Over the last 3-4 years, I have had the pleasure of mentoring lots and lots of startups (last count its just over a hundred or so) both with my association with Techstars and 500startups, and completely informally. I have a rule that if you ask me for help, I will always meet with you for thirty minutes. Sometimes at that meeting, I get along well enough with the entrepreneur to extend the relationship, and some of those have turned into formal advisorships.
The more I mentor and advise, the more I start to pattern match around the startups that I enjoy working with (community based customer internet) and those I have no value to add (biotech). But, more importantly, I am learning how to be a better mentor. Much of what David Cohen wrote in his Mentorship Manifesto is right, and here is my philosophy.
1) be honest both with what you can provide and what you cant. If you feel that the startup is not one that you are interested in helping, tell them that. There is nothing wrong with not feeling the connection.
2) Ask, dont tell. Its not your company. Be respectful of that.
3) Be consistent and reliable if you intend to develop a real relationship with the entrepreneur.
Being a first time entrepreneur is a lot like being in kindergarten, where your desires are initially supported unconditionally. When you were six, and you told your parents that you wanted to be an astronaut, your declaration was met with complete and total support.
Many of the entrepreneurs I meet are in this stage. They have spoken to friends, coworkers and perhaps a few customers, all who want to be supportive of the entrepreneurs dream. They want the entrepreneur to feel love, not despair, and so fill them completely with hope.
As a mentor, your job is not to dash the dream, but add realism to the endeavor. Dont tell them they cant be astronauts, tell the entrepreneur that they have to study math to be an astronaut, and give them the direction to determine if they even like math.
Usually at this point the entrepreneur will either make the necessary adjustments based around realistic assumptions, or they will not. If they dont, well, that an important data point in your decision to continue the relationship.
After that first big pivot (all startups have one), your role as the mentor is to help them determine if they have pivoted into the wind or not. Often an entrepreneur will make things more complicated given the belief that simple is easy to copy, and therefore cant be interesting enough as a business. Complicated is where it is at. Being the only one is better than being the best one.
“No one is making an automated peach pitter. Lets do that. And check it out, I did it with a Roomba, Mechanical Turk, Django and an iPad app. MONEY!”
Your job as mentor is to help the entrepreneur understand how to understand if they are solving a real problem, and if the market size and potential really has, well, potential.
Once a solution and market is decided on, and the entrepreneur starts to focus on product, as a mentor you have one question to ask.
“Have you launched yet?”
“Well, not quite, we were talking to a big VC, and they said…”
“Interesting. Have you launched yet?”
“Then go launch.”
Outside of all the crazy valuation conversation that is occurring around startups, especially Valley startups and accelerator startups, the best way to add value to your company is to have a product that people are using, and better yet, paying. If you havent launched a product, you will probably lose $1-$2mm off your pre-valuation (or cap on your note). More importantly, the company will learn that simple trumps everything, and the product will have focus and direction.
Now, the entrepreneur is coming to you as an advisor or mentor to help them raise money. There are two very specific ways you can help: 1) let them practice pitch you often; and 2) introduce them to the RIGHT investors. It is important to me to be positive deal flow for my friends who are investors. I will never present a company that I dont personally believe in or that I think is right for the investor. Many times, once a company reaches this stage, I will tell them that I am not the person to help them out raising money (mostly because I dont think they have spent enough time understanding the problem, their solution or their potential market).
The most important thing to do at this point is dont let the startup convince themselves they have to raise money. Raising money or bootstrapping is a choice of control and financial necessity. The longer the entrepreneur can go without raising money, the better, but once they are ready to really scale the business, then raising money becomes a real decision to make for the entrepreneur — not you.
The biggest value you can ever provide as a mentor is helping the entrepreneur discover their path for themselves. Being a mentor is an act of supportive self-discovery not one of explicit direction. Its hard to not just tell the entrepreneur what to do — after all, you’ve gone down that path and have succeeded or failed, so you should know — but fight that instinct, and instead, help them become better leaders, dot connectors and problem solvers.
And how do you measure success as a mentor? Not by how many of the companies you work with exit — you had little to do with that; but simply by how many of the founders you work with become mentors themselves.
- The Mentor Manifesto (davidgcohen.com)
- NASA Is Running Out of Astronauts [Space] (gawker.com)
- Mark Peter Davis On The Biggest Misconception About Startup Valuations (businessinsider.com)