that can be reactivated. A lot of Granovetter’s research on weak ties was based on people who had known each other better before.

Your “weak ties”, as referenced in the Granovetter study, are exactly the people a tool like LinkedIn is designed to help you stay connected with and leverage your relationships with. It’s former co-workers, customers, vendors, schoolmates. Those are weak ties as Granovetter defined them. You don’t need LinkedIn to manage your truly strong ties, because you interact with them every day/week/month.

I’m not saying there’s no value in those “weaker than weak” ties, aka “acquaintance ties”. Yes, some of those can become the weak ties that lead to real value. But to raise them to the point of real valuable — to action, not just presence — generally requires more interaction than just mutual consent to be in each other’s database.

But I do hope people will stop using Granovetter to justify their own “light linking” behavior. It’s a complete distortion of the findings of his study if you’re not using the same definition of “weak ties” that he did.

Multi-sided markets, online

HBS Professor Andrei Hagiu is an expert on multi-sided markets, and recently interviewed me on that topic: Market Platform Dynamics–Catalyst Conversation: Conversation with David Teten. His site requires that you submit an email address to read the article (but I should note that he doesn’t actually test if the email address is functional.)

Social Network Analysis and the Middle East

The SOCNET mailing list has had some traffic about using social network analysis for Mideast politics. Valdis Krebs is experimenting with attracting and repelling forces between nodes:
http://www.orgnet.com/mideast.html
has an interesting graph.

Ilan Talmud wrote:

On a structural approach to negative and positive relations and its effect of Interstate militarized conflict see :
Papers:
Zeev Maoz 2006. Network Polarization, Network Interdependence, and International Conflict, 1816-2002. Journal of Peace Research, 43(4): 391-411 at: http://jpr.sagepub.com/cgi/reprint/43/4/391

Z. Maoz. R. Kuperman, L. Terris, and I. Talmud. International Relations: A Network Approach.” In New Directions for International Relations, Edited by A. Mintz and B. Russett. Lanham, MD: Lexington Books, 2004 (with Z. Maoz. R. Kuperman, and L. Terris). http://soc.haifa.ac.il/~talmud/evolution.pdf

Z. Maoz. R. Kuperman, L. Terris, and I. Talmud. “Structural Equivalence and International Conflict, 1816-2000: A Social Networks Analysis of Dyadic Affinities and Conflict.” Journal of Conflict Resolution (2006, forthcoming), http://soc.haifa.ac.il/~talmud/strucequiv.pdf

Z. Maoz. R. Kuperman, L. Terris, and I. Talmud.” The Enemy of my Enemy: The Effects of Indirect Enmity Relations on Direct Dyadic Relations,” the Journal of Politics (2007, forthcoming)

Survey Findings: Transactional Trust in Social Commerce

I wrote last week about the initial findings of the survey on transactional trust in social commerce (eBay and other online auctions; craigslist and other classifieds; social networking, et al.) that I did for Rapleaf. Today we’re releasing the full findings:

Transactional Trust in Social Commerce
(PDF, 13 pages, 113K – Right-click and Save Link As or Save Target As to download)

The major conclusions from the study:

Transactional trust appears to be much more important to buyers than to sellers in a social commerce setting. The top four issues for buyers to determine trust all ranked higher in importance than the number one issue for sellers. The average of the top five issues was 18% more important to buyers than sellers. Sellers are also significantly less likely to research buyers prior to completing the transaction. And only 37% of sellers have ever decided not to do business with someone due to a lack of trust, versus 71% of buyers.

This seems to have a good basis in fact. Only 43% of sellers reported ever having any actual trouble with buyers, while 61% of buyers reported experiencing an actual problem with the seller.

The ways in which buyers and sellers determine trust is very similar, though. Ranking the nine factors considered for both buyers and sellers, not one single factor varied by more than two ranks between buyers and sellers (note: buyer rank excludes the two items not relevant to sellers):

Factors in determining trust
compared between buyers and sellers
Factor Buyer rank Seller rank
Posted ratings of the buyer 1 2
Reputation of the site or publication 2 3
Payment method you are using 3 1
Endorsements/testimonials 4 6
Intuition/gut-level reaction/prayer 5 4
E-mail or phone call with the buyer 6 5
Outside research of the buyer 7 8
Prior knowledge of the buyer 8 7
Personal appearance of the buyer 9 9

Payment – how the money is handled – is the highest priority for sellers. Recommended ways of improving payment trust included the use of PayPal, credit card or other secure payment method. For larger transactions in particular, many people wanted easier-to-use, more affordable escrow systems.

For buyers, relevant history – a track record, a reputation – is most important. Three of the top four issues for buyers are related to this (two related to the individual seller and one to the agent site handling the advertisement or transaction).

In the free-form responses as to what could best be done to improve transactional trust in social commerce, everything is centered on having a persistent, verifiable identity and history. While anonymity may feel safer for buyers and some sellers, it’s not conducive to building trust. Ideally, buyers and sellers both want to see:
– Verified identity
– Valid contact information – street address, phone, web site and e-mail
– Online social presence
– Feedback from others you’re done business with
– Ratings as a simple way to aggregate that feedback

If you’re not prepared to provide all that, you may not be prepared for social commerce in the coming years.

Connecting the Corporate Dots: Social Networks Reveal How Employees and Companies Operate

The Wharton newsletter reports:

“With the recent disclosure of wiretapping by the National Security Agency and the booming success of sites like MySpace and Friendster, social networking is much in the news today. But serious interest in social networks can also be found among academics, consultants and corporations seeking to deepen their knowledge of how companies operate. While organizations have been aware of the power of social networks for some time now, researchers at Wharton note that mapping these connections can yield some potent insights, such as how board members interact within and among companies, and how employee relationships can be better understood to improve productivity and the dissemination of ideas.”
http://knowledge.wharton.upenn.edu/article/1500.cfm

People are using SNA (social network analysis) in the sports world as well. Via Noor Ali-Hasan on the SOCNET mailing list, I saw a social network analysis of the FIFA World Cup Germany 2006 final match between Italy and France. “It shows the passes from every player to those three team-mates he passes to most frequently. Strength of arcs displays the number of passes. Size of nodes displays the influence (flowbetweenness) of a player.”

http://www.visualcomplexity.com/vc/project.cfm?id=342

Sadly, head-butting doesn’t show up in this chart.

UPDATE: Alan Reifman wrote to SOCNET:

The World Cup soccer passing diagrams are great, and I appreciate Dr.
Ali-Hasan for notifying the list. As some of you may know, I’ve done some similar mappings for U.S. college basketball in recent years (although not nearly as elegantly). Most recently, I presented a poster on this at the 2006 Network Science conference at Indiana University, and in 2005, I presented an earlier study at Sunbelt. For those interested, my research page on basketball passing can be accessed by clicking on:

http://www.hs.ttu.edu/research/reifman/netsci2006.htm

Rapleaf Transactional Trust Survey Results

My focus is normally on how people build trust over the course of virtual relationships, but the fact of the matter is that millions of transactions occur online every day between complete strangers, initiated through sites like craigslist, Elance, and dozens of other online auctions, classifieds, social networking sites, and so on. It’s one thing to do business with a well-established brand like Amazon or Best Buy, but how do people create “transactional trust” in these person-to-person situations, when they have so little to go on?

I was recently commissioned by Rapleaf, creators of a portable reputation system that allows you to develop and show your reputation across multiple sites, to conduct a survey to answer exactly that question. The following is a press release going out today that highlights some of the findings of the survey:

Survey Shows Ratings Are the #1 Way Classified and Auction Buyers Determine Trust (When Available)

In an independent survey of users of online classifieds, auctions and social networking sites commissioned by Rapleaf, buyers said that posted ratings are the most important factor in determining their level of trust in sellers.

“I like to see seller ratings and reviews,” said one buyer. “The social proof is very valuable.”

Among buyers, 67% selected ratings of the seller as “very important”, with an additional 25% labeling it “somewhat important”. The reputation of the site itself, rather than of the individual seller, was also an important factor for determining trust, with 63% rating it as “very important”. The payment method being used was a close third. Other factors considered included the quality of the ad, an e-mail or phone call with the seller, endorsements and testimonials, web research of the seller, and intuition/prayer/gut reaction.

For sellers, the payment method being used was the most important factor, with 81% rating it as somewhat or very important. Posted ratings of the buyer was a close second at 77%.

Trust is definitely a challenge for these sites. Over 70% of buyers reported not doing business with a seller because they didn’t get a good sense of trust. 50% of buyers reported an experience in which the product wasn’t accurately pictured or described. Rudeness, defective goods and non-delivery of goods were each cited by more than 20% of buyers.

“Credibility is key,” wrote one respondent, “and I think it’s difficult to establish in a classified ad. How can you develop trust in you, your product, your service, in just a few lines?”

For some, the trust issues prevent their participation entirely:

“I have never done it because I am afraid,” said one respondent. “Not only do I worry that I will lose my money, but I am not sure of the quality of the product or that I will even get the product delivered. Anything that will remove fear, ensure quality, build trust into the transaction would help!”

Sellers also frequently experience problems with buyers. Almost 50% of sellers reported having an experience with flakey buyers. Other top problems sellers cited included rudeness (38%), refusal to pay previously negotiated price (32%), and harassment (19%).

Several respondents expressed a desire to have ratings be available across sites. In response to the question, “What one or two things do you feel could be done to best increase the trust between buyers and sellers,” replies included:

“I like eBay’s feedback concept, although I wish there was a centralized version of this, so I could see how their feedback looks from other places (craigslist sales, Barnes and Nobles used book sales, etc.) and so people could take their feedback scores with them.”

“Reputations systems are important, and being able to understand a person’s reputation across multiple sites would be a boon (in other words, to blend, say, MySpace ratings and eBay ratings).”

“Some sort of due diligence, much like eBay’s rating system. I think also that it would be good to have some sort of overall trusted vendor rating for use on the entire internet.”

“People want to build trust with those that they buy, sell, and barter with,” said Auren Hoffman, CEO of Rapleaf. “Ratings are a proven way of doing that. We rate books on Amazon, electronics on shopping.com, and restaurants on Yelp. As more and more business is done between individuals on the Internet, rather than just with large e-tailers, rating people is the natural next step.”

____________________
Rapleaf is a free portable reputation system for e-commerce that allows buyers and sellers to rate one another. Getting rated and getting a Rapleaf score can help facilitate a greater level of trust among other buyers and sellers.

For the complete results of the survey or more information on Rapleaf, contact:

Auren Hoffman
people@rapleaf.com
(415) 578-4562

UPDATE 7/21/2006: The full report of the survey has now been published:
Transactional Trust in Social Commerce

WorldWIT Conducting Online Networking Survey

WorldWIT, an online and offline network for businesswomen, is conducting a survey about online networking. It’s just ten questions – please take a moment to fill it out. I’m sure we’ll all be interested to see the results. And yes, they want responses from men, too.

Meshforum 2006, May 7-9, San Francisco

I’ve heard great things about Shannon Clark’s MeshForum conference, and wanted to share this note from him:

Hello all,

As many of you know, I have been deeply interested in the study of Networks, and three years ago I founded MeshForum. MeshForum’s goal is to foster the research into Networks – across fields and industries. Last year we held our first conference, MeshForum 2005 in Chicago.

This year, MeshForum 2006, will be May 7-9, in the Bay Area, at the Commonwealth Club in downtown San Francisco for the 7th and 8th and at a nearby venue for the 9th.

MeshForum is the type of conference that is defined not by a single speaker but by the diversity and input of the audience – come prepared to participate and engage with the speakers and your fellow attendees. In addition to two days of amazing speakers, you will have highly interactive lunches, group dinners at fantastic local restaurants and a full day in Open Space to work collaboratively on network issues.

If you are planning on attending MeshForum 2006 please register soon, and please invite others to do the same. It is a great opportunity for small teams to get together, learn, and collaborate. There will be no vendor pitches or the typical canned speeches at MeshForum – instead expect to hear (and especially see) a wide variety of thought provoking presentations.

This year we will be exploring two very important themes as well as hearing from a variety of experts on specific areas of Networks. The first theme which will underlie the entire conference is Visualization. The second theme is Social and Political Networks.

Visualization is a vital and key part of all Networks – but it is also an extremely complex and difficult task.

Networks – from transportation grids to social organizations to biological systems embody many characteristics and features that are not easily detected in just the raw data – over the years (indeed over the centuries) many techniques and approaches have been tried to render network data visible and thus understandable. Manuel Lima, founder of visualcomplexity.com, will join us to provide an overview of the over 250 different approaches he has documented and assembled. Dave Gray, founder of Xplane, will lead a workshop on visual thinking, and there will be many other artists and researchers who will present their own works and visualizations.

Social and Political Networks impact every person, business, and government. Understanding our place within multiple networks, as well as the successful (and unsuccessful) ways people have mapped, navigated, and made use of social and political networks is the key to success in the 21st century.

We’ll hear from Robert Scoble and Shel Israel, authors of the great book Naked Conversations, on how new engaged forms of communication, especially business blogs, are changing relationships in the business world – both within corporations and between corporations and their customers. We will also explore the role of networks in politics with expert political activists. Other speakers will cover the future of social networks, social network analysis, and much more.

MeshForum 2006 will also cover the economics of transportation networks with an emphasis on understanding the role of tolls. We’ll  hear about the world from the experts at worldchanging.com and there will be many other surprises.

For all this, and more, including a FREE copy of Naked Conversations, please register today.

Advanced registration is just $500 and by registering today you guarantee yourself a seat as MeshForum 2006, when we reach 150 people we will have to close registration..

Included in your registration will be:

– most meals Sun, Mon, and Tuesday (email me if you have specific dietary requirements, vegetarian options will be available at all meals)
– all conference materials including a FREE copy of Naked Conversations
– three days of learning and engagement

An opening reception on the evening of Saturday May 6th will be organized. Hotel Details will be posted on the website and emailed to all registered attendees.

Please register today!

See you in May!

Shannon

p.s. If you or your firm is able to pay more than $500 and support MeshForum via sponsorship or via offering scholarships to attend MeshForum, we would be extremely grateful. Any level of support is appreciated.

p.p.s If price if your only reason for not attending, please contact me, we will have a limited number of scholarships and volunteer opportunities available. We will also be recording all of the sessions for later distribution online.