I'm driving down a curvy highway in a thunderstorm. My windshield wipers are stuck and I need to free them so I can see, but I also need to keep steering and I can't take my foot off the gas -- I need to get to my destination. This is a recurring dream of mine and I know just where it comes from. Sound familiar? It's exactly what entrepreneurs do every day -- drive the car while they fix it at the same time. Plus building it. And no, you can't slow down.
MY FIRST EXPERIENCE OF THIS PARADOX IN REAL LIFE WAS AS AN ENTREPRENEUR. I was the VP of Sales at Tacoda after we decided to switch from enterprise sales to a network model. We had enterprise customers that were buying our software -- while at the same time we were building something completely different, yet selling a product we knew would be out of date. But we needed the cash to buy us time to prove out the other model. Not enough gas. Fixing the current product. Building the new one. Crazy. But this was our best course of action.
Most recently, before joining Social Starts, I used this analogy all the time as an angel investor in meetings with entrepreneurs. Then I’d launch into giving advice that I was sure would fix all of their problems. Isn’t that why companies took my money? So they could get my advice, culled over 15 years of operating in growing startups? It felt good, and I felt smart. Of course my view could guide them forward. Except that this would happen: I’d go back and they had almost never done what I’d advised. It’s because I never had enough information to actually give holistic advice.
I've thought a lot about this analogy now that I'm a venture partner at Social Starts; where we try to be helpful when asked, rather than proactively give advice to our entrepreneurs. In fact, we don't take board seats. And we don't take advisory board roles.
Back to my dream: The driver needs help. Not advice. If at the driver’s request, I can free the windshield wiper without the driver needing to, then I've helped. If I show up and tell her she should free the wiper and give her 4-5 ideas for doing so, well, then all I've done is waste her time. In fact, by distracting her, I’ve increased the likelihood for a crash.
She knows the wiper is stuck. She knows all of the other problems the engine has. She knows there isn't enough fuel in the tank.
She's thought through all the possible outcomes and needs to find the right mechanic, not deal with a back seat driver, however well-intentioned.
This has been a big switch in my mentality. It’s natural for most of us to want to share what we know, to offer advice and expect to be heard. But the more I work within the rubric of helping, not advising, the more I embrace it.
Rather than offering unsolicited advice, we encourage our founders to call us when they have a specific need:
An introduction to a specific investor.
Help talking to an editor about why their offering is newsworthy.
Training for a salesperson on how to overcome objections.
Creating a hiring process.
At Social Starts, we help companies with specific tasks that produce tangible results. What happens when we can't help? We accept it. Then we're up front about it and try to find someone we know who can help.
Plus, there are other valuable byproducts of the helping, not advising approach: It enables us to invest in competing ideas -- we don't put ourselves in the position of advising our portfolio on outcomes or strategies, so we don't have any conflicts. Additionally, we're not on boards -- so we can't vote to influence anything. (Not to mention that startups that look to be in the same competitive set at the moment-of-inception often turn out not to be competitors, and vice versa.)
All of this, we believe, produces better returns for our LPs: We focus our efforts on finding the best companies in the best investment spaces. Then, we help those entrepreneurs by utilizing our knowledge, experience and networks to help them win.
Charles Smith has been an active NY angel investor since the mid-2000s and is now a venture partner at Social Starts. Charles is also an entrepreneur and is well known for his work as VP of Etsy, and his executive roles with Tacoda and RealMedia. Follow Charles on Twitter @CharlesSmithC.