You’ve invested, now it’s time to roll up your sleeves: 5 tenets for helping the entrepreneur
Over the past 5 years or so, I’ve had the opportunity and privilege to give advice to many entrepreneurs based off of my experience and learnings in building a business. Prior to late 2018, I was not investing but I was still introduced to some incredible entrepreneurs who were in need of guidance of some kind based on whatever stage they were in & what they were tackling at the time. The advice ranged from fundraising, product & tech development, organizational items, sales, and just about anything that comes up when trying to build a technology based startup.
Once I started investing, I was able to not only continue the tactics / methods of giving value add input, but then also couple it with some early investment dollars. I quickly found that many investors have an inconsistent or lackluster approach to lending a value add, helping hand. Some of this is by design of course — there are angel investors, and even VCs for that matter, who will set the expectation that they just want to invest and do not have the time or wherewithal to provide proactive assistance. On the other hand there are those who will “offer” help but not actually deliver, or those who are just incapable of productively contributing as an investor.
I thought it would be helpful to share some of what myself and Julian do at 186 Ventures to help entrepreneurs we invest in. I’ve also included some of the ways that I’ve helped companies who I’ve advised but have not directly invested in.
1. Provide high level grounding, especially in the earliest of stages
When you’re building a product and business, especially in the early days, it is very easy to get caught up in the weeds. Even to this day as an operator I find myself getting caught up in the weeds all the time!
How and what you choose to focus on in the early days determines whether you move at 20 mph or 120 mph out the gate, and the subsequent trajectory that you set for your company. Every founder and leadership team has its strengths and it is important to keep the holistic picture at top of mind when building a startup. Some founders who are deeply technical will over index on product & engineering, some founders whose experience stems primarily from business development will over index on the go to market strategy & market thesis, etc.
I’ve found it useful to help the entrepreneur never lose sight of some of the things around the corner or what they may not be currently thinking about but should, e.g. if you’re building a consumer app, focusing solely on number of downloads or registered users is a sure way to make poor product decisions, it is important to consider whether users are engaging with your product in the way it was designed to be used.
A framework I’ve deployed to help early entrepreneurs keep track of priorities is a simple check list that can be sliced and diced in different ways depending on the type of company, e.g. for a consumer app, early on it is important to focus on iteration velocity, engaging with end users, and making sure to assess actual usage of core features, e.g. for an enterprise SaaS product, early on it is important to conduct effective customer validation. The check list itself can simply be: product & engineering, sales & customer conversations, fundraising, G&A, and you help guide priority items within each.
2. Be BLUNT and CANDID, even if it rubs the entrepreneur the wrong way at first
One of my former VCs (thanks Jeff!) recommended that my co-founders and I at the time look into Ray Dalio, founder of the world’s largest hedge fund — Bridgewater Associates, and his stance on giving & receiving feedback. Since then, for my own operating approach I have adopted this system with my team members and I have also adopted this system when working with entrepreneurs from an investor POV.
Of course you need to walk a fine line when giving feedback to entrepreneurs you’ve invested in. It is important to acknowledge and respect that they are the ones doing the real work, making the magic happen, and who have the most context on any given situation (most of the time) relative to the investor. So with all that said, any critical feedback must be presented with reasonable caveats and in a productive manner. It takes time to articulate good feedback.
3. Follow through. Commit *only* to what you are able to do, *do not* over commit and let them down
In building a company I was exposed to hundreds of people who at some point in time offered to help in some way. Whether it be a friend, an advisor, an investor, and so on. There are few things more frustrating to an entrepreneur trying to will the impossible into existence than a prospective investor or active investor who promises to do something but never follows through on what they may have committed to.
The analogy I always like to use is when a parent promises something to their child at a young age and forgets to do it. It is easy to ignore the repercussions of it because the child probably won’t speak up, but it is usually not forgotten.
4. If you don’t know the answer, offer a concrete way to help find the answer together
The best investors I had did not necessarily have the highest IQ and did not always have the answer. Of course, domain expertise always helps and may save time for everyone involved in a given discussion, but it will be impossible to always have an answer for an entrepreneur ask. The best investor will find a way to offer concrete help, even if it is out of her wheelhouse.
Chances are that even if you have a half-baked network, you still have a second degree relationship somewhere to someone who will be able to tangibly contribute to whatever the problem at hand is. This takes a lot of effort, so it will take discipline and set dedicated time to work for the entrepreneur. Consider yourself a super part-time employee and that whatever income you receive is coming from the portfolio company — this mindset will usually force you to produce results.
In short, produce results for your portfolio companies, the effort alone is not always enough.
5. Always remind the entrepreneur that persistence is their strongest asset
At the end of the day, whether you are an investor on the board of a company, an angel investor, an advisor, or a friend — external advice & help will only go so far. Yes, it may solve an acute pain point at any given point in time, but ultimately the entrepreneur’s persistence is the omnipotent piece of the value creation equation.
When you’re not sure how you can be helpful, or even if you are being very helpful and an entrepreneur is finding themselves between a rock and a hard place, always be sure to bring up the countless examples of how persistence wins. I know when I’ve been beat down, support in the form of words was always comforting and added some fuel to the tank.
Reach out to me at hello@giuseppestuto.com if you ever want to chat about anything tech or if you need any advice on the early stages of starting a company (or if you’re just thinking of starting one!).
Giuseppe
