Creating an effective Go to Market Strategy

by Tony C. - Founder Coach | Oct 24, 2019 | Uncategorized

The Go to Market strategy is one of the most critical elements in a startup’s arsenal.  You can have an awesome product or service, but without a good Go to Market (GTM) strategy, you might not get that product out into the world before someone else steals your thunder. You certainly won’t build a business. And while the GTM is critical it seems to be one of the things that many first time founders don’t fully understand.  The Go to Market strategy isn’t something that you should start thinking about for the first time when you’re creating an investor pitch deck, but should be part of your internal company playbook. Every activity of the company in the early days should be aligned with the GTM. If you don’t have one, you can’t have that alignment.

A great GTM will:

• Impress investors
• Help you validate your market/idea/product
• Help you get to Product/Market fit
• Be a competitive advantage
• Generate revenues

I understand why so many founders are confused about go to market strategies.  For a lot of first time founders, this is something new and the info on the internet isn’t consistent.  When I ask people to tell or show me their go to market strategies, I’ve had bright people reply with 2 and 3 word answers like “Growth Hacking” or “advertising, marketing, and sales”.  Those are not go to market strategies. They are categories of activities that are too vague to act on with no more info. The answers might not be wrong, but they certainly are not enough.

So what is a go to market strategy and how should you go about crafting yours?

Before I go on, I want to remind you that this is not about what you should put in your GTM slide on your pitch deck. This is about your actual “go to market” strategy. What ends up in your pitch deck is “just enough” to convince investors that you actually have a plan to get users to adopt your product. A large percentage of the GTMs I review seem to suggest that “if I build it, they will come”, or that “serendipity” is an acceptable GTM strategy.  Spoiler alert, those are not good answers.

What is a Go To Market Strategy?

Let’s keep this simple.  A Go To Market strategy is exactly what it sounds like. It’s a plan that shows how you are going to go from where your product is today and get it in the hands of your next group of users/customers.  I say “next group” because if you don’t yet have customers, your GTM will be about how you get to your early adopters and how that will lead to later users. If you already have initial customers, your GTM will be more about how you will grow from your base.

You should have 2 versions of your GTM, one that you can use to execute and one that you will use when communicating with people outside the company like investors or potential strategic partners.  The latter version, for the outsiders, will be a distilled version of your internal strategic document. The internal execution version of the GTM is your road map and will help align everyone on the team. GTM’s are not meant to be vague or general.  That’s why “growth hacking” is not a good GTM strategy.

Your go to market strategy should address the main stages of what is known as the customer journey.  Although the specifics of the customer journey vary a bit between consumer and enterprise companies, there is enough common ground to use to craft your GTM strategy.  

Using a high level customer journey, your GTM should answer the following questions:

• Do you know who your users/customers/stakeholders are and how to reach them? For enterprise, this means knowing the decision makers and the buying process.
• How will you make your users/customers aware that your product exists and potentially solves their problem better than the legacy solutions or competitive products? 
• How will you reach them to deliver your message? Inside sales team? Personal networks? Trade shows? And why will they listen?
• Once they are aware of your product, how will you get them to trial/test your product/service? Why will they take a chance on your unproven solution? How will you make it easy for them to “try you”.
• How will you make it easy for them to adopt your solution? Will you train them? Can they self install/sign up?  Will you transfer their legacy data for them?
• Will you make it easy for people that see your message to share your message (virality/referrers)?
• Is pricing part of the enticement to trial? (14 day trials? Freemium?)
• Do you have some advantage that you can use as part of getting in front of potential buyers (ex. Certification from a regulatory group that is difficult to get, or a relationship with a trade organization that will advertise you)
• Do you have a special strategic alliance that helps you get awareness?

It all starts with the the target customer

The most important part of your go to market strategy is having a clear idea of who your target customer is and an understanding of their experiences and motivations. A consistent weakness I see in GTMs is either a weak understanding of the customer, or a vague one.  

A vague description of the customer for consumer businesses might be “women 25-35”.  For enterprise, it might be “SMB’s”. These are vague because these groups are so large and varied that it’s not likely that they all have a common pain point that you are going to solve.  

A weak description might be one that describes a somewhat narrow group, which might seem focused, but where the group’s characteristics are loosely connected to whether or not they have a common pain point, like “sole practitioner dentists in the Bay Area” when the problem you are solving is about “helping dentists market more effectively”.  I can’t tell from the description of the group if Bay Area dentists consider marketing to be a pain point many of them have.

Any good description of your target customer will not just describe who they are, but what they want and need.  It will describe when, how, and why they experience your problem use case. It will describe their motives for taking a leap of faith… or not. It will show that you understand who they are and some of the thinking that influence their behaviors.

You should have 2 levels of target users (at least). There is a larger pool of people who are likely to be experiencing the problem you are solving.  Then there is the smaller, laser focused group of people that are almost certainly feeling pain, know they have a problem, and are looking for a solution. Those people are your spear tip.  They are where your GTM starts and how you validate that your solution is valued.

Take a moment and think about your product or service.  If you had to describe the potential early adopters, the people who will be thrilled that you have arrived, how would you describe those people?

So now you know who your GTM is targetting.  And you have the questions above to help you draft the considerations of your plan.  So what else do you need to do?

There’s actually a lot more to do that I can cover in one article, but here is how you make your GTM better than most…

Doing this will level up your GTM

Think about why people in your ideal-target-market group, after being shown your messaging and your product, would NOT become customers.  To do this part correctly, you need to step outside of your founder-centric enthusiasm. You need to forget why you love your product. You need to stop assuming that everyone will instantly want to give you money.  And at the same time, you have to assume that you have GOOD reasons not to buy.

I know. It’s insane. But play along.  Make a list of the reasons. Some might include:

• They are worried that you are a scam
• They don’t want to share their information with an unproven stranger
• They like the fact that their imperfect legacy product is integrated with their other systems
• They may not want to take a risk on your product because if it fails, they might get fired
• They might not have the pain you think they have at the level you expected
• They may worry about the effort they have to make to adopt a new product
• They may not want to lose all the work they’ve stored on the old system/app
• They may worry that you won’t be around in a few years
• They may not like the combination of features you created
• The innovative new UI you thought would wow them is confusing to them

I could fill a whole page with more examples, but the point is: think hard about what it will take to get people to make a change. Change is scary and takes effort. Change has a learning curve. Change might not work and is risky.  Inertia is the biggest competitor most startups will face.

So when you are thinking about your GTM, you need to think about how, at each step, you address these very real and very valid concerns.  

After you make your list of “reasons not to buy” go back to your GTM and think about elements you can add to your approach, your ads, your sales scripts, your product, your guarantees, etc.  

Adding these steps when you are developing your Go To Market strategy will not only give you a better chance for success, but it will prepare you to answer the hard questions that you’ll get when you are ready to fundraise.

About Tony

In addition to starting and scaling companies of my own, I’ve worked with numerous coaching clients to help them craft their strategy and story in their early stages.  In addition, I am part of an angel investment group’s selection committee and a frequent pitch panel judge. As a result of those roles, I see and review dozens of startup pitches and plans each month and know which ones give investors confidence and which don’t.

I’ve been working in or with startups for the last 25 years and am the CEO of The Founder’s Forge.  The Founder’s Forge was created to provide an amalgam of business coaching, personal coaching, founder advisory and mentorship, fundraising strategies, and startup foundation education for early stage founders and first time CEOs.  We focus on giving founders the tools they need to: execute effectively, avoid common mistakes, get clarity and focus, and do all of that with less stress and better relationships.

To see if Founder Coaching would be a value add for your particular circumstance, click here to schedule a free discovery call.

When pitching to investors, it’s OK to tell them what you are doing

by Tony C. - Founder Coach | May 14, 2019 | Uncategorized

When pitching to investors, it’s OK to tell them what you are doing

This morning I had the chance to review 7 pitch decks from companies that were looking for seed financing.  Of the seven decks, most of them failed to get the thumbs up from the angel group I work with. Some part of me wishes that the reason they didn’t get the thumbs up was because their ideas weren’t worthy.  But the fact of the matter is that I think that most of the ideas have a lot of potential. So I thought it would be worthwhile to talk today about one of the reasons why those good ideas didn’t make it to the “consider” pile.

Simply put, at the end of the presentation, we weren’t sure exactly what the company did.

With all of the information that is floating around about pitch decks, one of the things that continues to surprise me is how many decks seem to skip the most obvious question: “What does your company do?”

What does your company do again?

Hopefully, when you read that last paragraph your first thought was “you’re kidding”. But the fact is that I see a fair number of presentations from smart people, that leave me scratching my head a bit.

Maybe the problem is that some founders don’t understand the question.  The question isn’t “What does your company do?” as in “We make the world a better place”, but more like “What actions does your company do or how does your service interact with people in a way that impacts the world better than the existing products or services?”.  

So somewhere in your presentation, either in the deck or in your script, you need to help the audience understand what makes your company unique and effective in solving a problem.  

But maybe the problem isn’t that the founder doesn’t understand the question.  Maybe the problem is that they didn’t want to reveal their “secret sauce”. There are still founders out there who are worried that if they give away too many details about what they do, that everyone is going to steal their idea.  So their strategy is to be somewhat vague. For the record, being vague is not the best path to getting funding.

More than that, if your entire competitive moat is that “no one knows what you are doing”, you’re probably not fundable.  Investors look for businesses that are defensible and teams that are in a unique position to execute. If all it takes to compete with you is the knowledge of what you do, then you should consider starting a different company unless there’s room for a large number of competitors in your market.

I’m not suggesting that you include a highly detailed description of your tactics and technical detail in your presentation (yawn). Besides potentially being boring, too much detail eats up precious time in your presentation window. What I am saying is that you need to say enough to make it clear that you are doing something different that has a high likelihood of making some particular thing faster/better/less expensive.

Lastly, the third explanation for why panelists and audiences still don’t know what a company does after the presentation is because some founders just don’t “speak plainly”.  I’ve written before about founders that get caught up using jargon, but sometimes founders try to tie together so many big or sexy sounding words, that the audience just doesn’t understand what the company does.  The clip below from the show Silicon Valley is supposed to be a parody, but the truth sometimes is closer to this than it should be.  The clip is only 20 seconds long, so go ahead and watch it. I’ll wait.

It’s OK to talk to me like I’m a child (in this case)

The bottom line is, if you don’t accomplish anything else during your pitch, you should make sure that the audience understands what it is you are doing or are going to do. The good news is that it’s easy to do that with 2 easy steps.

The first step happens when you are putting together your presentation.  Start by thinking about the problem you are solving. Then think about your product or service. Write down how you would explain to an 8th grader what you are creating and why it will help solve the problem.  For this first pass, avoid using any language or words that an 8th grader wouldn’t understand. Don’t worry about how long the explanation is, at least not initially. Focus on being clear, straightforward, easy to understand, and simple.  Whatever you write down is “what you do”. We’ll call this your “WYD statement” or your “WYD” for short.

If your first version of your “what you do” statement takes you more than 30 seconds to read, then you’ll want to edit it.  This isn’t your elevator pitch although this could be a part of your elevator pitch. The difference is that your elevator pitch will include who your product is for and how your product will help.  Instead, your WYD is really about what actions your company makes or how you provide a specific solution. It’s just the “what”, not the “who”, “why”, or “how”.

One example might look like this:

“Rather than launching taxis from a central hub, we use big data to determine the best places to locate idle cabs so that we can get taxis to most customers in around 5 minutes.  We also use data to provide accurate quotes before the customer commits to the ride and our app gives the customer real-time updates on the status of their taxi.”

Speaking at a normal speed, that example would only take somewhere between 15 and 20 seconds to say.  But there is enough in there to differentiate the company from the status quo and provides obvious benefits to the user.  There’s no jargon in the example, just plain English. Like a resume, it uses active verbs. What do we do? We use data to locate… We use data to provide quotes… We use data to give updates.  If you want to know how the data helps us do all of that, we should set up a meeting.

You don’t need to explain the specifics of the algorithm.  You don’t need to explain how GPS works. You don’t need to tell me how you decide which car to send.  On the flip side, you don’t want to simply say “we disrupt how you get a ride”.

Test your “What you do” statement to make sure it’s clear

Once you have a decent “what you do” description drafted, you’ll want to take it for a test drive.  By that, I mean that before you test the description in front of investors, test it on some other people first.  Find a friend or two that are not in your industry and not part of your startup team. If you have friends that would fit as part of your target audience, they would be the best.  But being part of your target market isn’t necessary. And I’m not kidding about the 8th graders. If you can test your statement on a real 8th grader, then, by all means, do it.

Start by telling your friends the problem or problems that you are setting out to solve. If they are part of your target market, ask them if they feel the problem is a real pain point.  Then read your WYD to those friends and then ask them to explain, in their own words, how your company helps to solve the problem. I say “in their own words” because you don’t want them to just parrot back what you said. You want to see if they understand what you do.  If they can give you back a pretty good description of what you do, mission accomplished. Bonus points if they understand how your activities or service actually impact the problem. If, after hearing the problem and what you do, they don’t understand how your company reduces or solves the problem, then go back to Step 1.

The way you frame the problem you claim to be solving is as important as the solution.  Make sure that there is an intuitive connection between the two. In the example above, imagine that the presentation had described the problem as being that “Taxicab rides are too expensive”.  The WYD statement I used in the example wouldn’t necessarily have any impact on the cost of cab rides. In fact, with more data, a company might be able to charge “surge prices”.

The wonderful thing about an effective WYD statement is that you will use it over and over again in a wide variety of conversations. You’ll use it to fundraise, to recruit, and even to attract customers.  So it pays to take a moment to make it as clear and compelling as you can. And for goodness sakes, don’t forget to include somewhere prominent in your presentation.

(Originally published on ThePitchGuru.com)

Traction is for planning, not just pitch decks

by Tony C. - Founder Coach | May 14, 2019 | Uncategorized

If you have made any efforts at all to put together an investor pitch deck, then no doubt you’ve heard that one of the critical slides to include is the infamous “Traction” slide.  Traction, when you have some, is an amazingly powerful component in your presentation. Strong, well-presented traction can make up for a lot of weaknesses elsewhere in your pitch.

When I am out in the world attending demo days, pitch nights, or working with accelerators, I see founders putting up a wide array of information and calling it traction.  Putting up “not-really-traction” information on your traction slide just highlights the fact that you don’t have real traction, so avoid the temptation to fill the gap with fluff.

Many founders don’t seem to understand the true significance and importance of traction.  From what I see out in the startup ecosystem, some founders don’t think about traction until they are starting to put together their investor pitch deck.  That’s way too late. I’ll explain why that is after I give you a quick primer on traction.

…some founders don’t think about traction until they are starting to put together their investor pitch deck.  That’s way too late.

If you Google “define startup traction” as I did before writing this, you’ll get a mixed bag of answers.  For example:

In a 2013 article in Entrepreneur Magazine, Martin Zwilling said this: “First of all, a definition: Traction is evidence that your product or service has started that “hockey- stick” adoption rate which implies a large market, a valid business model and sustainable growth. Investors want evidence that the “dogs are eating the dog food,” and your financial projections are not just a dream.”

A 2010 article in ReadWrite says: “Traction means having a measurable set of customers or users that serves to prove to a potential investor that your startup is ‘going places.’”

An article in Inc. Magazine says that Naval Ravikant, a co-founder of Angel List defines traction as “quantitative evidence of market demand.”

I could list more, but the point is that there is no fixed definition of traction in the startup world.  And it makes sense that a fixed definition would be difficult since there are different types of startups, different types of investors, different business models, different funding stages, and on and on.

But I won’t let that stop me from adding the definition that I give to the companies that I work with.  I define startup traction as:

“Any event, trend, or outcome which shows the successful execution of a startup’s business and marketing strategy,  and which validates the company’s assumptions and projections. In other words, any proof that the market thinks you have a great product and that you can actually execute.”

The biggest difference in my definition is the link to execution.  Traction is proof that you are executing. A lack of traction is the opposite.

“Traction” is “Proof”

When you browse the internet for traction info, you will see a ton of articles about things like “how much traction is enough” or “what’s the best way to present traction”.  Since those articles are plentiful, I’m not going to answer them here.  What I am going to do is to put traction into context so that it’s not this separate thing created just for funding. Hopefully, I can also make it easy for you to know what is and what is not traction.

As I mentioned earlier, if you are starting to think about traction when you are putting together your pitch deck, that’s too late.  In my definition of traction, I mentioned your business and marketing strategy. That’s because your business plan includes a list of events, activities, milestones, and outcomes that are all stepping stones on your path to unicorn-dom.  You need to negotiate partnerships, acquire customers, achieve specific metrics like customer acquisition costs, generate user sign ups or downloads, get customers to reorder, etc.

Before you start building the business, those are all just plans.  Your strategy. When those things start to happen the way that you predicted, they change from being plans to being “traction”.  So traction isn’t just something that you think about when you are getting ready for funding. Traction is just your plans actually happening.

That’s why investors want to see your traction slide!  They want to know that your plans are not just plans. They want to know that you are able to Get Shit Done.  What that also means is that you are not just running your business and then looking back to see if you can find traction to include in your deck.  It means that if you are trying to build a company, that you are trying to get traction each and every day. It means that you and your team are managing the business to achieve traction.  It means that traction is your operating roadmap, not something that you look at in the rear view mirror.

Because traction is a strong indicator of your ability to execute, that means that traction should be limited to things that you influenced or made happen.  So a change in regulations that benefits your company is NOT traction. Another important element of traction is that it shows third-party validation of your plan.  We already know that you believe in the company, but traction shows that other people do too. So bootstrapping your company is NOT traction.

Other things that are NOT traction include: (I’ve seen these in pitch decks)

• Hiring a big name law firm that takes on any startup.
• Issuing a press release that doesn’t get picked up by meaningful media
• Hiring a development firm or other vendor at their typical market rate
• Hiring inexperienced people who get paid
• Moving into new offices

Those things are nice, but they don’t actually show that third parties or customers are validating what you are doing or planning to do.  They are not things that you would have included in your business plan that are critical to your success. They don’t show that your business plan is likely to be highly predictive.  

I can’t think of a situation where anyone had too much traction in their presentation.

To figure out what you should include as traction in your pitch deck or investor presentation, you have to start with what’s in your plan.  What are the milestones that you need to achieve to know that you are on track? What metrics do you need to hit to have a viable business model?  How quickly do you need to acquire customers to hit your targets? What channel or distribution partnerships do you need? How much media are you hoping to get?  What are your big media targets? What conversion rates do you need? What average transaction value? How much virality are you counting on?

Some, if not most,  of your traction items will be quantitative.  For those, you want to show that momentum is building or that the economics are improving.  So keep track of the historical numbers as you go. Set operational targets to show strong growth. If your growth metrics aren’t showing strong percentage increases, don’t expect investors to be excited.

Now from that list of planned activities or milestones, pick the 4 or 5 things that will be or are the main drivers of the business.  Then track the progress of those things relentlessly. That list will be the basis of your traction metrics. Not just in your initial pitch, but in your follow up newsletter updates to investors.  Those follow-ups will keep you on the investors’ radar. They will also show investors that you are an execution machine. If the early parts of your forecasts are being hit, it will give them some level of confidence in your ability to hit more.

I know I said to focus on 4-5 things, but the reality is that if you have more than 4-5 great traction metrics, use them.  I can’t think of a situation where anyone had too much traction in their presentation. Frankly, if you have “too much” traction, the money will find you.

What do you do if all you have is your plan and nothing has actually happened yet?  You start making things happen. If you don’t have anything that can show that you aren’t the only one that loves your idea, then you will have a really hard time getting funding.

Bootstrap to get some early validation of your plan.  Use some of the Lean Startup tactics, like MVPs and Customer Development interviews.  Do some low budget advertising to show that you can hit decent acquisition costs. Start having conversations with potential partners and get some conditional commitments.  There’s a lot you can do before you raise money. The critical thing is to understand that today’s activity is tomorrow’s “traction”.

Build something great.

Good Luck.

(Originally published on ThePitchGuru.com)

Are you an investable founder?

by Tony C. - Founder Coach | May 1, 2019 | Uncategorized

Do you have the traits that make investors want to give you money and support you?

If you’ve been around the startup ecosystem for even a minute, you’ve no doubt heard the saying the investors don’t invest in ideas, they invest in people.  In most cases this is the truth. It’s easy to get caught up in the idea that the startup concept you have is so amazing that investors will flock to back you, the truth is that you have to be an “investable founder”.  

Why do you have to be an investable founder and what does that even mean?

Let’s start with the why.  It’s actually simple.

First, an investable founder will generally give you more confidence in their ability to pull the whole startup thing off.  Starting a company is hard and the things that make a founder investable will probably make them seem better equipped for the challenge.

The fact is that the great majority of the time, there are at least a few people running around looking to raise money for almost identical concepts.  Imagine for a moment that you were in the audience of several demo days and saw variations of essentially the same idea. If you wanted something meaningful to distinguish which one to put money into, one thing that separates the identical ideas is that they have different founders. If you found one founder to be more investable than the others, it would make it easy for you to choose which one got your money.

You need to remember that most angel investors and most venture capital firms only make a handful of investments each year.  That could be from among 1,000+ ideas they’ve seen. Ideas, even good ones, don’t create successful businesses. Planning and execution does.  

Second, founders who are not investable, are just not people that you will want to commit to being connected to for the next 3-7+ years. You’ll see why more clearly when you see the list of what makes a founder “investable”.

What makes a founder “Investable”?

For the sake of brevity, here are my top 5 things that make a founder investable:

1. They have to be likable and charismatic. Most investors in early stage deals want to help good founders as much as they want to make money. To want to help you, they generally will have to like you.  In addition, being likable and charismatic is a trait that can significantly help the business. It will help you recruit and retain key talent, close strategic partnerships, and woo investors, among other things.  Founders who aren’t particularly likable might have trouble with some or all of these essential CEO jobs.
2. They have to be smart.  I know that everyone of you is saying “I’m smart” and you’re probably right. But investors are looking for “Smart” with a capital “S”.  They want to be dazzled with the way that a founder’s mind works. How they think about strategy. How they look at their market. How they bring new insights to old problems or see patterns that other people miss.  You don’t have to necessarily be a rocket scientist, but you should be smart enough to see something that most people wouldn’t.
3. You have to be willing to learn. The worst type of founder is the one that comes off like they already know everything. The fact is that knowing a lot is great. But knowing what you still need to learn to become a great CEO is better.  You can spot an investable founder when they get questions about their concept. The best ones show that they have thought about the question before, done the research and have an answer, or they use the question to consider new possibilities, things they missed, or new things they have to learn.
4. They have to be willing to consider to new information.  Startups are notorious for making pivots. Many of the best known startups began their life doing something other than the thing they became famous for. Investable founders have the ability to reassess when needed and use new data to chart an alternate course.  Some founders come across as determined to follow one course until it works… new information to the contrary be damned.
5. They need to show a strong tie between their history and their ability to run their particular startup.  Whether it’s the years that they spent gaining the subject matter that is critical to the success of the venture, the time they spent developing the technology that powers the solution, their role leading a similar team or building another company, there should always be something that suggests that a particular founder has an advantage over other founders with the same concept.  

I’m sure that some of the other investors out there will have other things to add to this list, and I invite their comments and additions.

Any traits to avoid?

On the flip side, there are some traits that quickly make a founder seem un-investable.  My top 3 here would be:

1. Arrogance. The type of founder that dismisses people that “don’t get” their concept.
2. A lack of commitment. The founder that isn’t full time. Hasn’t invested a lot of time and at least some money in their
3. A lack of diligence. The founders that don’t know what competition exists or the regulations and protocols specific to their industry or don’t fully understand the technology they plan to use. These are also the founders that don’t research which investors invest in their stage or their industry.

If you have most of the 5 investable traits and none of the 3 un-investable traits, you’ve got a better than average chance at raising money.  Not necessarily for the venture that you are working on at the moment, but eventually. Investors remember the investable founders. They like them.  Sometimes they want them to come back when they have a better idea. And sometimes they decide that you and you current idea will be one of this year’s investments.

If you like this post I’d really love it if you could share it on Twitter or LinkedIn.

I hope you found these tips on being an investable founder helpful. Work on making your investability clear from the start.

What other traits do you think of when you think about who is investable and who isn’t?  Let me know by leaving a comment below. You can also reach me here to ask questions.

Published by Tony Clemendor

Tony has lived in the startup ecosystem of Silicon Valley for 25+ years as a founder, adviser, investor, community building, and Founder Coach. He’s on a mission to help good founders become great founders.

It’s time to be honest about your startup advisor relationships

by Tony C. - Founder Coach | Mar 22, 2019 | Uncategorized

All advisor relationships are not created equal

If you’re like most of the startups I’ve worked with for the past 20 years, you have an advisor or two helping you out. You recruited someone who you thought could help, or someone who you thought had a pedigree that would make your team look more impressive, or you got an advisor (temporary?) as part of your participation in an accelerator.

Some of you speak with your advisors weekly.  Some less frequently or not at all. Some of you send occasional updates on the progress of your company to your advisors.  Some don’t. Some of you have advisors that are actually engaged with you and your company. Some don’t.

Formal startup advisors, informal advisors, and fake advisors

Good advisors are a valuable resource.  You may have selected them because they have a particular functional or market expertise.  You may have selected them because they are well networked. You may have selected them because they’ve raised money or are an investor and can help you understand the fundraising landscape.  The bottom line is that they bring some knowledge or connections to the table to help you be a more effective founder.

But time and time again, I see founders who treat advisor names like the sponsor decals on Nascar race cars.  They try to collect founder names that we recognize, or people with titles that seem to carry some type of endorsement.  

Where I see this most often is on fundraising pitch decks.  At this point, when I see an impressive and credible advisor in the deck, I tend to question whether what the actual relationship is.  

I don’t think that these founders are trying to be deceitful, per se, but I think that most know that they are not being entirely upfront.  They think of it as “marketing”. But from my vantage, it’s no better than the person whose resume says “Attended Stanford” when the reality is that they attended an extension class at Stanford, or the person that claims to have an “exit” when their one person company got a small check for an asset or as a 1-person “aquihire”.  My mom used to say that a misleading exaggeration is just one flavor of lie.

Founders need to understand that investors invest in people more than they do in companies.  In particular they invest in people that they feel they can trust. If you start the investor relationship by trying to sell them on your “team”, but the team isn’t genuine and involved, then that investor relationship will never make it past due diligence.

What a coincidence.  She’s my advisor too!

Recently, I was working with several startups on their pitch decks and was surprised to find the same woman listed as an advisor for 3 different companies in 3 very different sectors.  All of the companies added her after brief conversations with the woman at a pitch or networking event. I wondered if she even knew that she was on those decks. I asked each of the founders to follow up with their advisors and make sure that they had permission to list all of their advisors on their decks. Not surprisingly, in each of the follow up meetings, all 3 founders removed her from their decks.

If you are wondering if this is more the exception than the rule, I don’t think it is.  I was once at a pitch night and was happy to see a founder I had previously met on the agenda.  I was less happy when he got to his Team slide and I saw my name and LinkedIn photo as one of his “advisors”.  At best, it suggests that they don’t have any true advisors. At worst, it looks like a blatant misrepresentation.

The lies can go both ways….

It’s bad enough that some founders try to collect advisors like we’re Pokemon characters, but sometimes, advisors are trying to collect startup advisor titles as well.

It seems that collecting advisor titles on a LinkedIn profile helps with street cred.  Yes, I know I have some of those, but I have regularly scheduled contact with all of the founders on my profile.  When the relationship is no longer active, I list an end date. Some advisors I’ve run into like to “list them and leave them”.  Some don’t ever speak with the founders they are “advising”.

It’s the founder’s job to leverage the advisor relationship

When I decide to work with a founder as an advisor we establish ground rules.  One of those rules is that they have an agenda for every meeting. In particular, they should come to the meeting with a question or something that they need help with.  The founders I work with are great about this. They understand that no request is out of bounds or embarrassing. Helping is part of what I am there for.

Since they are so good at setting agendas with me, I’m surprised when I discover that they don’t always ask their other advisors for help.  One of the frequent surprises is when they have an “Angel Investor” as an advisor in their deck and I ask if the Angel has invested or plans to and the founder says: “I didn’t ask”.  When you are a startup founder who is raising money, you can’t be shy about asking for help.

When a founder says that they didn’t ask their advisor to invest, I follow up by asking if they asked their angel/advisor if they knew anyone else that might be interested in investing.  Again, I get shocked when the founder says “no”. If your investor is invested in your success, engaged with you personally, and has equity in your venture, why wouldn’t you ask them for warm introductions to investors?  More importantly, why wouldn’t they want to make the introductions?

Are you getting honest feedback about your Startup?

The flip side of this is when a founder does ask for introductions and the advisor gives some lame reason why they can’t make introductions at the moment.  With all due respect, that’s crap. In the networked tech world, you can develop a great reputation by referring good investments to investors. If you have asked your advisor for the names of potential investors or for warm introductions, and they say anything other than “I’d be happy to”, they think that your venture isn’t ready for prime time.  They think that referring you would not reflect well on their reputation.

Hopefully you have the sort of relationship with that advisor that you can honestly ask what it is about you or your company that’s keeping them from referring you to their network.  There will always be an answer. Dig until you find it. You need to because you don’t want an advisor that doesn’t believe in your prospects and hasn’t been giving you feedback on the things you need to improve.  

Any good advisor will tell you why they can’t refer you yet and the reasons are usually not that complicated: “You don’t have enough traction yet”, “You need to add a critical skill set to your team”, “You need to validate the pain point with customers”, etc.  If you don’t know how to address some of those, one of your advisors should be able to help.

You should have advisors, but only the ones that are truly engaged

I mentioned at the outset that good advisors are valuable.  Great advisors are engaged. In a good advisor relationship you have an explicit agreement with them about how they are helping, what their affiliation is, and how and where you can use their name.

Great advisors are honest with you.  They give you their honest opinion. They are not cheerleaders. They are not your boss.  They want to see you succeed and will do what they can to help. They will be honest even when they think that it is not what you want to hear.

If you have advisors for your startup, my advice is:

• Have an actual objective in mind for them and share that with the advisor.
• Have regular meetings and have an agenda.
• Ask them hard questions and expect constructive criticism.
• Give them equity and align your goals. There are standard advisor equity agreements.

• Don’t use advisors as window dressing. Especially in your pitch decks. You either have a relationship or you don’t.
• Don’t keep them “affiliated” with you forever.  They are your advisors while they are actively advising.
• Don’t be afraid to ask them to leverage their network on your behalf.

Your advisors should be a fully utilized asset.  Having the right advisors should save you time and help you avoid typical mistakes. Having fake advisors doesn’t have any positive value and can hurt your street cred in the long run.

Originally posted on LinkedIn