4Ps of Advising…

It seems there is more interest these days in the startup advisor (speaking of Southern California). So, I thought I’d share a little bit about what I’ve learned over the last few years. I started off by doing a ton of research (calls, conversations, reading, etc) to understand the role, the expectations and the reason for startups. I’m happy to discuss that more if you want (ping me). What I’ve found is that a big part of my role is focused on 4Ps (I couldn’t resist):

  • Pitches – facilitate strategy and force articulation – This is where it usually all begins. In doing this I apply a process I learned from one of my favorites mentors/coaches – deconstruct and reconstruct. It’s a process of tearing down what you think you have/know and rebuilding it to be a clearer/stronger version of your brilliance. I’ve found it beneficial every time. I think this step is important because I don’t believe you can outsource strategy. I learned this first hand – if you want to lead it and you want people to believe it, it has to come from within. You have to own it – spend the money you might spend on a consultant or agency on product/marketing experiments or market intelligence and find smart people to help you shape strategy. This process also forces you to articulate your vision in terms of business and to understand the various scenarios you may face (your plan will change at some point). This not only prepares you for fund raising, but helps you prepare for the journey. I think this is probably the most eye opening part of the process.
  • Products – fresh perspective and broad expertise – this is a fun and challenging part of the process as it can be poking and prodding the very heart of the team – the product. You have spent countless months conceptualizing your product, you’ve convinced some brilliant engineers to work for equity and you’ve been eating Raman (on a good night). Now, you are asking someone to take a fresh look. Again, I find this is where a lot of progress is made in short order. I also use this as a gauge on likelihood of success. I’ve scene startup leaders so high on their own vision, they can’t listen to outside feedback. If you’ve asked someone in to help think through your company, you should ask them to test your product concepts. The two biggest areas I tend to focus are on competition and differentiation (highly correlated). As much as I love product features (and I LOVE product development) I try to help at this level first and try to help find a place we can battle for leadership (and it will be a fight). I tell people to bring in folks with broad sets of expertise (people who have worked various categories) to help you make your product better. I’ve found in every situation I bring several unique insights from another company/category. This helps you define a more unique offering. I think this part of the process is the most ‘personal’.
  • Partners – dev time and marketing cost – This step is about networks and creative problem solving. The networks help you connect with potential technical & marketing partners. I often find myself questioning the NIH. This is totally understandable and I’d be kind of worried if this didn’t cause a little friction. But I encourage people to borrow other peoples products and APIs to build the initial service (especially if you are bootstrapped) – spend time on differentiating features. Figure out what features make your service different and build those with all your might (I have a lot more to say about product development). The other area to focus on is finding partnerships that can drive customer acquisition. Leveraging business development to drive traffic or free up other companies marketing dollars is a great way to get traction while keeping the burn rate under control. This step is about finding out how much more your core team can do to get traction.
  • Proformas – business model and gut check -This is the part that is painful – just painful. But the part I enjoy the most is forecasting. Understanding the business metrics, revenue drivers and assumption variables. I tend to focus on that side of the equation (and get some help from a CFO type). It is also the place to evaluate your revenue streams and do sanity checks. I’ve worked with guys that wanted to show revenue from every possible revenue stream under the sun (all in year one) – come on. Revenue takes time and there is a COGS for that (somebody has to do something to generate the cash flows). The biggest part of this step is the total gut check. How big is the business opportunity? How will we make money? What will it take to get to profitability? and so on and so forth. This is the most painful part of the process, but also the most important – this is where the investors want to know about the money – and you should too!

So, that is the high level view of the 4Ps. There are more Ps like passion, people, persistence, patience (I guess I like alliteration). There are also a whole bunch of other things like analytics/metrics, viral, process, positioning, coaching, etc. I hope this helps anyone thinking about advisors. Remember the magic is in the doing!

Well, I’ve gotta go, I know at least 3 companies that are going to be p&#$%@ I’m not working ; )

Go start something!

One Response to “4Ps of Advising…”
  1. Henri Duong says:

    Diggin the 4 P’s – looking forward to the next post on additional P’s!

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