Across every startup ecosystem I’ve seen, it seems to me that there’s only one real way to to help startup ecosystems mature: investors need to lose their egos and founders need to gain some confidence.
Early-stage investors are increasingly useless for anything other than money or introductions
My last exit was in 2009 (read: 2009 was pretty much the last time I was actually in the trenches thinking about customer acquisition, product development and anything else a founder loses sleep over). More broadly, many (definitely not all) of the investors out there today probably were never founders (or even worked at startups) themselves. To put it bluntly, being an investor is probably one of the few jobs on the planet where you’re considered a genius if you’re only right 1% of the time. The rest of the time, we get to make hand-wavy assertions (perhaps like this one…) and pat ourselves on the back while founders listen intently.
Here’s the thing though: what worked yesterday probably won’t work today — as the web gets bigger, more startups come online causing the most common customer acquisition channels to get saturated. In other words, the pace of change in the startup world seems to only increase and investors can’t help much when it comes to many of the tactical issues that founders face.
At best, investors can provide high level strategic guidance or direct introductions to mentors that have recent tactical experience in the areas that a founder might need help. (And, anyways, early stage investors are almost always better off searching for new deals rather than trying to deep-dive into a particular startup that might be going sideways. But I digress…) If a founder needs tactical advice on legal and finance, it’s probably OK to ask an investor for specific advice. Otherwise, smart founders should ask an investor for an introduction to someone that might be able to help with an issue.
Most of the tactical help that founders need is available online or through other founders
One of my favorite quotes from Michael Lewis’ Moneyball:
By it’s nature, the internet undermines anyone whose status depends on the privileged access to information.
In other words, most of the challenges that startups face have already been dealt with by others and those people probably talked about it on their blog, Quora, Hacker News or some other online community.
What this really means is that founders need to stop asking for so much advice — most of what they really need to know is already online (for example, many 500 demo day pitch decks and videos are online) and the help they need with tactical issues (such as SEM, SEO, user retention) is available via other founders.
As I said earlier, investors need to lose their egos — these days, there’s little we can do to directly help a startup succeed. Rather than pretend to have superhero-like powers, let’s just try to stay out of the way until our founders call us.
On the other side of this, founders need to gain some confidence — don’t ask an investor for “feedback” on your idea, talk to your customers. The default state of your startup is failure and the only one that can change that is you.
Let’s all do our respective parts to make the startup ecosystem better. Everywhere.
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