During more than a decade of starting businesses, I received a lot of advice. Most of this startup advice was solicited by me, but that wasn't always the case. As I gained more experience as an entrepreneur, I realized that one of the most important skills I needed to master was the ability to filter advice. It became apparent to me that not all advice was relevant to my company, or even good for that matter. But there was often pressure to seriously consider others' opinions.
Being coachable is one of the characteristics of startup founders that many angel investors and venture capitalists look for. It means that the entrepreneur is open to feedback and willing to take advice, as opposed to digging their heels in and assuming they know everything just because they started the company. Especially for first-time founders, it's beneficial to seek help and take advice. The challenge is knowing what advice to take and what advice to ignore.
As I look back on my journey dropping out of college to start my first company to raising venture capital for my third, it's full of lessons learned from people far more knowledgable than me. Whether it's the insights gleaned from former professors during my undergraduate studies of entrepreneurship or hearing from successful founders themselves during Techstars, so much can be learned when you have an open mind.
But even good people can give bad advice if they don't know you or your business.
"You can't make money sitting on the Internet."
Around the time that Mark Zuckerburg was growing Facebook from his Harvard dorm room in early 2004, I was living with my father after relocating from South Florida to Northern Kentucky. Confused and depressed after my life's Plan A didn't work out, I found solace in music, graphic design, and web development. In my spare time, I built a custom PC with parts ordered online.
Having taught myself HTML and CSS in high school, I realized that I could monetize my technical skill set by building websites for local small businesses. Despite gaining some paying customers, being on the computer for hours at a time while coding was viewed as laziness in my household. That's why I was told that I couldn't "make money sitting on the Internet" and to "get a real job."
In today's Internet-centric world, it's hard to believe that I was once mandated to get offline which made it difficult to grow my nascent web development business. I believed then, as I do now, that the Internet would only become more important in our society, and I wanted to play a role in that. In hindsight, this misguided advice taught me a valuable lesson that shaped who I am today.
Some advice will come from people who don't understand or support your vision as an entrepreneur, so don't be afraid to disagree, even when they're family.
"We are looking for businesses not ideas!"
The startup ecosystem in Cincinnati looked much different in 2011 than it does today. There was less capital, less founders, and less startups. At the time, your best chance of success in Startup Cincy was being accepted to a local startup accelerator and/or funded by one of the few sources of venture capital.
Inspired by the founders who presented at a demo day event in the fall of 2010, I decided to further pursue my own entrepreneurial ambitions by applying to startup accelerators. By then, I knew that seeking advice from others was critical to success, so I enlisted the support of mentors. They encouraged me to reach out to the accelerators and learn what they were looking for in applicants.
It was through this networking and application process that I learned the importance of having a cofounder and a vision. I was a solo founder with nothing more than half-baked ideas for startups, so I was not too surprised when I didn't even get an interview. When I asked for feedback about my application though, I was told "We are looking for businesses not ideas!" and not much else.
This made sense, until I later learned that companies had been accepted to these programs with nothing more than a founding team, an idea, and what amounted to scribbles on a napkin for a prototype. While this is rarely the case today, a product with traction (i.e. a business) was less of a requirement for a startup accelerator than a compelling vision and a capable team to execute it.
Y Combinator even experimented with accepting founders without an idea.
As a young entrepreneur, this vague advice made me believe that I needed substantially more proof to gain admittance to top startup accelerator programs which were created specifically to back founders and companies at the earliest stages of formation. The experience taught me that exceptions can always be made for startups with a formidable team and clear vision for the future.
I didn't know better then, which is why better startup advice would have helped me get on the right track sooner.
"It's not your money."
With the rise of remote work in recent years, it's crazy to think that my company once spent $3,000 per month on rent (plus utilities) for an office space between 2015 and 2017. Back then, I thought an office was necessary to hire and build a great team. I've since changed my view on this and would likely build a remote-first company if I started one today.
To manage the cost of our office space, we took steps to ensure we were being responsible with the venture capital we had raised. Despite having a nearly 3K square foot fully renovated office, it was pretty sparse. We had very little decor, plastic folding tables for desks, refurbished computers, and used office chairs purchased from a local liquidation warehouse.
When another founder of a venture-backed startup visited our office, he commented on the no-frills style. His advice: make it look nicer. He suggested better furniture, TVs, and some decor. This wasn't necessarily bad advice to ensure the comfort of our employees, so we ultimately made some of these improvements. But it was his rationale that really struck a chord with me.
Knowing we had raised venture capital, he said "It's not your money." I never saw it that way. The fact the money wasn't mine made it more important that I was a good steward of it. I also knew that every dollar I spent was another dollar that the company needed to raise or earn. Although it's true that it takes money to make money, I always tried my best to spend it wisely.
"Don’t you have to grow by more than 30% a month to make this a business?"
Paul Graham wrote in one of his famous essays that "A startup is a company designed to grow fast." Of course, I agree with his definition. It's one of the key differences between a startup and other businesses. If a startup isn't growing fast, it probably hasn't found product/market fit.
"A good growth rate during YC is 5-7% a week," Graham explained. "If you can hit 10% a week you're doing exceptionally well. If you can only manage 1%, it's a sign you haven't yet figured out what you're doing." At my last startup, we tracked growth monthly and in 2017 managed to grow ~30% month-over-month.
But for some investors, that wasn't fast enough. We were urged to grow even faster while we struggled to find a profitable business model. The managed online marketplace we operated suffered from negative unit economics, so while growth was accelerating, so were our costs. We should have hit the brakes.
Rather than being advised to solve the core problem or pivot to an entirely different model, some investors focused only on growth rate instead. Growth at all costs has since fallen out of favor, but at the time it seemed more important to grow fast than grow sustainably. This is one mistake that killed my startup.
Starting a business is hard. To improve the odds of success, it's crucial for entrepreneurs to ask for help, be open to feedback, and take some advice. But in my experience, there will be no shortage of startup advice if you want it. The real challenge is knowing when to agree or disagree with the advice.
My hope with sharing stories like these is to help other entrepreneurs find success where I failed. Every business is unique, so what may have been bad advice for my startups may be words of wisdom for another. Either way, I hope you've found this insightful and subscribe to my free newsletter to learn from more of my mistakes.