I am not an early stage VC but recently had a chance to mentor a large number of startups 1-on-1 in a very condensed period of time. All of the startups I worked with had a live product and some level of traction. The experience left me with a much more visceral understanding of how hard it is to pick investments at this stage and actually be helpful to early stage teams.
I was slightly apprehensive when I was first asked to mentor all of these startups in such a short time period because I wondered “what the hell do I know about these industries”? Usually when working with startups I have more time to learn about their industry and digest information. In any case, I overcame my concerns pretty quickly because I knew it would be a lot of fun and that I would learn a lot. I wanted to share some reflections on what I learned about how to be most helpful if you are lucky enough to have a team of people care about your opinion and you are not an expert on their industry.
Be Humble.
This is #1 for me. Excuse the explicit language here. It is really fucking hard to start a company and more often than not a founder is being shit on left and right by people who don’t want their product, don’t want to invest in them, don’t want to return their email, want to tell them why their business is wrong, stupid, won’t work, etc.
As someone who is actually trying to help, the most important thing you can do is show some humility. Even if you’ve had personal success in the past that does not mean that you know all the right answers. If you did, you’d be a trillionaire (and you probably aren’t). It’s also very unlikely that after a few conversations you know more about an industry than a company’s founders so its best to refrain from blurting out specific ideas immediately. It’s embarrassing and not helpful.
Questions, not Answers.
If you have been around a lot of early stage companies you have probably developed some level of pattern recognition and can diagnose common problems and blind spots regardless of industry. By focusing on asking thoughtful questions, you can start to uncover these problems and get founders to think about them more explicitly. You can also point to helpful frameworks and other companies as examples of how they might think about solving them. Realizing that I didn’t need to provide all the answers (since I don’t have them) to be helpful was a big relief. A few lines of questioning that I found to be particularly helpful are:
- “Tell me about your sales process from start to finish.” This can feel sort of like pulling teeth when talk to a lot of companies because it is seems to be the most commonly overlooked issue (from what I’ve observed).
- “Why do people not use your product?”
- “Do you have a financial model?” At this stage, I like to think of models as logic documents to understand how a founder thinks about their business. I’ve been surprised how many companies haven’t done this exercise or have half assed it.
- “What’s your goal?”
Introductions are Gold.
Most early stage companies suffer from a lack of access to important customers, potential new hires, industry specific experts to ask questions and investors. If you can help a company access any of these types of people you have probably been immensely helpful. In the absence of an introduction, it can take a very long time to build these relationships. And time is the enemy of any startup.
Be Supportive.
This is similar to being humble, but slightly different. If you have been a founder before, you’ve probably experienced the pressure, depression and ups and downs that are hard to explain to someone who hasn’t gone through this process themselves. When you are experiencing these emotions it can be intense and you can easily lose sight of the fact that (unfortunately) it’s par for the course. As a mentor on the outside looking in, it can be very useful to offer a gentle reminder that this is pretty common and “no you are not the biggest loser the world has ever known”. I’ve been on the other side and I can say it really helps to hear this.
Product-Market Fit
Founders have a tendency to fixate on their product in a myopic way. You have the luxury of being much farther away from it and by extension a more emotionally detached and logical perspective. This can make your insights and guidance into questions around target market and business model useful. Sometimes a bit of cold analysis goes a very long way for those in the trenches.
I love having the opportunity to work with founders and think about these problems. It’s a blessing to be able to do this, but I have to say- picking winners…god damn, what a challenge that must be. I also have to give credit to my friend Wills Hapworth who runs an early stage fund called TIA Ventures for sharing a lot of his insights with me and giving me some guidance on how to approach these challenges.