A few years ago I watched as a young colleague with an MBA took it upon himself to advise the proprietor of a crepe stand about operations and business strategy – in exchange for a free crepe. As a former journeyman chef I was amused by the exchange. It was clear to me that my colleague’s advice was vastly overpriced.
Last week I served on an advisory panel for early stage companies at Innovation Island on Vancouver Island.
One of the participants seemed to be struggling with too much advice. The presenter had stopped working “in the business” in favour of working “on the business”. When I heard that I couldn’t help thinking that someone lifted that line verbatim from an introductory management consulting textbook.
In the past year or so the company had successfully sold their services to at least 3 large government organizations – which isn’t trivial for a small startup on northern Vancouver Island.
However the presenter seemed to think that selling services isn’t scalable – and that the company wasn’t a good fit for a seed round. I had to ask myself who got to them. It seemed to me pretty likely that one angel investor couldn’t see the potential – and they took it to heart. Based upon one man’s opinion they had decided their only option was to bootstrap the business themselves.
Some years ago I read an opinion piece by an intellectual property lawyer. He recommended that a startup developing IP should keep it close to the chest until they secured investment. He didn’t like the idea of using the IP in services in order to prove out the technology. Maybe that works for an IP lawyer who gets paid when the IP is protected – but it sounds like bad advice to me. How does a startup know whether their IP is worth protecting until they established that it’s useful?
How do you know that a minimum viable product is viable unless a customer has tried it out?
If an angel investor doesn’t want to invest in your company, it doesn’t mean that you don’t have something. It could simply be that the particular angel investor doesn’t understand it and can’t see it. If instead you hear the same refrain from a number of investors – maybe you should take it seriously.
If you’re getting advice, you really have to consider the source.