I wasn't the most popular kid growing up. Even in college as I lived up to the analytical stereotype and stayed home studying (a better word would be "experimenting" or "training"), my party-going acquaintances would assure me that I was investing in the wrong thing. "It's not what you know, it's who you know. So don't spend so much effort with the books when it's the relationships that matter." And there certainly is some truth to this. We've all seen the stranger's perfect resume get passed over for the friend's average resume (the stranger is by definition unknown, and therefore risky, so there is business rational to pick the safe candidate over the risky one). People ultimately make the decisions, so people are important. It's one reason I so actively endorse the community user groups.
However, there must be balance. There are three caveats that this cliché misses:
1. If what you know is valuable, then people will want to know you. Even a hermit who cures cancer will begrudgingly become famous. Recruiters in every major city are scouring over LinkedIn, user groups, monster, dice, and every online job board trying to find good candidates, offering bounties, and poaching top talent from competitor's. In other words, "what you know" will quickly open doors to "who you know" (and "who knows you").
2. Really, it's not "who you know," but "who knows you." Sharing an elevator, or even a lunch, doesn't mean that they'll risk their reputation giving you a referral, or that you can "phone them for a favor".
3. There are talkers and doers. Talkers can drop a name for every occasion, have 500+ social-networking friends, and can truthfully say things like "Oh, I know Acme's Chicago director, Bill, we met at last Autumn's pumpkin-throwing contest…" They could get the interview with their connections, but they could never pass the interview itself.
Of course, with "what you know" vs. "who you know", like most two-way debates in life, you'd prefer both. But in the field of software engineering, you can never sell-short the "what you know".