BUSINESS BLOGS
BUSINESS BLOGS
category: business
09 Jan 2008
related tags: Startups | Management | Entrepreneurship |

All right, first off, I am really not referring to any one in particular.

Second, I am certainly not referring to people involved in the following story: Billionaires Can’t Keep Frontline Wireless From The Deadpool, after all, the company’s backers and advisers include big names and accomplished people such as billionaires John Doerr and Ram Shriram, as well as former Netscape CEO Jim Barksdale and former FCC commissioner Reed Hundt.

But I think that as important as it is to have good advisers whom you can turn to for advice and wisdom (I am blessed to have one of the best), having the wrong advisers is a surefire way of killing your company.  I am probably stating the obvious, you would think, but a lot of young entrepreneurs spend a lot of time and money trying to lure big names to their company, only to have it backfire.

There a number of reasons for this, they are:

Spend too much time focusing on the forest

Yes, it’s good to see the forest through the trees… but you also don’t want to spend too much time thinking big when you have tactical, micro-level operational issues to tend to.  Friendster, for example, had an a-list backers list that was thinking of how to defend the eventual attack from Google that it lost sight of the user interaction and navigation issues that bogged down the site.  In the end, MySpace - ironically with a more deficient UI - zoomed past Friendster by letting anything go.

Conflicts of Interest

I’ll occasionally talk to a VC and within minutes he’s hawking one of his portfolio companies to me.  That’s fair, and par for the course… if an investor wants you to scratch one of his company’s backs, I think it’s a very reasonable request - so long as he does not force you.  But for an adviser to be pledging allegiance to another company when he’s supposedly giving you advice is plain wrong.

Bad Apples, Worst Deals 

I once met a would be angel investor who turned out not to be an angel, but a potential intermediary.  As the conversation continued, he said he would help me if I merged my company with one of the companies in his fiefdom.  It was appalling but the truth is, it was not all that odd.  Allegedly, Mike Moritz of Sequoia urged Peter Thiel to merge his Confinity.com with Elon Musk’s X.com to form Paypal.  Paypal struck big, with an exit of $1.5B (placing it in both the Top 13 Explosive Web Startups of All Time and the Top 10 M&A Deals of All Time) but to this day, some would suggest that Thiel and Moritz don’t exactly get along.

I am not passing judgment on the angel cum intermediary cum advisor cum M&A artist I met, maybe he sincerely thought he was doing me a favor… but the point is, if an adviser had bad intentions, you the entrepreneur are screwed.

Again, advisers can help you grow considerably.  I myself serve as one to many entrepreneurs and companies and like to think that they appreciate what I have to offer and what I have done for them… but don’t fall in love with the concept and idea of having a bunch of advisers surrounding you merely for the sake of it.