Johnson Cook

Atlanta tech investor. Entrepreneur.

Johnson Cook - Atlanta tech investor. Entrepreneur.

Relationship Transaction Costs

 

Did you realize that for each relationship you have, there were transaction costs? Sure, you received something of value, and as with everything- there was a cost. Transaction costs are a big topic when discussing a Startup Rainforest because these are what keep the flow of ideas, talent, and of course, capital from accelerating.

Think about the barriers that you must overcome to form a new relationship:

  • Geography – of course, it is much easier to build a foundation of a relationship when there is less physical space between you and the other person.  For those who live in the far north suburbs of Atlanta- being my golf buddy down in Peachtree City carries some pretty direct transaction costs (aka gas money!).
  • Networks – sometimes we exist so heavily in our own network that meeting someone out of the network is challenging. There are fewer common connections meaning it will take a bit more to trust and understand the other person.
  • Culture – we certainly have more than our share of cultural divides in Atlanta. Although we are friendly and trusting to those with the same heritage as us, you can’t argue that Atlantans are slower than much of the rest of the country to accept, engage, and embrace people of a different background than our own.
  • Language – Let’s face it. This one is a huge barrier for Atlanta. Not so much within our community, but I believe the southern drawl can be a reason Atlanta doesn’t have more global connections.  Everybody thinks they sound like Dan Rather, but be honest: if you call up an NYC or West Coast VC and start dropping yalls and aints — the barrier to that relationship is heightened because of language.
  • Trust – Ah, the biggest of them all.  Trusting that you can be open and genuine with a stranger is not natural. We have biological reasons why we don’t trust other people, but in order to form a relationship that will turn into any sort of innovation, we must pay the price of trust.

From the Book… Rainforest Axiom 4: Social barriers – caused by geography, networks, culture, language, and distrust- create transaction costs that stifle valuable relationships before they can be born.

 

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