Startups are hard because by definition, you’re trying to do something that has never been done before. There is no roadmap, handbook or “right” answer.
There are no experts. There are only opinions.
So then, it is shocking to me how many people are so willing and eager to offer up their services as “advisors” to startups. Most alarming to me are the people that are patently unqualified to even have an opinion, let alone advice. People that sprout theory because they’ve haven’t done it before, when execution and battle scars are what early founders need to learn from.
This is one of the most dangerous traps a new and unexperienced founder can fall prey to. Listening to the wrong people can kill a startup faster than anything else. But every day I talk to yet another young founder that tells me what advisors they have and how much equity they gave up for it.
No. Just no.
I know how lonely it is at the beginning and how tempting it is to want a team. But a team of advisors is an illusion. A costly one. What you need is to build the company to the point to earn the true team member – employees. Then they’re the ones you should generously give equity to.
This doesn’t mean advisors aren’t helpful. Mentors and advisors are vital if they’re the right people, leveraged correctly.
What makes someone’s opinion worth considering?
1) They’ve been through it before
I have many people I am fortunate to be able to turn to for different issues or questions I’m facing. But all of them are people that have been through this startup journey before and have the battle scars to prove it. I’m happy to listen to other highly intelligent people talk about their thoughts on the theory of things. But when it comes to betting on the future of my company, give me the battle-tested any day of the week. Startups are such that everyday brings unexpected challenges and insights. Nothing goes according to the theory. The only people that can help me see around the next curve are the people that have been around the curves themselves.
2) They ask questions and don’t give directions
Wondering how much to raise and at what valuation? Struggling with a hire that isn’t working out? When you’re talking to the best advisors, they’re not telling you what to do. They’re suggesting the range of things that are possible and asking you pointed questions. Based on data and experience. Then you have to decide what to do with the information. Anyone that starts spouting off specific actions can’t likely speak to breadth of options because they don’t know them. The irony is that the best advisors don’t actually give advice — they ask the right questions.
3) They’re a mirror, not a fortune teller
The best advisors are the ones that manage to hold you accountable to yourself. The ones that shine back to you your own truths you have to confront. They are neither feel-good buddies nor oracles. They don’t have answers to your questions. They should have stories and watch outs and hard truths. They are your best bet at you not drinking your own Kool-Aid.
4) They walk the talk
Too often “advisors” offer up a monthly check-in chat and it’s mostly that. Them pontificating on ideas with little effort or efficacy. The true advisors are there in the trenches working with you. Maybe they’re running analyses that you’re not experienced to do or making a key connection to someone that can bust a barrier you’re facing. Whatever it is, they’re working for that equity. Don’t ever settle for just talk.
5) They don’t ask for a lot in return
The people that have been on this journey understand how important it is for early founders to conserve both equity and cash. (They also understand that “time is money” and won’t be inclined to waste much of yours.) So they won’t be the ones that are negotiating hard for a lot of compensation and beware of anyone doing so right off the bat. Lastly, very few, to the point of essentially no one, will warrant more that 0.25% of your company so don’t make an expensive mistake at the beginning that can impact the whole future of your company.
The real deal mentors and advisors are invaluable for founders along this startup journey. They provide support and hard truths and coaching. But beware of exactly who warrants this designation.
Starting a startup and building a company are hard. Don’t make it harder by surrounding yourself with the wrong people from the start.