Chapter 7: Your Startup External Friends: Your Start-Up’s External Friends
You know, you do need mentors, but in the end, you really just need to believe in yourself. - Diana Ross
In this chapter I’d like to touch upon a very important set of people who will have a big say on how far your business can go.
No man is an island; an entrepreneur will need external help from people outside of his organisation in order to grow. This is simply because for any start-up, it is impossible for your small team to know and have all the right experiences to help your company grow. Too many entrepreneurs waste time figuring things out instead of getting some external professional help that will help your daydreams come to fruition.
In most cases, especially where you have funds, it is good to pay someone with the right experience and expertise to help you get things done properly the first time around. This can save you a whole lot of pain and headaches down the track.
So what external people do you need to help your business grow? I believe there are 3 categories of people your start-up should engage and each play a different yet important role in helping your start-up flourish.
Category #1: Knowledge and Regulatory Advisors
These are people like lawyers and accountants who have very specialised knowledge. You need them to help you with things you are not familiar with and to avoid getting in trouble with the law and for tax issues.
You need these advisors to ensure that you set up your corporate structure properly, make sure that you are minimising tax as best as you can, and to ensure that your agreements are done properly. You want to make sure they have a decent understanding of your industry where possible, otherwise they might miss out on certain things to your detriment.
Generally, I would not take their advice on your strategic business decision-making processes. They should help with regulatory and tax things that you are not familiar with and make sure they act on your instructions.
I wouldn’t go for the top-end of town with these advisors when you are just starting off; you want someone who is competent and affordable. Get references from other clients of theirs who are in a similar industry to yours, where possible. At the same time, don’t just use the cheapest guy in town; if you get the wrong advice that could lead to improper structures, problems with the tax office, and possible legal lawsuits if your contracts are not done properly.
As you grow, be aware that there is a good chance one day that you will outgrow these advisors of yours and move on to more experienced and competent people.
All in all, they are not that important in your day-to-day running of your business and your decision making.
Category #2: Advisors
The second group of people are advisors, who are more important than the first group of people. Their main role is to help you think through alternatives or other options for your business. They generally have real-life experience in various aspects of business and they can act as a good sounding board for you to consider other perspectives in your business to help you make better decisions.
They will also become an invaluable tool for you in determining the pros and cons of each course of action before you take them. For example, a marketing advisor can help you think through the various market alternatives for you. Would it be better to target IT managers or HR managers with your product? Would it be better to launch your product locally or in a foreign market? Would it be better to reach prospects via direct mail or a PR campaign? Would it be better to launch your product now or wait till you develop the new feature for your product?
Their experience will give you invaluable shortcuts and help you make better decisions that will help grow your business faster. They could potentially save you from a lot of mistakes and help you see things from different angles, so that you can make much more informed decisions.
However, a word of caution here; it is absolutely important that you use this category of advisors as a sounding board to help you see all the possibilities, but do not delegate your business decision-making to them. As the founder and leader of the business, you have to take ultimate responsibility for the decisions that your business makes.
Another aspect to this is that you must be aware that the advice that they give you is based on their background and experiences. As such, while they have more insight than you in their area of expertise, they may still give you the wrong advice. So you must weigh the advice of your various advisers and not take it as infallible.
A good example of this is when I started BIGIGontheNet in 2001. In 2004, we launched a new product called ZOOM at the DEMO 2004 Conference in Arizona. ZOOM was an application that acted as a plugin to Google. This application worked in a way that you could see 10 pages of Google’s search results on one page without clicking forward to each page. It even helped you to tag and categorise the results so it made for easier finding of the information.
DEMO conferences at that time were and probably still are the places to go for new inventions (not just a trade or technology show). You can find out more at www.demo.com. Of course, there’s TechCrunch and a whole bunch of other tech shows for fundraising nowadays but DEMO is for real inventions getting showcased for the first time. At this event, all the movers and shakers in the VC and media were present. So if you gain a successful launch, your product is virtually guaranteed commercial success. It was our next big thing since we had spent all our earnings developing ZOOM.
After the initial demonstration to the event organisers, we received a lot of good feedback and we were approved to showcase our product at the event. In the meantime, we showed it to our some of our advisors, one of which had a legal background. He was of the opinion that we might violate copyright with Google given our fonts and colours looked and matched that of Google. Our original idea for this was so that our application worked seamlessly with Google.
We decided to take his advice and changed the font and colours so that we would be protected from copyright issues and potential lawsuits that might occur with Google.
In hindsight, this was not good advice. Because of this change the whole ‘wow’ factor was lost. It would be have been better if we kept the original look and feel, and risk getting sued by Google. The thing that got people the first time round was the fact that it integrated so seamlessly with Google in its look and feel that people felt that was part of the Google experience.
By changing the look and feel to protect ourselves legally we ended up losing the ‘wow’ factor and people quickly lost interest in our application.
So you need to be clear about your goal. If we were clear that our goal was to have the ‘wow’ factor, we would have just taken that risk of getting sued and gone ahead with the original design. The actual risk of getting sued by Google was actually not that high anyway; Google probably would not have bothered with us.
The funny part is that, if we had got sued, the publicity we would have received from a lawsuit with Google would have far outweighed any legal costs we might had to pay.
While at the end of the day we didn’t sell a lot of product, we still got a good outcome at the tradeshow by getting some big players interested in our project, such as the former ‘FAST search engine’ people who wanted to form a JV to sell ZOOM in Europe. But our product fell way short of its full potential because we took the wrong advice in this case.
After making the changes and presenting at the conference in Arizona, the organisers actually came to ask us why we made those changes because the product has lost its impressiveness. We explained our reasoning only to be told by the organisers that our product would have become famous had Google decided to take legal action.
Sadly, the opportunity had then passed and we didn’t really have a second chance at it. We had one chance and we squandered it. This is a good example of how you should not take heed of every single piece of advice coming from your advisers.
I suggest to always come back to your vision, and use that to evaluate if the advice is bringing you closer to fulfilling your vision or moving you further away from your vision. That is a good yardstick to measure the quality of advice that you receive. Spend time daydreaming the possible scenarios as well, and the pros and cons of each potential scenario.
The other thing is to carefully select your advisors. It’s a simple fact that advisors wear their own lenses based on their experiences and their knowledge, and will give you advice based on their background. So for instance, if you have someone who has worked in a large corporation for 25 years with big budgets for product launches, they will give you very different advice from an entrepreneur who has launched multiple businesses through bootstrapping.
That’s why you need to select advisors who are closest to your startup’s values and vision, and make sure they come from the right background and experience to give you good advice. In an ideal world, your advisors would have been in your position in the past so they can advise appropriately.
In another scenario, I had a business where I was in a deadlock with my shareholders whereby I felt we should sell the business, whereas other shareholders wanted to just keep the business and the dividends.
In this case we got advisors to give us all the options and their perspectives. Some concurred with the other shareholders and told us to hire a manager to run the business; others believed that the best outcome was to sell the business and realise its maximum value.
By seeking external advice, it helped us to see different perspectives. It also helped the other shareholders see things in a non-biased way and be open to more possibilities. In the end the majority of shareholders in the business saw that the best outcome was indeed to sell the business to realise its full value.
An additional benefit was that the advisors gave us good advice in relation to many aspects of the sale, and helped us get a better value for the business sale. At the same time, they facilitated a much smoother transaction than otherwise possible, given the differing viewpoints of the shareholders.
Category #3 Mentors and Coaches
Let’s talk about coaches first and the role they play. Coaches are basically people who can help you strengthen a particular business skill. There may be certain skills that you as the leader of your start-up may be lacking, which may be essential to your business’ growth.
For example, presentation skills and skills to face the media may not be easily left to someone else; the fact is that you may only have one shot at presenting to investors or facing the media that could have a big impact on the momentum of your business.
The fastest way in this case will be to hire a coach to help you work through your skills and improve them quickly. You really don’t want to use every investor meeting as a practice session; you want to be impressing them and getting them to invest in your business.
A presentation coach in this case will help you refine the way to speak, make gestures, and answer investor questions in the best possible way. The truth is most entrepreneurs do not have these skills and need to be trained in them; that’s where a coach is useful.
When I was with Singapore Computer Systems (SCS), I was about to make my first corporate sales presentation of my new documentation software to clients. Thankfully the company hired a speaking coaching to help me out.
I actually naively thought that I would have no problems to speak and sell the product from the stage. But after the first run with my speaking coach, I realised that I was stumped after 5 minutes of speaking. I actually didn’t know what to say next! I was simply not organised enough.
The coach helped me with this, helped me organise and put a good story behind it. The result was a successful new launch and we actually gained some customers from the presentation. Not only did the coach save me and my company from a disaster, we actually made the launch a successful one.
Mentors
The word ‘mentor’ is a bit overused nowadays, but the truth is a mentor relationship is like a disciple-master type relationship. When selecting a mentor, you should find someone who has ‘been there, done that’.
Sometimes people select others based on the industry and businesses they have been involved with. For instance, many venture capitalists have impressive resumes with the number of hot-shot technology start-ups they have invested in. But in reality they have never run a start-up business before; so they wouldn’t make a good mentor if you are a start-up entrepreneur, because they haven’t actually been in your position before.
They would make great advisors but may not necessarily be a good mentor for you and your business.
The one who designs and the one who builds are different people. Just because an architect has designed a house doesn’t mean they know how to build it. You need a builder.
The best way to learn from mentors is by watching them do it. Make sure they are walking the path that you plan to walk along.
When I was at SCS the General Manager was my mentor. I didn’t really learn the soft skills from him. When I first started off I was in a very junior position, with great ideas. However, the truth is those ideas would have never flown had I not learned from my mentor at that time; he showed me how to navigate the culture and bureaucracy within the organisation. If I didn’t learn these skills, nothing would have been accomplished with my project. In fact, it would have never taken off.
I needed to understand how the organisation actually worked, and what buttons needed to be pressed. As an intrapreneur this was absolutely critical for ensuring that I got the necessary support and resources to pursue my project.
The same thing was true when I was with a government organisation for a few years. If you don’t understand the machinery of how things work you will never get things done.
It’s a very interesting skill, that is not really about politics, but it’s about understanding the culture, the way things are done, the people and the decision making process in the organisation.
By watching and observing my boss, I learnt very quickly how to move things and get approvals in the organisation, and how to carry out the right conversations in the right way with various department heads to get their support on my project. My boss had spent 10 years in the organisation at that time, so he knew how to work his way around this. Without his experience and knowledge I wouldn’t have been able to navigate this maze. It would have taken me years just to figure out what was going on.
Having a mentor tends to be more important when you are starting out. For example, if it is your first start-up venture, a mentor can save you lots of time and save you costly mistakes. After my first big venture at SCS, I didn’t feel that I needed a mentor, but coaches and advisors then became more important to me when I needed specialist training or advice to deal with various challenges and decisions I had to make in business.
I think the other tough thing is that good and suitable mentors are not easy to come by. It’s not easy to find someone who you can learn by watching them demonstrate, but if you can find one, they are worth their weight in gold.
Conclusion
If you can find a good mentor, it could be the most powerful thing that could happen in your business.
Seek advisors and coaches in areas where you need to strengthen your business. Make sure you are clear with your goals when you ask questions of your advisors.
With the knowledge and regulatory advisors, use them only as and when you need to.
One mistake many start-ups make is to lump all three categories of external people together, and that results in confusion and unclear roles for each category. You need to be clear who sits in which category and use them in your business accordingly. Otherwise you can get the wrong people and wrong advice, which could be detrimental to your business.
Now that we have covered what external people and advisors your start-up requires, the next step now is to make sure that you protect your most important asset as a start-up…your intellectual property. Let’s get into that in the next chapter.