Episode Transcript:

ADAM MCGOWAN [00:08]: Welcome to episode two of Ventures in Tech, brought to you by Firefield. This is Adam McGowan and on today’s show we’re going to be talking about the topic of advising and mentoring in the startup ecosystem. I’ll again be joined by my colleague Henry Reohr from Firefield who’ll be leading today’s conversation. And with that, I’ll let Henry take it away.

HENRY REOHR: [00:32]: Well, before we dive into a lot of detail, I want to start at a pretty high level. It would seem that when an expert is willing to share insights with an entrepreneur, that’s a pretty good thing. As with most good things, more is usually better. Do you think it would be fair to say that an entrepreneur should take all the mentorship advising they can get?

ADAM [00:56]: I wish it was universally fair, but I don’t really think that it is. I think one of the challenges is the fact that too much advice can actually be, at best, a bit confusing, and at worst, I think it could actually be misleading or even potentially paralyzing for an entrepreneur.

I do think there are a number of factors that play into the utility of a particular piece of advice. Namely, I think there are three. The first one I would describe as the circumstance of the start up, The second would be the background of the expert, and the third would be, what I would call, the context of the interaction between the entrepreneur and the actual expert.

HENRY [01:43]: Well, let’s take any of these one at a time. Can you talk about how the circumstances of startup plays into advising and mentorship?

ADAM [01:54]: Sure. Let me start it by breaking up what I call advice into two distinct categories. The first category I would call “personal based advice”. What I mean by this is the kind of advice you would expect that’s either somewhat inspirational or the kind of things that help define the character or the skill set of an individual – of the entrepreneur.

Having an entrepreneurial mindset; being able to sort of work through a collection of challenges all these sorts of things. The skills an individual needs to be able to be successful at bringing a new venture to life or growing one is really what I’m talking about, and there’s a lot of opportunity for mentorship here. This is a wide range… it ranges from, you know, kind of personal wherewithal, all the way through public speaking and being better at pitching.

But that’s really not what I’m referring to. I’m talking about the second category and the second category is what I would consider “venture based advising”. This is advice that directly impacts the company and not necessarily the individual. And this advice is contingent on what’s actually going on within the business itself. This has a lot to do with the industry; has to do with the stage of the company’s life cycle; has to do with their financial circumstances. It has to do with the nature of their customers and the list goes on from there.

So these venture based factors matter because the value of any advice, in my view, is going to be directly related to how it’s going to address a company’s very, very specific situation. So that’s why it’s important to be able to assess that upfront, particularly when you’re talking about this venture based advice.

HENRY [03:44]: So how about the person’s background? Are you suggesting that entrepreneurs try to make judgment calls on whether the expert offering them advice can actually provide them any value?

ADAM [03:58]: Yeah. It might sound a little bit strange, particularly if you consider a lot of entrepreneurs (particularly first time entrepreneurs) might not have a ton of experience; might be somewhat young or semi new to their space or to the field of entrepreneurship; and it might seem a bit of a mismatch. Whereas an expert may have decades of experience.

So the idea that an early entrant into the space who’s super ambitious is second guessing someone far their senior in terms of experience might seem a little bit odd, but I think that not doing it and not challenging those assumptions is probably one of the biggest mistakes that I see for entrepreneurs who are on the hunt for advice.

And I think the challenge there is that they don’t trust their own instincts. The reason I think that matters is because the term “expert” is unbelievably subjective. And one of the big problems is that it’s very easy to claim expertise but it’s also nearly impossible to discredit that someone is in fact an expert.

There are many different ways to assess someone’s credibility in their field but I think the point I’m trying to make is: because someone labels himself an expert, because they’ve had a lot of years in a particular field, it doesn’t necessarily mean the advice they’re going to provide is going to be ideal for you. I think that’s really what I was getting at it.

HENRY [05:26]: It seems like it might be a tough conversation for somebody to have with someone who’s supposed to be an expert in their field. Do you have any tips for how to go about asking an expert to justify themselves in that way?

ADAM [05:45]: That would be a very hard conversation. It would be extremely awkward, it would actually be something that might be so off-putting that it could really have an impact on the ability to even get any advice. So while I’m advocating for justifying the expertise of the “expert”, I’m actually not advocating to do it face-to-face.

What I’m really talking about here is a lot of work that’s happening behind the scenes. We’re talking about homework that’s being done before you go about having one of these sessions with an expert – before this mentoring or advising ever even takes place. An entrepreneur should use tools at their disposal, starting with things like LinkedIn, and Googling and taking off from there – to really understand as much as they can about the advice giver before they actually start collecting advice from them.

Search not only or what they’ve done as far as companies, but what those companies’ histories have been; what they’ve done outside of those companies; if they’ve done other advising or mentoring; how much depth they’ve had in that field, how much diversity they have in their background. These are all really important things to know.

And I think what an entrepreneur should try to do is to really use that knowledge and foundation that they’ve discovered about this person for the friendly, get to know you, initial phase when they are actually getting introduced and having to meet and having that first session. There’s a lot of this colloquial and congenial Q-and-A that happens at the beginning.

My argument is to make the most of it and have it actually be more than idle chit-chat. Start with your homework and hopefully try to fill in those blanks when you actually talk to one of these individuals, and I think that when you’re coming from a place of interest – when you’ve shown you’ve actually dug into their background – this won’t come off as off-putting at all.

This will actually be, probably, very complimentary to the individual. A lot of experts like to talk about their experience and why they have expertise. I just think that if you come at it from the right place, with enough foundation and information, it will actually work out really well and probably to your benefit.

HENRY [08:01]: So beyond doing your homework and trying to qualify the experts that you’re talking to, are there any red flags or tips for sniffing out particularly bad advice that you might get from someone?

ADAM [08:18]: I think there are. There’s a lot of different types of bad advice but I tend to lump them into three pretty broad categories. The first one I would describe as the “anecdotal” advice. What I mean by this is the idea that you hear a story from an expert – it’s one instance of something happening and then having that instance suggest that there is some sort of a trend..

One piece of data does not make a trend – particularly in the case of someone who has a lot of experience – and you would know this from doing your homework. The hope would be that they piece together a pattern of behavior and then use a pattern that they’ve experienced over an extensive career to be able to give you insights into how that pattern can apply to your situation. So I would be wary of the one off, the “anecdotal”.

The second one is, and this isn’t really a great term, but I would consider this the “narcissistic” advice. This is the idea that the expert believes that their opinion about something can be projected to the rest of the world. If you show someone your app and say, “What do you think?”, and the experts says, “I love it, I would definitely use it and therefore it will be a huge success,” – that suggests that everyone else in the world agrees with his or her opinion, and that’s just not true.

I think being able to distinguish between the enthusiasm and, maybe in some cases, self centeredness of the expert’s opinion, from the idea of being able to have that expert project that onto the rest of the world, that’s a really important thing. If it’s very self focused, I’d be very cautious of that opinion and that advice from an expert.

And then the third would be what I would consider “overreaching”. Overreaching is a pretty natural tendency, I think, for experts. What I mean by overreaching is when they focus on questions in their own sphere of influence and experience – where they have a great deal of depth and a ton of insight – and then as you start to move into categories, maybe on the periphery or maybe completely unrelated to what they really know, they continue to project the same level of knowledge and unfortunately, probably, conjecture at this point and not real evidence.

So somebody might have a great deal of experience in going to market, but they might not actually be a sales person at heart. You start to ask questions about sales, and next thing you know, they have lots of opinions on that. So this also comes from your homework. Be very cautious about where someone’s expertise lies and catch them, if you will. Make a note mentally when they overreach and you should use that to really evaluate the quality of each piece of advice. An expert can be an amazing expert and hugely valuable, but maybe not in every discipline. So you really should be picking and choosing.

HENRY [11:11]: Getting back to the list of factors that may impact the quality of advice, you said that the context of the interaction matters. What do you mean by context and why does it matter?

ADAM [11:24]: What I mean by context is the nature of the interaction between the expert and the entrepreneur. There’s a number of different ways that this can happen, but I generally lump them into three categories. So the first one I call the “quick hit”, if you will. So this is going to be the short office hour session. This is going to be that 10 minutes favor phone call from a friend of a friend. This is something that happens in pretty rapid fire.

The second one (or the second category) is what I would kind of, in a friendly way, describe as “mentor madness”. This is when you’ve got a mentor who is assigned or paired up with an entrepreneur typically via a program like an accelerator or incubator or some other means where there’s a bit of a structure to it. Typically there could be a number of mentors assigned to individual entrepreneurial team, and maybe over the course of the program we’re talking about 5 or 10 dedicated hours of one-on-one time happens between that mentor or each of those mentors and the entrepreneurial team.

And then the third group that I would lump as its own category would be what I would consider “official advising”. This is when someone becomes a potential member of your actual board of advisors. It’s possible they could be compensated, maybe a little sliver of equity for their contribution, and you have really regular sessions and some ad-hoc availability when things arise with someone like that. So they’re really a member of your team at that point.

Now, let me go back to those one by one and talk a little bit more about why they matter. If I think about the quick hit, it’s the least valuable, and it’s the least valuable for a number of reasons: First, if you get beyond the personal based advice (which by the way, the personal based advice can be great in an office hour type session) you could get 30 minutes from someone about a way to be better at pitching or a way to be better at exuding leadership qualities. Those are great, but that’s not what we’re talking about.

If you’re in an office hour session and you’re trying to get venture based advice, it’s going to be a little tough. And it’s going to be tough because there’s not enough time for that expert to truly understand the circumstances of your venture. It’s just simply impossible and if they try to conjecture about what’s really specific to you, it’s going to be really hard.

And I also think that one tip in an office hour type setting, this quick hit type setting, is as hard as it may be as an entrepreneur try to refrain from asking questions super specific to your venture. It might be in the tip of your tongue, It might be something that’s really, really irking you that you can’t figure out. But the more specific the question is, and the more unique it is to your venture, the less likely the expert can actually help you.

If you’re meeting with a marketer, extract marketing general knowledge from them. If you’re meeting with a salesperson, extract general sales knowledge. Solving one very specific problem in the course of a very very small amount of time, you might think you’re getting really good value but you might actually get information that’s not as helpful as you think.

The second category, the accelerator or incubator style mentorship. This can be very very valuable but it can certainly have its pitfalls. This is one of the most likely places where I’ve seen these examples of the “bad advice” – that idea of the anecdote, or the narcissism, or the overreach. And I think it’s really important to pay close attention and really size up these mentors on that measure. I would also argue that you should only really start taking on venture level advice after that mentor has done a pretty deep dive with you.

If they’re spending 5 to 10 hours over the course of a program and in the course of your first session they’re giving you all this very pointed advice about what you should do with your company, that’s a problem. Because there’s just not a way that they really should be able to dig down that deep, assess exactly what you need, and make a very coherent, cohesive and complete opinion of what you need. It seems very unlikely that they should be able to do it that quickly.

And then the third group is official advising and undoubtedly it’s the most valuable. But the caution here is to make sure you treat it like what it is. It is a long term relationship and so you should take it with that level of seriousness. So, lots of homework on this.

This is someone you’re going to have a partnership with, they can become a member of your team so be very thoughtful and also be very cautious during that courtship phase and trust your instincts and make sure you’re very thoughtful about ensuring they’re the right ones. You don’t want to have a board of of 100 advisors. You want to find a few key members that are most critical to you and focus on them. So a lot of homework, but because of that effort you’re going to get, undoubtedly, the best reward.

HENRY [16:31]: We covered a lot of material so far. Could you summarize the main pieces of advice that an entrepreneur should take away?

ADAM [16:40]: Sure. So this first one is going to sound, I think, quite obvious, but really understanding your own business is absolutely critical. You might argue, well, how could someone not? Well, it’s possible. The idea here is to make sure you really, really can articulate your key and riskiest assumptions: What are the things that your company is most levered to? What are the events that could occur that could completely to derail you from your business plan?

And be very honest about it. Don’t assume that because you raised a particular round of funding that you have hit some milestone or you’ve reached the finish line. In many cases it might be the starting point. Be very thoughtful about where you are, where you are against your plan, and also try to have the self awareness to look at your company with a very objective eye. Look at it the way somebody from the outside would. It’s easy to say, sometimes it’s very difficult to do. So that’s something I’d keep in mind.

The second would be to categorize your needs. As is the case with the experts, your time is unbelievably precious. So the time of doing homework; and courting; and connecting with; and then collecting insights from experts is not trivial. It’s not trivial for them. It’s definitely not trivial for you. And so, given that time is one of your most scarce and valuable resources, you really want to make sure you’re believing that the quality of advice trumps the quantity of the advice.

You’re going to be relying on your awareness of yourself. You’re going to be relying on your awareness of your venture to know where you’ve got gaps. Where are you missing certain elements? And then focus on engaging experts who best fill in those gaps. Having three great mentors (they’re unbelievably personal, you’d love to go out with them for beers, but they’re all marketers) is not a good place to be spending that precious time you’ve got to be able to bring this collection of advisors together.

So the third thing would be do your homework. I said it a number of times but I’ve said it because it’s very important. You’re going to be wasting an interaction with an advisor if you don’t come into that session, every session, extensively prepared. That’s most important for the earliest of sessions with one of these experts.

The fourth thing would be to qualify the advice. You really need to make sure you’re trusting your own instincts here. You’re going to be relying on that homework and really use a sixth sense to separate the really quality and actionable advice from all the rest. So harking back to those three telltale signs of not good advice, look back and try to use the sniff test from your research to see if the expert is really as much of an expert as you think or that she or he proclaimed to be.. And see if you’re getting advice from a lot of overlapping advisors. Start to size up who you think is going to give you the best advice given the venture based circumstances you’re personally dealing with. So I think that’s really important.

And then lastly, you really need to go about constructing your own best conclusions. It’s really a mosaic puzzle. You’ve got to pull all these pieces together, and in order to plot the best path forward for your venture, you really need to be collecting a variety of different perspectives. That means you’re likely going to hear a lot of different opinions and it’s really going to be on you to be able to stitch those together into what’s going to be the most advantageous plan of attack for you and your venture.

This is one of those places that separate the really great from the not-so-great leaders. There’s nobody that’s going to be able to do that for you. That’s going to be one of those executive and leadership-type qualities that you’ve got to figure out. So when you have enough self-awareness to know that you’re missing things, you also need to have enough awareness to know when you’ve actually filled them in and when it’s coming from the right sources.

HENRY [20:39]: All right Adam. Thanks for answering my questions. That’s all I have for today.. I’m Henry Reohr from Firefield. You’ve been listening to Ventures in Tech. We look forward to catching you next time when we dive into your venture’s financial projections and why, for the most part, investors couldn’t care less about them.