June 18, 2007

Why it's strongly advisable to have advisors - by Sanjay Anandaram

Over the past several weeks, I’ve met several entrepreneurs. Some young and others experienced. Some have boot-strapped their ventures, others have secured some financing from friends and angel investors. All of them have a dream and the desire to succeed but only very few will. Usually, those that don’t succeed realise that they’ve been chasing the wrong opportunity with the wrong business model and wrong team much much later in the game, if at all. What if they had been made aware of the pitfalls and dangers early on and been prepared to deal with them? What if they had had the benefit of experienced counsel from mentors and advisors? While having mentors and advisors is in itself no guarantee of success, having the right mentors can often times reduce the agony of late unhappy realizations of the state of the business.

What was interesting to me about the entrepreneurial teams I met was the absence of any advisors/mentors who were either directly or indirectly involved. If one looks at entrepreneurs say, in the US, more often than not, entrepreneurial teams have advisors and mentors working closely with them. In many cases, angel investors double up as advisors.

Why are Indian entrepreneurs shy about involving advisors? While the entrepreneurial eco-system here is not as mature as in the US and the culture of mentoring isn’t as widely prevalent, the fact remains that most entrepreneurs are hesitant to have advisors. Some of the hesitation can be attributed to lack of awareness and shyness. The larger reason and more serious reason is due to fear, anxiety, and arrogance. Fear about losing control and influence. Fear of sharing company information with a “third party”. Fear of having to share the pie. Arrogance about knowing it all.

While no man is an island it is even more true that no startup can be built in isolation. The importance of building bridges and relationships cannot be over-stated. The importance of sounding out business strategies, feedback on technology direction, dealing with issues relating to employees, sales & marketing, customers introductions, partnerships and so on with someone who’s experienced can be critical. It is worth considering the setting up of an advisory board consisting of people who bring a diverse set of complementary competencies to the table and who can provide credibility and legitimacy to the fledgling company. There are two types of advisors worth considering: (a) a big name brand individual with an acknowledged set of achievements & expertise and (b) an executive who might not be personally well known but by virture of his/her position in the corporate world can positively impact the startup. Advisory boards are also usually compensated in stock or a combination of cash and stock. These advisors can help you tremendously; so spend quality time in creating the advisory board. Engaging with your advisors and mentors on a regular basis, providing updates, seeking and receiving feedback can prove to be invaluable. Having a shoulder to cry and lean on in times of trouble can be uplifting. Being spoken to directly about the dangers ahead can be critical for success. For this to happen, inhibitions need to be shed; fear and anxiety need to be replaced by confidence, humility and a willingness to learn.

Of late, industry, entrepreneurial and academic groups (including Nasscom and TiE) have started mentoring programmes for entrepreneurs. These programmes are becoming popular but still have a way to go before they become mainstream and become acceptable to all entrepreneurs. In addition, there is a growing number of successful entrepreneurs and corporate executives who can be tapped as mentors and advisors. The benefits of such associations can be enormous and can take the company on another trajectory altogether. While there are issues of the tactical “here and now” that need resolution, it is very important to also build the foundations for what could be a big company. At the same time, being aware of the risks and issues of pursuing one path over another can save many sleepless nights.

Paraphrasing a line from an ad for a popular chewing gum, “Mento(r)s dimaag ki batti jala de!”.

What do you think?

Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.