7 Reasons You Need a Mentor
Do you know everything you need to turn your idea into a billion dollar company? If you’re being honest, you’ll admit the answer’s no. The great news is that if you’re part of the right network you can get the advice you need.
If you’re like many entrepreneurs, you have so much on your mind that you don’t even know where to start when it comes to figuring out what you need help with first, second, and third.
And as your venture grows, odds are good that you’ll need help with different things in broad categories like strategy, finance, people and product. What follows are the kinds of advice mentors can deliver in the first three categories -- and mentors who have helped start-ups with each.
1. Industry Vision
Your start-up should skate where the puck’s heading. If you are too consumed by the day-to-day, a mentor could help your start-up figure out where your industry’s heading so you can decide whether those tasks will lead to long-term victory.
LinkedIn Chairman, Reid Hoffman, can think about where things will be in five years and how to invest now in order to profit from that vision. Lee Hower worked with Hoffman at PayPal and LinkedIn and considers him a mentor.
Hower explained in a November interview that in 2003 Hoffman saw-- correctly it turned out -- that social networks would be important for business. As Hower said, Hoffman “was thinking about networks of people, products, and economic activity - which is why he ended up starting LinkedIn and investing in Facebook.”
2. Acquisitions and Partnerships
Let’s say your start-up has customers that need a product or service you don’t offer. You can either build it or acquire a company that already has. Acquiring is the faster solution but it could cost you money and time as you focus on integrating the acquired company.
All that is very complex and something you may not have experience doing. Mentors can help. As he explained in a December 2011 interview, Elad Gil -- who sold his last company to Twitter -- has helped a dozen start-up CEOs to find the right acquirer, negotiate pricing, and determine the role of the founders and employees in the new organization.
Of course, you could simplify things by getting a mentor’s help in negotiating a partnership deal like the one that mobile payments service provider, Square did with Starbucks--it bought a $25 million take in Square which in turn keeps a portion of a 2.75% fee from each transaction at 7,000 U.S. stores.
3. Raising Capital
Odds are good that your start-up does not have enough profit from selling products to pay all its bills. Fortunately, there are many mentors who can help you navigate the choppy waters of raising capital early from angel investors and venture capitalists.
For example, Gil helps start-ups find venture capital firms for their Series A and B rounds; assisting with negotiating key terms such as valuation and the rights of investors to appoint board members
4. Performance Monitoring
How do you know whether your start-up is successful? Do you count the number of users, revenue per employee? Progress on product timelines? Cash burn rate?
Kevin Spain is a partner at Emergence Capital Partners who helps start-ups in his portfolio with many different activities. As a former financial and corporate development executive, Spain helps design the right financial measures to manage a portfolio company’s growth.
5. Hiring and Firing
How do you decide whom to hire and whom to dismiss? If your start-up is small, those people decisions can determine whether your venture climbs to the next level or gets consumed with infighting and stalls out.
Mentors like Gil and Spain can help. Gil found that most engineers who start companies don’t have experience with hiring and firing and he helps them do both - initially, he may be asked to help with the more difficult task of firing an employee.
And he helps start-ups establish hiring processes that include testing them for their productivity, checking their references and finding out how they behave in an informal setting.
If you don’t have the right culture, you can suffer from turnover and low productivity because your people don’t work well together or aren’t motivated.
If that’s your problem, there are mentors like Justin Moore, whom I dubbed Silicon Valley’s Culture Doctor. As he explained in a November 2011 interview, venture capitalists bring in Moore - who is CEO of Axcient, a service that helps companies protect their operations from fires and floods - to help CEOs work on their company culture.
He explains to them why culture is so important to achieving great results. But to develop a culture, he tells CEOs that they must start with creating a set of values that become the basis of what people in the company do.
When Moore tried to do this the first time, he was grateful for the help of a mentor who had taken three companies public. And based on Moore’s experience, he tells other CEOs to develop their own values because Axcient’s values are not right for other companies.
7. Organization Structure
As your start-up grows, it needs to change who does what. If you were the product visionary in your start-up’s early days, you may not want to spend your time tracking the detailed plans of six product managers. And that means you need help changing your organization structure.
Gil is one of many mentors who could help with that. He works with the founder once the company reaches, say, 50 people to help analyze whether the reporting structure should be changed, and if so, how.
For example, he helped a start-up decide whether to hire a Vice President of Marketing first and let the VP appoint people to perform, say, PR, product marketing, and advertising - or whether the start-up should hire those lower level people first and later hire the VP.
Strategy consultant, startup investor, teacher, corporate speaker, pundit, and author of 11 books, Peter Cohan has invested in six startups, three of which were sold for a total of $2 billion. Before founding Peter S. Cohan & Associates in 1994, he worked with HBS strategy guru Michael E. Porter.