Why You Should Be A Startup Advisor

Being a startup advisor has been immensely fruitful.

Learning 1: I got exposure to a lot more varied situations than any one startup encounters: I saw people with different ways of thinking, and different priorities. For example, one startup I worked with paid only a pittance to its engineer. Another founder wants to move fast, no matter what mistakes he makes in the process, even if that caused critical problems he couldn’t solve. I could compare my working style with his and decided to go faster in my own decision-making, though not as fast as him. I saw how B2B is different from B2C. How deep tech is different from, well, shallow tech. How founders are so different from each other, and approach things completely differently. I worked with startups that are funded, those that are bootstrapped and have free cash flow [1], and those that didn’t have free cash flow and so shut down.

Learning 2: I got to see what’s common between startups, like how hard fundraising is. Or how risky startups are, in various ways, especially for founders. As another example, none of the five startups I know well found a co-founder, despite trying for years. The lesson for me is not to start a startup hoping I’ll get a co-founder, because that’s unlikely to happen. I’ll instead start with a co-founder, even if it means working on a different idea, or his idea rather than mine [2].

Learning 3: I have people to correct my biases. This was especially important since I handn’t started a startup before. Or even worked at one. The world works very differently from how I thought it worked, and I learnt that quicker than I might otherwise have. I have people to get help from, which is critical because, as a startup founder, I don’t have the support system a manager in a big company would have, and I’m dealing with a harder problem of building something from scratch. Asking a friend who’s an engineering manager at Google or some other big company wouldn’t be helpful, because they’re ensconced in a completely different environment [3]. I learnt all kinds of things, in every possible area from hiring to management to UX to fundraising.

Learning 4: I’ve gotten concrete benefits for my startup like an office to work out of, when I didn’t have one of my own. And help from the designer, marketer and recruiter at one of the startups I used to advise.

Learning 5: Given my close relationships with the founders, I got much of the learning one gets from starting a startup, but at far less the time investment, say only an hour a week rather than 40, at least. If I learnt a third of what the founder learnt, but at 1/40th the time investment, that’s a 13x better deal. You should evaluate things in cost-benefit terms like this. Not to mention that these lessons cost me zero of my own money, and hardly any stress on my part.

This is actually a much better deal than being a founder. I can see myself not being a founder someday, but I’ll continue advising.

Learning 6: I’m able to look at other people’s problems more coolly and rationally than when I’m in the hot seat. When there’s a disagreement, and my opinion is sought, I have more credibility as a person who’s not a party to the disagreement.

Seventh, I saw how startups are messy. Ranging from a bad office environment like broken chairs. Or air-conditioning that sometimes doesn’t work the whole day, or drips water onto your computer. To favoritism, like a manager who brought along an employee from a previous startup, who is from the same state as him, and gives her a good performance review, unlike her peers, who think she’s useless. In return, she passes along good feedback about the manager to the CEO, while others have issues with him. Then there’s a HR person whose neutrality is in question. Then there are other things like shouting obscenities in the office. Or subtler forms like talking ill of people behind their back, or people having their own agenda, people spying on each other to HR or to managers, and so on. You see founders being non-transparent with investors and with employees. Not to mention outright lying. You see employees go without salary for as long as 8 months. Or leave the startup with huge arrears. You see angry employees suing the company, and the founder personally.

All this mess gave me clarity on where to draw the line. This can be in terms of ethics or standards of behavior below which I won’t stoop, even if it means having to shut down my startup. And I won’t work with people who don’t maintain these standards. In addition to ethical matters, I also got clarity on practical problems that occur in some early-stage startups, like missed salary payments, which problems I’ll accept, and to what extent, and which ones I won’t, because some situations only get worse.

I understood more clearly which position I want in the future: a solo founder, co-founder, or employee (such as a CTO). And which stage of company to work at in the future. Some of these options are riskier than others, but also bring more reward. Is it worth it? I got a first-hand look at these tradeoffs at multiple startups and am able to make an informed decision on what I want in the future.

Eighth, I’ve found myself making some hard calls in this process, like recommending that two friends of mine, one of them a good friend who got hired because of my introduction, be let go. When you’re an advisor, you’re working for the startup, and you shouldn’t have divided loyalties. Set a high professional and ethical standard. This is also training for life.

Ninth, I have a much better network now, which I can use in many ways, whether to understand market conditions, what salaries are like, get introductions to VCs, or get recommendations from them if I choose to get a job or raise money in the future.

Advisor Mechanics

Now that we’ve seen all the benefits of being an advisor, let me share what I learnt about the mechanics, how to handle the relationship and balance it with your primary job.

First, it doesn’t make sense to be an advisor for the money, such as a stake. Probably 95% of startups fail, that too at the very early stages where advisors are needed most. Even if the startup succeeds, I may not get paid for years. And it may be a small amount. One founder also went back on his word to give me a stake. For all these reasons, if I wanted to earn money, I’ll be a technical consultant, charging per hour or per day. Be a consultant to earn, and an advisor to learn.

Second, when I negotiated a stake up front, that made the founder treat me like an employee. Because he’s paying me, he didn’t give me flexibility on the mode of communication, such as in person or call or WhatsApp. He expected me to conform to his way of working, such as having to share an agenda before he would give me his time. Since I committed a certain amount of my time, I had to be available, though that was the critical time for my startup. This put me in an impossible situation. And so on.

So the lesson is not to negotiate a stake up front. I’ll instead go back to my earlier way of doing things, which is a gentleman’s agreement that if his startup succeeds, the founder will pay me whatever he thinks my value was, whatever he would consider fair if he were in my place.

Third is flexibility: since I’m not being paid, I’ll have flexibility, such as calling when I’m in an Ola. Or asking him to come over to my office if I feel that works better. Because I’m helping others, I’ll have the flexibility to arrange things so that they don’t impose too much on my primary job or family time.

Fourth, I won’t make commitments, like “X hours a month” or “I’ll ensure you find a good engineer to hire”. It will all be best effort.

Fifth, if the founder has a different skill from hime, in exchange for my advising him, I’ll ask for his help and advise in my own startup, in a reciprocal manner. This can have concrete benefits, and is worth more than a low chance of making an unknown amont of money at an unknown amount of time as a result of having a stake [4].

Sixth, if the founder turns out to be a person who did not honor his commitment, even a small one, I won’t invest more in the relationship. I want to invest in compounding relationships, where the other person’s integrity and commitment is beyond question, and I get more and more value as the years go by.

In summary, being an advisor let you learn and grow in your career, like a founder, but faster, with far less time investment, zero financial risk, and far less stress. You can’t hope for a better deal than that.

If you have never started a startup, because it’s too risky, you should at least be an advisor.

[1] Which means you have more money coming in than going out every month.

This is similar to being profitable, except that to be profitable, you need to recoup past investments, too.

Having free cash flow is the holy grail of startups: it means you can’t run out of money, which is the overwhelming reason startups die.

[2] Ideas are overrated anyway. We get carried away by our ideas, there are others already doing it, who are probably further along or did it better than we planned, let alone built, and the idea is only 1% of the work in a startup.

While the idea may be my cofounder’s rather than mine, I still need to buy into it — passionately. If you’re not excited by it, you should be an employee, not a founder.

[3] But don’t overweight advice, either. Early in my startup days, I listened eagerly for advice that would change things for me. There’s no such advice. If such advice could be given, the advisor could be running the startup instead of you. Advisors and friends don’t know your circumstance and your preferences and what didn’t work for you well enough to give you that advice.

[4] I’ll structure it by offering the same gentleman’s agreement to him: if I succeed, I’ll give him whatever I think his fair share it.