There are a few different sources of advice for founders, with the most important ones being end users and paying customers. Below I have put a list of sources of advice in order of importance, just to push the point that the best form of advice comes from actually doing stuff and observing the results.
The focus of this post is to answer a question that comes up a lot – articulated by one person earlier today as:
I would dearly love a mentor/investor with that sort of experience, do you have any advice for who to approach?
I really dislike that word mentor, which to me has connotations of a somewhat contrived, unbalanced and paternal relationship. That could be just me, but I prefer the word “advisor”, or “someone you had a coffee with once”, so if you ever ask me for help please keep that in mind.
1. End Users
These are the people you are building your products and services for, and it’s critical that your entire business is built around them. So go ahead and immerse yourselves in their world. Observe them and ask open questions to determine their unmet needs as the first step in the design process. Later on watch them use your prototypes and successive versions of products. Go hang out with them at their conferences and hire people from their community as you grow.
These are the folks who pay for your products, and so it makes a lot of sense to observe where they want to spend money, and what is and how it is easiest to sell. But be careful to balance short term revenue with that long term unmet end-user need. The real value is in the latter, though you may need to former to keep your business afloat.
You have access to a vast amount of knowledge internally. The customer service and sales teams are close to the customers, but so are the people who collect money. At the beginning these are often the same person, but as you expand make sure the communication continues. Make sure that everyone in the entire team contributes to building up the knowledge about your business, and to your short and long term strategies. There are lots of ways to do this, and it’s also important not to distract from the core goals of getting work done. Ultimately leadership is about helping people, rather than telling people, so if you find that an isolated group is doing all the thinking then try to change things up. At the same time make sure that you have alignment between the key team members, not just in what you are doing but also why and how.
These days we are also overwhelmed with data, so make sure you are both collecting it and also looking at it in formal and informal ways. I like seeing daily, weekly and monthly reports, but also to be able to play with the data and make ad hoc queries. Your data should also contain internal metrics on how you get things done – such as average number of sales calls made per day and close rates.
Generally the task of collecting and presenting data belongs to the development team, but they are busy building the product and this can be neglected. can neglect to provide this as they focus on delivering product, but please don’t, as understanding what is going on is how you learn. So make sure that it’s a priority to capture and report data as you go so that you can all understand what is going on and continually improve.
4. Fellow Founders
Now on to the interesting stuff.
It’s lonely being a founder or a CEO of a larger company. You can feel like you are inventing things as you go, and have nobody to turn to for trusted advice. My take is that the best people to share and learn from are others who are or who have just been through a similar situation.
So reach out to other founders and CEOs, and get into the mode of having occasional coffees or drinks with each other. Even better you may want to join a small founder or CEO group. There are founder and CEO groups that exist, but starting your own is the best way to make sure you can get into one. So go ahead and progressively gather a mixed group of people from your town who are in the same position as you are. Start meeting regularly in a quiet and private place, not necessarily with any particular agenda, but with a view to have an informal conversation. You could add beer, food or guests, but the important features are that each person gets to talk and listen about their own issues, and that the group is by and for the founders or CEOs.
Larger groups can work too, but it’s much harder to get a productive session where founders are learning from each other rather than listening to a speaker or speaking to the same people in a beer or cocktail setting. To do this right you will need a facilitator who has a mandate to place primary emphasis on the founders or CEOs speaking and learn from each other. I’ve been doing this recently when facilitating TINShed events for a group of around 20 CEOs from the fastest growing TIN100 and TIN100+ companies, but I would hope that the people who meet in the room also continue conversations 1-1 or in small groups.
Larger events, such as awards nights and meet-ups can be very useful as well for sporadic catch-ups with peers, and for meeting new peers. Check out meetup.com for meetings in your area, and make sure to actually meet one or two new people each meeting. Don’t get drunk.
Beyond this you can also reach out directly (Twitter works well for founders) to peers for advice over coffee, email or direct messages. While most very successful and well known people are usually incredibly generous with their time, they are also bombarded with requests. So start with people who are not yet in the limelight, and who are perhaps a bit closer to your stage of development.
I do recommend reading a critical mass of books about business, but also to stop after a while, as they tend to get repetitive. These days you can often get the essence from a book within the first 3 chapters or so, with the remainder of the book is full of repetitive padding. Read accordingly.
My take is that business per se is actually very easy and the hardest parts are the things that distract and derail you. Find stories about people who started or ran great companies, and try to understand how they kept the focus on the right things, and how and why they made the decisions they made.
Industry websites, magazines and websites about early stage companies are also great sources of advice, but they can be massively distracting given the amount of “must read” news each day. You do need to keep up with your sector, so while I recommend occasional wider scans, you should visit a handful of sites regularly. It may also be handy to have an active and helpful presence under your own or your company’s name in websites, and certainly being on Twitter gives you a great firehose of information along with a community of smart and awesome people.
6. Paid Professionals
It’s really important to find great legal and accounting advisors. These are not your family accountant or lawyer, as you want to work with people who have worked with other early stage companies that you admire. So ask around, talk to them and get good references.
Once you have retained someone then please be a good client (especially if I have referred you).
- Make sure that you are aligned as a team before asking a lawyer for help in drafting documents like shareholders agreements. Do your internal negotiations without your lawyer in the room, and trust the lawyer to write it up professionally. If your lawyer gives you a list of questions to answer, make sure you all agree on the answers before responding, and respond quickly.
- Use your accountant as an advisor rather than a bookkeeper, and make sure they have all of your data by keeping your Xero accounts up to date.
- Trust your advisors – if you have briefed them well then make sure you thoroughly read what they have done but don’t second-guess them. Always read contracts and look at your accounts in detail – it’s your signature and responsibility not theirs.
- Pay your bills on time.
One rather cynical way to think about paid professionals is that they cost $1 a word – spoken or written. This might encourage you to be very efficient with your own and their time.
It’s the same, in my experience, with designers and developers – give really good inputs and then stand well aside while they work their magic.
7. External Business and Technical Advisors
These are last in my list – but many people put them first. I believe that’s a mistake, and it’s better to work through the above first, but at some stage you will need help from people who can help you work on the business, not in the business. I’ve written before on the right mix for directors, and it’s the same sort of mix for advisors.
Free Advice. Great advisors can be expensive, but on the other hand people love being asked for help and advice is often free. There is definitely an element of getting what you pay for though, and waiting (or asking) for someone to blog or write about your business or homepage is not the most effective strategy.
To find advisors start with people you have met who you respect, and have coffees with them to update them on your business and get their informal advice. Ask them who else you should talk to, and keep having coffees. Over time you’ll call back the ones who are most useful.
It’s really fun giving advice – most people enjoy it. But it takes time and energy to give quality considered advice, and there is really only so much anyone can expect to give overall. So at some stage you should pick one or more people to have a more formal relationship that involves economic benefit. The mechanisms for this relationship are occasional or periodic consulting, retained advisors, advisory boards, directorships, shareholders and director-shareholders.
Retaining someone as a Consultant can be a nice way to test out a relationship, but also for longer term work. Either way I bring the person in for a few hours or days to see whether you can work together and obtain decent results with them. Try to get a tangible outcome from the work – not a report for a shelf, but some changes, agreements or decisions. You can leave it at this if you like, or choose to retain them formally or on an ad-hoc basis from then. Technical or business consultants may be particularly useful for a certain stage of growth only, say, so an ad hoc relationship is a good way to stop paying them when they are no longer useful. While a month to month advisory contract can work, be clear that it can end anytime at your discretion, and be clear on the expectations for the amount of work (minimum and maximum).
And speaking of which, all advisory work should be for short bursts of time. Advisors can help in small doses, but are an expensive way to get stuff done. So if you find yourself using them a lot consider hiring in the skill (from them or someone cheaper) instead. If they are good they should help you find their replacement.
Advisory boards can work for some sectors, like medical companies where the boards are stuffed full of scientists and doctors. The upside is that the members have no governance power, so you legally don’t have to listen to them. But if they start telling rather than advising (as they will) then they will in effect become a de-facto board of directors, and they may be in conflict with a real board. I don’t like them in general, and would prefer 1-1 relationships with advisors, which is often how these work in practice.
Boards of directors are the right place, for my mind, for your most trusted advisors. You need to have people who are comfortable with the governance role, who understand they are there at the shareholders’ discretion and who (collectively) have the appropriate mix of skills. Don’t be afraid to let them go when you are no longer learning, or need a different set of skills, and don’t be afraid to pay them well and demand work and results every month in return.
Shareholders and Shareholder-Directors are aligned with the success of the company, and it’s fantastic when they have invested a material amount for them in your company. Because they gave you money you can generally pay them less, or nothing, which is great. But while they will act a lot more like owners, there is the danger that they will act like the owner, or that they will act in their own short term interests rather than the company’s or founder’s. So you may need to deal with a strong difference in opinion, especially around raising capital. So, especially if they hold a small percentage, you need to retain the ability to let them go from their formal director role. You should also hold them to work and results commitments each month and make sure they are on the board for their advice rather than their money.
Shareholders who are not advisors are fine – just make sure everyone knows where they stand. They do have your interests at heart, so you can (and should) get in touch with them if you feel they can help, which they should be willing to. This can be especially useful around fund-raising time, but should generally sit in the background as quiet or loud supporters.
While you may end up with a handful (at most) of trusted advisors, ultimately you need to make the decisions yourself, do don’t cede authority. Many founders have managed very well without ongoing external help, so don’t feel you have to have any, though I do recommend it.