a canadian startup

I Dislike Professional Startup Advisors

In the last two years, I have met more than ten startup advisors, each trying to convince me that I need their service.

During a Deloitte Fast-50 networking meeting, I met the CEO of BlueCat Networks, Michael Hyatt. His only advice to me went as follows:

If anyone ever asks you to pay them as a startup advisor, say no. If you need help, call me and I will help you tell them to say no.

Michael hates startup advisors.

(I am not talking about people on advisory boards, mentors, or advice-givers, (from which I have personally benefited greatly) I am talking about people that have fishy-sounding company names whom you did not approach and that want to offer you advice for money and/or shares — usually large sums of money).

Maybe not all advisors are evil. I dunno. But I do have advice for advisors and the entrepreneurs that are approached by them:

Advisors: Stop making entrepreneurs feel inadequate

The last two advisors that approached me began their pitch to me by telling me that my business sucked. I called other startups that also spoke to the same advisor and they were told the same thing.

You see, bad advisors begin by trying to make the entrepreneur feel inadequate. There are two reasons for this, I think:

1. It makes the entrepreneur feel like they need them, which will make us pay for their services.
2. It makes the advisor feel better about themselves

As for the latter reason… whatever. But as for the former reason, I have a message to the advisors:

Relationships based on this kind of need are not healthy. If you really want me to use your services, it would be smarter to earn my respect, rather than break down my confidence. Instead of coming to a meeting giving me vague statements of how you think I don’t know what I am doing, come with suggestions for how you think we could improve.

Startup Entrepreneurs: Don’t believe Advisors when they tell you you’ll fail without their special advice.

Fellow entrepreneurs, you are being approached because you are successful. If you are really going to fail without this specific coach, then you shouldn’t be doing this job. You may not know all the answers, but as a startup in a brand new field, no one does.

I don’t understand how any random advisor whom nobody’s ever heard of thinks that their advice is worth X thousands of dollars per hour (a frighteningly common rate) when you can go to the library and find books by the best business women and men in the world for $19.99. Free blogs offer even better advice.

In this regard, the paid advisor business model doesn’t work. It can’t work.

Entrepreneurs: You want full time people

Many advisors will tell you that since you can’t afford them full time, they will work one day a week at a salary that is twice what you pay a new grad to work full time.

The myth is that startup’s are about brilliant ideas and minimum work. The truth is is that it only 2% ideas, and mostly staying up at night, answering as many emails as possible.

Do you really believe that, no matter how experienced the person is, that an advisor can do the same work in eight hours as two people working full time? Absurd.

If advisors really want to do the day-to-day work, they should apply as staff. If they do, you will say “I can’t afford you” and the conversation will be over. As it should be.

And if advisors want to get paid to whiteboard ideas but have others do the work, you should be smart enough to realize that you’ll get by without that.

Startup Advisors: Don’t ever, ever tell me that stocks are free currency

I have been told, over and over, “don’t worry, you can pay me in stock. Stock for you is like printing new currency, so you shouldn’t worry”.

Um, no.

Shares are all we have as entrepreneurs. You’ve been here so you should know that. Entrepreneurs, if you really want to prove your merit as a CEO, protect the one thing you have ultimate control over: shares. Advisors, nothing is free.

What are you saying, Ali, are all advisors destined to fail?

Well, as long as there are unconfident entrepreneurs out there, no, I think you’ll do fine. But I really think most startup advisors need to look long an hard at what they are doing.

Advisors: Why are you working with startups? Why don’t you work with larger companies, offering them advice and know that they can afford it?

Wrong Answer # 1: “Working with startups is my passion. I love startups”

My response: working with startups is a great honour. I agree. But the cost of the ticket to get in the party is taking less pay, and higher risk (with the potential for larger end payoffs). So if you really love startups, give up your expensive life and take the same salary as the rest of us. And if you can’t handle that risk, then move on, you’re no longer startup material.

Wrong Answer #2: “I see so many startups that need my advice with their business plans and meeting investors. I can offer so much to them”

My response: the implicit relationship you are building with startups is “startups are immature, and I can help”. This is a formula for a bad relationship.

So where are you going here, Ali?

Well my advice can be boiled down to two messages.

Entrepreneurs: like Michael Hyatt, my advice is to say no to any unsolicited advisor that wants you to pay them. If you need staff, hire staff. If you need advice, read. Talk to the many, much more qualified people out there that love to give free advice. If you feel like you’re getting nowhere and you’ll do anything to get help, realize that we’ve all been there — be patient.

Advisors: close up shop. After closing your startup advisory business, you now have two choices: work for big companies as a consultant, and ask for big company money. Or… work for startups as an employee or contractor, and ask for startup company money. If you think startups can’t afford you because you’re so valuable, then congratulations, you’ve graduated from being a startup company employee. You can now a) start your own startup or b) work for larger companies.