It happens all the time. A founder surrounds him or herself with a skilled group of advisors — maybe one or two from investors, a trusted mentor from their past, perhaps someone influential who can open doors. But as the company grows and pivots, it becomes clear this is not the best team to create long-term value. Can this situation be avoided by choosing advisors more wisely? Can it be turned around once things aren't great?
As a partner at First Round, Phin Barnes has advised more than 20 startups and has seen a common problem emerge: Advisors (especially investors) default to removing roadblocks for the companies they support — everything from finding them new hires to good lawyers — but spend very little time offering strategic, tactical advice that could make an even bigger difference.
In this exclusive interview, Barnes contends that it doesn’t have to be this way. Founders can ensure that they don’t miss the opportunity presented by their advisors — they can deepen these relationships, use them to maximize their knowledge in certain areas, and drive more productivity. The following seven tactics can help.
1. Really Pick the Right Advisors for You
It’s possible to plot most advisors along a spectrum. On one end, you have the person with incredible domain expertise — whether it be in enterprise sales or internationalization, etc. — but they have a really hard time unpacking what they know. On the other end, you have the advisor with less hands-on experience but who is very skilled at the art of advising. They know how to filter and problem solve and prioritize. Depending on your business, you’ll want to draft advisors that are a blend of both poles, but might land closer to one than the other.
“A lot of people’s first instinct is to find an advisor who is really good at something very specific. Their expertise looks great on paper,” Barnes says. “But it’s so important to balance that against how you relate to the person, and their personal style in an advisory role.”
Styles range dramatically from confrontational to encouraging to analytical. Some advisors dive right into what you’re doing and immediately tear it apart in nine different ways. Founders need to decide which style they’ll relate to best before they agree to work with anyone.
“I would recommend looking for an advisor just like you’d look for a co-founder — someone who compensates for a weakness you know you have,” says Barnes. “The best advisor for you will complement your strengths and cover for your weaknesses. That’s the only way they’re going to be able to see around the corner for you and encourage you to think in different ways.”
Finding an advisor who looks good on paper isn’t that hard. There's no shortage of brilliant, accomplished and experienced experts out there to draw from. What you don’t want is to learn that you have conflicting styles once you’re stuck with them. How can you avoid this? Interview them, Barnes says. And be sure to get some backchannel references by asking companies they’ve advised prior too.
2. Know When You Need Advising the Most
“If you’re a founder, think about your job day-to-day leading your company. You’re probably making a bunch of decisions fairly quickly or effortlessly, but where are you hesitating?” Barnes says. “Wherever you find yourself balking, that’s where you should engage your advisors. Even if you don’t know it yet, it means you need help.”
These are the areas where an incremental shift in perspective could be tremendously helpful. Seasoned advisors know when to interrupt an entrepreneur’s flow. They’ll see the hesitation even if things are operating smoothly, and they’ll simply ask about it.
“When I was running my own startup, I knew when I had a blind spot or when I wasn’t certain because I just felt different — less confident, more patient even. I would find myself waiting on things, trying to collect more information.”“When you find yourself constantly waiting to make a decision, that’s a great time to ask your advisors to help you clarify the situation,” Barnes says. “You’re probably staring down a problem set with a ton of variables and you’re lost in it. Pulling in someone else with experience can help you boil that down to two things that matter, and then you have a much better chance of solving the problem.” Good advisors and coaches will reframe the questions you’re asking yourself as a founder so that you find the answer yourself. Their job is to be a filter that also gives you more confidence in your abilities to make good moves for your company.
3. Break the 80-20 Rule of Advising
As Barnes has observed, advisors usually spend about 80% of their time with a company focused on reducing friction. This includes a lot of logistics, like advising on equity splits, connecting them with the right PR firm, helping with recruiting, and more. And indeed, friction reduction is a very important function that advisors can play.
“There are all these logistical areas where the question has been asked and answered multiple times, so an advisor can just help your team quickly get to the best practice and move on,” he says. “But in a lot of cases, that leaves only 20% of the time for them to help with serious strategic guidance. That’s the harder part of the work but it usually has the most impact.”
To get the most out of both types of advising, Barnes recommends that founders look to work with people who reduce friction primarily through making the right introductions. It’s especially helpful if a connection can be made with a fellow noncompetitive entrepreneur who has gone through a situation before or is currently handling something similar. They're closer to the work and the relevant issues than the advisor.
This way, the advisor can focus more time and attention on core, strategic advising. The challenge with providing this type of guidance is that it has to be very customized to the individual company or specific founders. “Being able to give good advice in this area often requires knowledge of the company from inception through their vision for the future. You have to get the nuances of the market and the interplay of the company and its competitors.”
As you can imagine, this makes many advisors hesitant to dig into this kind of work. So how can you get your company’s advisors to break the mold and leverage their experience to help you succeed?
“Don’t expect your investors or advisors to have the answers to all of your big questions. They might know the basic stuff off the top of their head, or know who to introduce you to, but on the big decisive stuff tell them instead that it’s their job to be a sparring partner,” Barnes says. “Define your relationship this way: You’ll tell them what you’re thinking or planning to do, and their job is to back you into a corner and make you fight your way out.”
When you set things up this way, your advisor has to spend less time learning everything about your company — a tall order when they're probably working with several — and you end up honing and strengthening your own arguments. “The marginal change that occurs when a founder has to defend or explain their position is where the real value is created,” Barnes says.