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The "No BS" version of how startups are really built, taught by actual startup Founders who have lived through all of it. Hosts Wil Schroter and Ryan Rutan talk candidly about the intense struggles Founders face both personally and professionally as they try to turn their idea into something that will change the world.
Welcome back to another episode
of the Startup Therapy podcast.
This is Ryan Rutan, joined as
always by my friend, the founder
and CEO of Startups.com, Will
Schroeder Will, seems like
there ought to be a test you
have to pass before you're
allowed to give startup advice.
There isn't.
Literally anyone can slap
the word advisor on their
LinkedIn and start reshaping
people's life decisions with no
license, no exam, no liability.
In fact, we're doing it
right now, aren't we?
Hi.
Here's the uncomfortable thing
that you'll say about this,
which is that after decades of
advising startups, the honest
version is that most startup
advisors are, are horrible,
and the worst part is that,
isn't that they're horrible,
it's that they have absolutely
no idea that they're horrible.
Yeah.
Right?
Which is the worst part.
We're not talking about
scammers, bad actors.
Yeah.
Th- those are easy to spot.
We're talking about the
well-meaning ones, the advisor
who genuinely thinks that
they're helping, while quietly
steering a founder's dream
straight into a wall with a
warm smile and total confidence.
So today, let's talk about
why so much startup advice
is dangerous, why it's
usually delivery and not the
advice that does the damage-
Mm-hmm
…
and the three words that
separate a great advisor from
an absolute wrecking ball.
How many times have you been
at a pitch deck competition
where you're called to be one
of the judges, and you watch
one of the other judges deliver
feedback in such a certain
cocksure manner- Oh, yeah
and you're like, "That person
doesn't know what they're
talking about at all." Like,
like, that's- Yeah … batshit
crazy, and it's not even like
their opinion's just off.
They're, like,
fundamentally wrong.
And it, it reminds me of where
we are with AI right now, right?
Where, like, Claude can give
you- I, I was getting ready
to make the same parallel
an
absolute answer.
I was like Yeah.
Right?
Will this be fatal?
Yes, you are going
to die in four days.
Yeah.
But you know it's not cancer.
Oh, just kidding.
I should've looked more closely.
You'll be fine.
Yes.
Yeah.
You, you nailed it, right?
Yeah.
Yeah.
No, it's- Exactly … it's
exactly that.
I remember the, the first
couple times, people were
like, "Look at how wrong it
can be and, and how confident,
and that's really dangerous."
I was like, "Have you ever
talked to a startup advisor?"
Oh, my God, yeah.
That's the worst part.
Like, I think you said this, you
know, in the intro, but, like,
these are well-meaning people.
Like, these aren't-
Yes … necessarily, like,
you know, these Bernie
Madoff, like, they've got
some, some nefarious plan.
No.
There's no agenda other
than trying to help.
Which almost makes it worse,
because- It does … you
want them to be right, right?
Like, you, like… And so
startups, you know, founders
have a couple of disadvantages
going into all of this.
The first is you don't
know what you don't know.
Right.
And so when someone tells
you that the sky is red
and you can't tell the
difference, then the sky- Right
is red, right?
Yes.
And so the problem with
the advisor is the advisor
is so certain that what
they're saying is true- Yeah,
yeah
…
or isn't tainted by bias or
anything else like that, they
deliver it in a manner where
the founder is like, you have
just gotten, you know, ground
truth that's undeniable- Right
because I said it.
Yep.
And the way they say it.
Yeah.
Right?
Yeah, yeah.
Because an opinion delivered
with the conviction of a fact-
becomes a fact to the person
who can't tell the difference
Sounds awful lot like a fact.
Right?
That's not advising, that's
counterfeiting, right?
Yep.
And it happens all day long.
Yep.
And again, like they don't
necessarily know they're doing
it, but it is the confidence
that it's presented with
makes us wanna believe it.
And, and I'm always a little
bit amazed by that because, now
to, to be fair, most people, and
again, advisors don't get a, a
monopoly on this, most people
are wildly, uh, lacking in the
self-awareness column, right?
Yeah.
But as an advisor, that
actually needs to be one of
your greatest strengths, is
a matter of self-awareness.
Right.
And, and I'll, I'll give
you a couple examples-
Yeah … of where, like
where I see it all the time.
We'll go back to the
pitch deck competition.
One of the judges gets up
there and says, "No one will
ever fund that, full stop."
Okay.
Okay.
It turns out that you
know exactly the funding
behaviors of every-
Yeah … eligible investor.
Now, I understand- Every
single one … right.
There's some things that
are like, okay, generally
that's not fundable.
Like, hey, I'm gonna go
after VC and I'm opening
a Subway franchise.
Not gonna happen.
Yeah.
I, I can certainly tell
you not, you know- Yeah
bias notwithstanding,
it's just not compatible.
Right.
But often that, that comes
more of like an opinion,
nothing based on fact And
I'm totally unaware that
maybe that could be damaging.
You know what I mean?
Right.
Yeah, that's the thing.
Do they need to
hear this right now?
Like, what are you actually
trying to do in that moment?
"No investor will ever fund
this." My response to that is
always, "How many Patagonia
vests do you own?" Right?
You must have them all.
Like-
Well,
I mean- You know what every
founder or every funding
source is thinking right now.
Like, it is ridiculous.
And again, like, I think that
the important part there is
they're not telling you that
because they wanna damage you.
They're not telling you
that because they don't
wanna see you succeed.
They're telling you that because
somehow they think that's
going to inform your success.
Right.
And, and which is dangerous.
Okay?
Yeah.
Now, again, in this case
we're talking about just
a fundamental unawareness.
Yeah.
Here's another great example
that I see all the time,
and it's kind of tied to
the pitch deck competition.
Every single town, every
single town across the
world has what we call- The
guy … the local yokel.
Okay?
Yeah.
The local yokel is
someone who goes around in
their town spouting out-
Yeah … startup advice as
if they have a worldview.
But what they don't know,
th- their unawareness, is
what they're talking about
is actually really wrong.
So I used to see-
Yeah … this all the time.
You know, when I was coming
out of, out of Columbus, Ohio,
which I love, it's where I live.
You graduated college there.
You know, you're a big fan.
But the local yokels, of
which I was one of them, okay?
So I'm, I'm gonna put myself
in the firing line here-
Sure
…
would deliver a lot of decrees
about how startups should
work and how things will work
and what's investable- Yeah
et cetera.
It wasn't until I went to
the West Coast, initially
Los Angeles and then
eventually to San Francisco,
where I was like- Got an
actual worldview?
Yeah.
Yeah, exactly, where
I was like, holy shit.
Like, the stuff I was
saying was so far off base.
Again, it wasn't,
you know, negative.
It w- you know, I, I
was like, I would have
said something opposite.
I would be like, "Oh
my God, investors would
love to fund this" out of
also misdirected, yeah.
Yeah, yeah.
They'd love to fund
your Subway franchise.
Yeah.
Yeah.
They, here's all the
reasons it doesn't fit.
So I think what ends up
happening is the local yokels,
and I wanna stick on this point
just for a sec, Ry, because
I'm 100% sure there are an
awful lot of founders that are
listening to us right now- That
need this checkpoint, right?
Yes.
Look around at the advice you're
getting in any town in USA.
And by the way, this
also applies if you're
in Palo Alto, right?
Or, you know, Menlo
Par- you, you're the
heart of Silicon Valley.
You have to understand that the
folks around you have a bias.
They have an, a blind spot
that they don't understand.
When I lived in San
Francisco, the folks there
thought the whole world
thought like San Francisco.
Also a bias, right?
An incredible bias, right?
Yeah.
They were like, "How could you
possibly live on less than a
million dollars a year?" I was-
I don't know.
Like, I followed the
advice of literally 7.9
billion other people.
Yeah, I was gonna say, like,
like, I'm making a bit of a
mockery of it, but, like, it
wasn't that far off, right?
You'd hear people say, "Oh,
okay. Well, you can buy a
house for a million dollars
where you're from." I'm like-
Yeah
… "
Pause right there.
You understand" … They don't.
"You understand that the zip
code that you live in, the price
point there represents .00001%-
Yeah
of housing."
Self-awareness, zero.
Dude.
Yeah.
Like-
But you know what?
Like, honestly-
Also, you're from Kentucky.
Right.
Yeah.
You, you got here
nine minutes ago.
I would put it sort of
like that, yeah.
At least in those cases, like
from my perspective, when
they have an obvious tell that
there's- Yeah … a bunch of
bias being introduced into
their advice, it makes them a
little less dangerous, right?
Well- It's a little less
dangerous when, if you
can spot it … you're
saying if you can see it.
If you can spot it.
Yeah.
Because to me, the most
dangerous ones aren't the
ones with, like, the absolute
hyperboles and bad advice.
It's the ones with decent
advice that's still
absolutely wrong, right?
Correct.
Yeah.
The ones that, that sound
a bit more credible.
Right.
Right?
Because sometimes, like when
it's printed with, like,
too much confidence or,
or, or even bravado, right?
But, like, when they also
artificially attach humility
to it without it being real-
… that gets even more dangerous.
It's like now it's
a concealed weapon.
Yeah, right.
Concealed weapon, I like that.
Right, think about it this way.
The biggest thing is this
lack of self-awareness.
To me, that's the, the
biggest frustration.
An, an actual sense of
self-awareness would be a
person saying, "What I'm
about to share is an opinion.
It is backed by no more
than my own experience-" Yes
which, you know, could include
other people's experiences.
Yeah.
But it's just one data point.
Here's what comes out instead.
Here's what I feel strongly
about, here is my argument, and
now it's your argument, right?
Like, my words are
now your words.
And we'll talk about this later
when we talk about how, you
know, people kind of create
some pressure around making
sure, you know, their opinions
become other people's decisions.
But it's this wholesale
lack of self-awareness.
And part of this is
foundationally the advisor
doesn't realize how weighty
that guiding hand is, right?
Like-
Right.
It can be a passing
comment to them.
They're like, "Well, yeah,
I said that, but I, I only
meant it like 20 out of
100, not 100 power." Right.
Right.
"I had turned down the wattage."
Right.
Right?
Well, no one else feels that.
Yep.
It's the way I
look at parenting.
Parents take for granted often
the weight of their words.
If, heaven forbid, this
would never happen, but,
like, if I told my daughter
she was ugly, right?
And there are parents who
have clearly done that, right?
Yep.
The weight of their words-
Yes
isn't the same as if
they told somebody else
that they're ugly, right?
Right.
Like, you've just scarred
that human for life, right?
Correct.
The amount of damage you've
done, the nuclear bomb- Yep
… that you dropped in what you
thought was a passing comment,
they will never forget that.
Yep.
That's gonna shape so many c-
you know, courses of their life,
their relationships, et cetera.
Advising has that same kind
of weight to it, right?
It
does.
You are changing the course of
their future with every word,
often without realizing it.
Yeah, and at a particularly
time where they're
particularly susceptible to
it, because they want you-
Yes … to have the answers.
They came there hoping that
you could tell them something
that's definitive fact about
what they need to go and do, and
then you do exactly that, and
they forget the part where you
might be completely wrong about
everything that you just said.
I- Because they don't have a
way to evaluate that, and so
they take it at face value, at
full throttle, and they're like,
"Okay, I'm gonna go do exactly
what you said," or, "I'm gonna
believe exactly what you said.
No one's gonna fund this.
Okay, so we gotta figure
out plan B," right?
When plan A may have
been completely valid.
The biggest culprits
here are investors, uh,
particularly VCs, right?
Those folks are so used to
their word, their response,
their feedback, right?
Yeah.
Yeah.
Like Simon Cowell style, right?
Where how they feel is the
outcome of the startup.
Well, b- because
it often is, right?
Like-
Yeah, well, that's
what I'm saying, right?
They get to decide, right?
My opinion decides whether you
get the money, ergo- Correct
… I have all the power,
right?
Correct, it must be true.
Yeah.
And for the startups,
to your point, like,
it has a gating effect.
Yeah.
So it is true.
If you don't think that
I'm good enough, then
I'm not good enough.
You know, that's essentially
the, the premise.
So years ago, I'm at a board
meeting with my own investors.
So this wasn't,
like, a new investor.
It was an investor I
had a relationship with.
Mm. And this particular investor
was always, like, really
sure about everything he was
saying even though I knew damn
sure most of the stuff he was
pulling out of his ass, right?
He just-
Yep
…
he had this undesirable
or unquenchable thirst
to, like, peacock, right?
Yeah.
And make sure everybody, you
know, saw he was the guy.
So one day, I'm presenting
our, our numbers or whatever,
and he says something to the
effect w- of, "Well, that'll
never work." And I was like,
again, going through the
dialogue tree in my head.
I'm like- Yeah … "Okay,
option one, say nothing.
Just put it aside, Will.
Pretend it didn't happen.
Don't create-"
Yeah … "more controversy.
Move on to the
next slide," right?
Yeah.
And that's 99% of the
time where I would go.
Yep.
The other 1%, I remember
opening up with something
along as, "Fuck this guy."
Yeah.
And like, "I can't deal
with this anymore."
And so this is very
unusual for me.
I went that other direction.
I, I went the
non-diplomatic way.
Uh-huh.
And I just said to him, I'm
like, "Dude, you can't say stuff
like that." And he's like- Yeah
… "W- huh?" Like he, like- What?
What do you mean?
… definitely not what he expected
my next response to be.
Yeah, yeah.
This was me scolding him, right?
Wait, no,
you can't say stuff
like that- Yeah.
… Will.
No.
And I said, "Look, you can't
say stuff like that," right?
Because first off, categorically
what you just said is false
Right.
And you said it as if because
you felt it, it was true.
Yeah.
That's wrong.
That's called
externalizing, right?
If, if you're gonna think
out loud, please preface it
with, "I'm thinking out loud.
Here's some stream
of consciousness.
Do with it what you will."
And I was like, "Your opinion
doesn't make something fact,
right? It just doesn't." Yeah.
It doesn't.
And I was like… And,
and again, this was
categorically false.
But he, he was like, "You'll
never sell that." And I'm like,
"Dude, I just sold it." Right?
Like- Yeah.
It's like
it's already actually happened.
Yeah, exa- That was-
Do you
mean again, sir? That's
why I made the point so
strongly, because I wasn't
questioning his opinion.
I was verifying
how wrong he was.
Yeah.
And it wasn't 'cause I
wanted to hurt the guy
or make him feel bad.
Right.
He's not a bad guy.
But, like,
yeah.
But I was like, dude, if it
weren't for me, like, I have the
experience to both actually have
backed that statement up, but
also to have done this before.
But if I was 15 years younger
at the time- Sure … and I
was coming into a VC for the
first time, I would've just
taken what you said and actioned
it and said, "Okay, I guess
we're not gonna do that."
Or hold everything
else constant.
What if you had just done that
three weeks earlier before you'd
actually sold one of those?
Yeah.
Right.
Dude, you gotta be careful as an
advisor- Yeah … when you make
these statements, these forward-
Yeah … looking, pretend I'm
the Oracle statements, that
you're not Nostradamus, dude.
Right?
Yeah.
And if you are, then only invest
in successful companies, right?
Right.
Yeah.
Like, if, if you're so certain.
Here, here's a great example.
They never talk about this
publicly, certain ones do,
but there's essentially a
quadrant graph for VCs, and
it's based on fund performance.
It's very binary.
Hm.
Right?
You, you look, look over
a certain period of years
and you say what kind of,
uh, rate of return has-
Yeah … each of the funds done.
And of course, the top right,
top quadrant is always the names
you know, Sequoia and a- Yeah
… and all those guys, right?
But the people in the bottom
left, right, like, they're
in the wrong end of both axes
who are never gonna return
money in fundamentally,
numerically- were as wrong as
you can be in their industry
are the ones that never shut
up in those meetings, right?
Yeah.
Like, those are the guys that
I'm talking about, and I'm
like, you would think that
numerically your score is
an F-minus at what you do.
Yeah.
You might wanna keep your
opinions to yourself un-
… until that number changes.
Yeah.
Nope.
Yeah.
They're just spouting, like,
they're just running it through
this engine that is essentially
just a collection of their
three worst experiences and
pretending that that's fact.
Nothing wrong with being wrong,
except when you present it
as fact and you help other
people to make wrong decisions
based on your wrong opinions.
Yeah, and dude, and you don't
realize you're doing it, right?
Yeah.
And if, if we expand that
out a bit, like, there's,
"Hey, I'm saying something
categorically false, and
I simply don't know it."
Okay, happens all… I'm sure
any of us have done that, right?
Yeah.
But at the time, we
thought we had the right
information, turned out to
be the wrong information.
Sure.
Guess what?
Literally just
described all startups.
However, however, when you're
an advisor, and hopefully you've
got a little bit of experience
under your belt, you should be
able to lead with that, right?
Yeah.
"Hey, here's why I think what
you just said, the product you
th- you're about to launch,
could have a problem, but
only the market will tell
us. I have an opinion and a
forecast, but the market will
give us the verdict," right?
Like, that's the fact, not me.
Ry, when you and I advise…
Actually, for those of you
that don't know, Ry and I run
a workshop every Wednesday on
startups.com where we do pitch
decks in one workshop, we do
funding, like how do you, you
know, raise money, and one
of the things that we always
frame our advice with is, "Hey,
today I'm gonna teach you how
to build pitch decks," right?
We use a very specific
formula, but guess what?
People have raised trillions
of dollars without our help.
Without
our help, yeah.
So clearly this is not
the only way to do it.
Frigging self-awareness
101, dude.
Yeah.
Right?
Because there's a lot of
people that are gonna be in
the audience that are like,
"Yeah, but the way that
you're framing the market size
isn't the way I wanna do it.
I wanna do TAM, SAM, SOM."
And my whole point is, "Hey,
I'm pretty good at this, like,
and I've done this a lot and I
have experience, but it doesn't
mean my word is fact," right?
Yeah.
And people are surprised
when they hear it, right?
They're surprised-
Yeah … someone would,
like, just say, "By the
way, maybe I'm not right."
H- heaven
forbid.
You know, something that's
really funny about everything
we talk about here is
that none of it is new.
Everything you're dealing with
right
now has been done a thousand
times before you, which means
the answer already exists.
You may just not know
it, but that's okay.
That's kind of what
we're here to do.
We talk about this stuff on
the show, but we actually
solve these problems all day
long at groups.startups.com.
So if any of this sounds
familiar, stop guessing
about what to do.
Let us just give you the answers
to the test and be done with it.
Going back to those sessions,
so when you're delivering
info, I'm answering questions
about pitch decks and stuff
in the background in the chat.
If you scan down through
that, you're gonna see
three words consistently
used in my feedback.
You might consider.
Yeah.
You might consider.
Consider this,
consider that, right?
Because I'm not telling them,
"Rewrite your pitch deck.
Rewrite your problem statement
and say exactly this." Right.
You might consider
throwing a stat in.
You might consider
making this numeric.
You might consider using
dollars instead of time, right?
Yeah.
You also might not,
and that's okay, too.
You bet.
Right?
Because I am absolutely trying
to avoid this parent-child
type relationship where it's
not just the confidence that I
apply to what I'm telling you,
but there's this, like, there's
also this implied punishment
for not obeying, right?
Like, if I, I tell you not
to touch the hot stove, you
touch the hot stove, you're
gonna get burned, right?
Right.
You better do what I said.
Right.
Right?
And it's awful.
You know, the other thing,
this one just burns me.
All right?
This one burns me.
So one of the last times I
saw this was a pitch deck
competition, so the fact
that you brought this up at
the beginning was perfect.
Somebody did push back on some
of the advice And holy shit,
have I never seen anybody
get haughty and pouty faster.
Like, arms crossed,
leaned back, frowning.
Yeah.
Yeah.
How dare you?
Oh, it was amazing.
As if their disobedience
was some kind of betrayal,
as if this person owes you
anything other than the 30
seconds they already wasted
listening to your dumb ass.
We have a thing internally
where folks that are on
the platform, any one of
us are helping out, right?
And, you know, some of
us, some of you i- in the
audience, you listen to
us with Ed Kang, you know,
our chief strategy officer.
Yep.
And, and Ed's awesome.
Just like the rest of us, he
has, you know, big opinions
about things, and he's…
Just like the rest of us,
he's not afraid to share them.
So invariably, we'll get a,
um, we'll get a startup that's
met with two of the three
of us, and let's say it's me
and Ed, and they're talking
about pitch decks, and they'll
say, "Well, Ed said something
totally different than what
you're saying." Uh-huh.
Intention when they say that
is, "I've caught you," right?
Yeah.
You know, "Ed said use A.
You said use B. Ah, I've
caught you guys." Uh-huh.
Yeah.
And, and I was like, "That's a
feature, not a bug, man," right?
Yeah.
I was like, if you're gonna
be in this business, you have
to be able to hear different
perspectives, and it's your job
to synthesize those perspectives
and determine which you wanna
use, A, B, or a combination.
So Will, right before the
podcast today, I was on
office hours, and during that
office hours, this came up.
Now, this founder was actually
very, very aware and enlightened
about why this was so valuable.
Yeah.
It was actually all three of us.
So this individual has talked to
you, me, and Ed- Oh, wow … and
came back and said, "So you
guys all had very different
opinions about a couple
different things in the deck,
and that's been really helpful.
It's been really valuable to
have that perspective." And
I was like, "Oh, thank God.
Thank God you see and
hear this," right?
Because here's the reality.
Imagine you present it to
the three of us, and you get
three different opinions.
Do you think somehow we're
special or different?
Do you think if you show
it to 15 investors that
somehow investors are all
homogenous people- Yeah.
just because they wear
the same- Just one answer
… damn Patagonia vest?
They don't all have the
same, uh, opinions, right?
You're gonna get 15
different opinions.
Right, right.
That is the point in
all of this, right?
There's so much difference
in how it's going to be
approached, how it's gonna
be perceived based on what
their own experience is, based
on what their own bias is.
Yeah.
All of those things come
to the table every time.
Well,
let's- All right?
So you're gonna
get it in advice.
You're gonna get
it from investors.
You're gonna get it everywhere.
And- And as you said, it's
your job to weigh all of that
against your own compass-
Yes … and figure out what
the direction is, right?
And that's not us
soft-pedaling our advice.
It's not us saying, "Well,
you gotta go figure it
out." That is the job.
Yeah.
That is the job.
And when I deliver that, you
know, little PSA that, you
know, our job is to provide
perspectives, your job is to
choose one, I'm 100% sure in
almost every case it's the first
time someone has told a founder
that they have that ownership.
Right
Right?
Like, and again, I wanna
bring this back to advising.
Part of advising is having the
self-awareness of knowing that
your words carry weight, okay?
Another part of it is
knowing that your perspective
is a perspective, right?
And if there's another
perspective, your job isn't
to stamp that perspective out.
Now, you can argue your case.
That's just normal, right?
But what happens is the
advisor hears a counter-advice
they've gotten elsewhere,
and their immediate feedback,
'cause this is human, right?
Is, "Well, here's why they're
so wrong." Okay, but that's not
the same as saying, "There might
be some merit to what they had
to say, but here's the merit
to what I have to say," right?
Yeah.
You decide.
Because a bad advisor is
not okay with being wrong.
Not that you're
trying to be wrong.
Right.
But when you find out
that, like, you know, maybe
you are, quote, right,
but someone went another
direction, you get offended.
Yeah.
No,
that's, that was the one- That's
just straight-up ego.
Yeah.
Yeah.
Right?
It's, it's hard to watch, right?
I see it in board interactions-
Oh, yeah … 'cause what ends
up happening is an advisor wants
to believe, you know, a board
member wants to believe that
the value of their direction
is so strong that you will just
take it at face value, and by
way of that, you're validating
the person giving it, right?
Yeah.
So if, if I'm on your board
and I say, "We should go with,
with product A," and you're
like, "Well, if you said
product A, it's product A," I
feel like my value has been,
you know, rewarded, right?
If you say, "Okay, I heard
product A, but I'm going with
product B," my ego says, "Well,
that hurts my ego," right?
And so I'm gonna argue,
uh, more heavily.
And again, it's not that,
that you wouldn't want
me to have conviction.
What you don't want is the
advisor that just can't stand
being wrong, or a coworker or a
spouse or, you know, whatever.
Like, just- Anybody … that
just wants to be right so badly.
Who loves to sit
next to a narcissist?
No one.
Puts the advisor in a power
position that I don't think,
like I said, I don't think a
lot of advisors understand the
weight of that power, right?
Yeah.
And part of this, you know,
part of this for the advisor
is being able to look inward.
The caption here is how to
be a terrible advisor, right?
Yeah.
A great way to be a
terrible advisor is not to
recognize your own bias.
Your own bias.
Yeah.
Right?
And your bias is a composite
of your life experiences, what
worked, what didn't work, right?
You know, your personal
interactions with people.
So for example, if you've
raised capital three
times, and every single
time you've raised capital
it's gone horribly, right?
You had, like, blowups with
your investors, like, you know,
your co-founder had to split.
Like, it's just always gone bad.
Chances are your advice is
gonna be, "Don't raise capital."
Now, of course,
that's your bias, man.
The problem is when
you don't recognize it.
Here's one other example, and
we'll ki- unpack it a bit more.
But if I'm that pitch deck local
yokel, right, in Anytown, USA,
and I'm about to tell you what
the market is for investing in
your idea- Yeah … and I am
not connected to the national
investment circle, okay?
In other words, all
I do are local deals.
I'm part of an angel group.
I'm otherwise playing golf.
Yeah.
Right?
But holy shit, do I love
giving big opinions in my
Anytown, USA- Yeah … because
I, you know, I sold a bunch
of real estate 20 years ago.
And that's the bias, right?
Like, my bias is what I
happen to know in this
Anytown, USA, right?
Yeah.
I'm not on the
national stage, dude.
I'm not doing top
quartile deals, right?
Right.
So it doesn't even occur to
me that maybe I'm not the best
person to provide this feedback.
It actually, my bias
goes totally lost.
Yeah.
The bias comes in, and, like,
you wanna make that advisor
even a little bit worse?
Now have them, instead of
grading it on the quality of the
advice and whether it actually
drives an outcome or not.
Again, I wanna, I wanna get
your opinion on this in a
second, because consequence
is something I think we need
to bring into this discussion.
But bad advisors will then
make, make the bad advisor
even worse because they
start to grade themselves
on your obedience, right?
That's fair, yeah.
Did the founder do what
I told them to do, right?
Yeah.
That's what… Because you
said, like, you know, well,
I guess it's path A. We're
gonna go path A, right?
Yeah.
Then they grade that as that
was well-delivered advice.
Yep.
Why?
Because they did what I said.
Yep.
Did it work?
Who cares?
Second order
problem.
And, and part of
that is because there rarely is
there any consequence, right?
Correct.
Right.
They don't own the consequence,
and so I think this is where,
like, watching people with
really strongly held opinions,
it's easy to have a strongly
held opinion when you're
not the one who has to live
through the outcome of that
opinion being applied, right?
Right,
right.
Founders sure as shit do, right?
If we pick path A, and path
A is an absolute train wreck,
we're the ones who have to pick
up the train cars afterwards.
The advisor, the investor,
whoever it was that gave that
advice doesn't necessarily have,
in some cases, even awareness
of what happened, right?
It depends on how they're
attached, because not
all startup advisors
are, like, permanently
attached to the company.
Right.
Right?
They're just people
who are giving advice.
Right.
And it's crazy dangerous.
I've always said this about
people who are critics,
and I said it's the
easiest job in the world.
Yeah.
Because if you're wrong,
it doesn't matter because,
you know, I was proven,
I, I guess I was wrong.
But if you're right, you will
never shut up about it, right?
So in other words, if you're a
critic of Uber- Yeah … back
in the day, okay, here's
what you would've said.
You'd have said, "This
company is just totally
underwritten by VC.
It has no real business model.
It's absolutely
gonna fail." Yeah.
And no lack of people held
sa- said opinion, okay?
And there was a bunch of
data at the time that kind
of looked like it might
be pointing that way.
Mm-hmm.
Now, Uber ends up going on,
have a wildly successful
IPO and building really
a great company, okay?
Here's what's not happening.
None of those critics are
writing this tell-all blog
post about how wrong they were.
But I guarantee if Uber
had tanked, it'd be the
first post they write.
Oh, yeah.
Yeah.
They'd have written
three of them.
Revisiting my opinion from
15 years ago- Never shop
by- … when I was still right
the only investor that I've
ever seen do this absolutely
beautifully, and I've
mentioned this once before,
is Bessemer Venture Partners.
Bessemer, on their site,
has something called
the anti-portfolio.
I know.
And I thought it was
one of the greatest-
It's beautiful
…
lessons in humility And it
basically said, "Here's all the
people that have been through
our doors that we passed on,"
and it's like Apple and, you
know, you know all these places.
So just to be clear, we say no
to great companies too, right?
Like-
Yeah.
It's such a nice message.
I mean, it's a beautiful
exercise in humility, but it's
also, it's also a wonderful
message to all the founders that
they said no to, which is like,
"This isn't a qualitative call
about- Yeah … your company."
Yep,
yep.
"This is about whether we were
willing to put money into it
at the time based on everything
else that was going on," right?
"It's not about you,
it's about our decision."
And by the way, you know,
when you look at something
like Uber, uh, when they were
raising, everything about
that, or Airbnb was in the same
category, everything about that
deal looked horrible, right?
Just the liability- Yeah
… around that, like the risk
and everything else like that,
I would have never invested.
And I'm also not an investor,
so like, but this is why.
Because you can look at
something one of two ways.
You can be the optimist
and say, "Well, anything
can work, you know, with,
with enough something."
Yeah.
And the other is, "Everything
sucks, everything's hard,
nothing's proven." Well,
that's fundamentally true too.
And so most people said
no to Travis and Garrett,
you know, when they were
raising for Uber, right?
Most people said no.
Yeah.
And frankly, they would
have had, you know, the,
again, this is their
advice, uh, their opinion.
They would have had a
very strong argument, but
it didn't make it true.
It didn't make it true, dude.
Sure didn't.
And so if we're to kind of zoom
out a bit, I think you touched
on this a moment ago, you've
got this great responsibility.
Super.
Where you're in a position,
whether you're an investor,
a startup advisor, you
know, whatever you are, to
all of these people you're
about to give advice to.
If you don't recognize the
gravity of that responsibility,
you said it a moment ago, like,
and I want to unpack this a
little bit, the consequence.
You ruin everything they
could have been, which for
a startup is everything.
Yeah.
And I think they
don't realize that.
Again, it's, it's a
self-awareness thing.
And if you are aware of
that, you will likely
speak differently, right?
If you think-
Yeah
…
okay, off the cuff, what will
make me sound smart right now?
What do I think I know?
What can I tell them?
Without considering, and what
will they go do with this?
What are the
potential downsides?
Like, like, I talked about a
certification at the beginning,
but at least I think as a
startup advisor, and I know, I
know you adhere to this, it's
the Hippocratic oath, right?
It's first do no harm.
Do no harm.
Right?
Is there anything I can
say in here that might
mislead this person, that
might cause them harm?
And if there is, then I need
to be very, very careful
where I tread with this.
Because you and I do have a
consequence to this, and I think
that's part of what makes us
amazing at this, is because we
do have consequence to this.
Yep.
This is not just something
that we do randomly when called
upon at a startup meetup.
This is what you and I do
day in, day out, right?
Right.
So we are taking some time to
roast our own profession today
because we take it so seriously,
because there are consequences.
When there is no direct
consequence, it's really easy to
just say, "Well, here's what I
think," without couching it as,
"Here's what I think," right?
Right.
You present it as, "Here's
what I know. Here's what
you should do, and there's
probably a consequence if
you don't do what I said."
Yeah.
Because i- in the same way that,
you know, you were saying that,
you know, a lot of, you know,
these, the critics don't go
back and, and analyze or agonize
over when they were wrong.
Do you know who does?
Every startup founder
who's heard a piece of
advice they didn't act
on that they should have-
Yep … or acted on something
that they shouldn't have-
Yes
…
every single one of them,
and they go, "Oh, man." And
that leads to even biased
action because then they're
like, "Okay, the next time
somebody tells me what I
should do, I should do it."
In my very first VC pitch,
I'm 19 years old, right?
I didn't even know what VC was.
I actually- Yeah, I was
gonna say … didn't
know what room I was in.
This is how green I was, right?
But there- Yeah … just
happened to be this kind of
family office-ish VC that was in
Columbus, Ohio in 1994, right?
Which is hard to believe, right?
And they weren't really
doing tech deals, 'cause
tech deals weren't a
thing yet, so to speak.
They were doing, like,
manufacturing deals, right?
So think of, like, family
office, quasi private
equity kind of masquerading
as, as venture capital.
But I'm in the meeting, and this
senior guy is, he's this really
smart, very well-educated,
very smarmy, and, and when I
say, he's a friend of mine,
so be careful when I say this.
Smarmy in that, like, I
know so much more than you
do, and I can't wait to
share it with you, right?
Uh-huh.
And he roasts me.
Absolutely ro- And it, it's
like he was enjoying it.
I think maybe he was.
He and I- Yeah … again,
became good friends
l- later on in life.
We even actually looked at, uh,
co-founding a company together.
But at the time, I'm
this 19-year-old,
pimply-faced dork, right?
Getting roasted by this
MBA/law degree guy, right?
Yeah, yeah.
On behalf of the VC.
And in the end, all of the
prognostication that he had for
my business was patently wrong.
Like at every level.
Uh-huh.
Every single thing-
Yeah … he said was wrong.
He's just standing
there guessing.
Yep.
Yeah.
And I walked away from that
meeting being like, "Maybe
I shouldn't be doing this."
That would go on, you know,
to be a company doing over
700 million in revenue, right?
Like, like, think of
the weight of that-
Yeah
…
feedback, dude.
Good thing you were a bad
listener that day, huh?
We, uh, the s- story
of my life, right?
I think when we talk about this,
you know, with great advice
comes great responsibility,
like, you know, the
Spider-Man quote, so to speak.
I think for a lot of advisors,
and I'm speaking to the
advisors now, not the founders.
For a lot of advisors,
you gotta step back, man.
You gotta step back, and
you gotta realize that
being able to give people
advice is a privilege.
I know it sounds like-
Yeah … it's their
privilege to hear you.
But giving it, having, you
know, earned that experience
and having an audience
that's willing to take
your advice is a privilege.
And it's something-
Yeah … that you have to
take with a lot of weight.
You have to take it
with a lot of humility.
Advice with humility is
the best possible advice.
Advice with optionality, you'll
say, "You know, here's what
I would suggest, but I wanna,
you know, just double-click
on the fact that it's your
decision, not mine. I'm here
to inform a decision. You're
here to make one." So I think
for all the advisors out
there, please, by all means,
keep giving that advice.
But when you do, just once,
look in the mirror and say to
yourself- I'm gonna give this
advice with absolute humility.
I'm gonna preface that maybe
I could be wrong, as much
as that's gonna hurt me, and
deliver that advice in the
most honest way you've ever
done in your entire life.
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