Top Tips for Being an Awesome Mentor to Startup Entrepreneurs
By Laurie Stach
December 26, 2017
The Role of a Startup Mentor
Startup mentors provide:
- Strategic guidance – identifying and correcting gaps in a company’s direction and the team’s business knowledge and understanding.
- Perspective and engagement – providing a sounding board for reflection and learning. Push the team out of the building and into the marketplace, to aggressively validate assumptions.
- Reality and focus – counterbalancing an entrepreneurs’ cognitive biases. Ensure the team is not simply hearing what they want to hear from their research. Challenge them on the conclusions they’re drawing, and the assumptions they’re making.
Main Startup Challenges
The first step to being a great mentor is understanding the typical challenges that startups may face – problems that you probably faced yourself at some point. Here are some of the common issues we have found in working with our high school entrepreneur startups:
1) The Idea—
Teams become overly focused on a specific idea, often trying to force something trendy in technology like the “Uber for” or using drones, machine learning, or artificial intelligence. The application of one of these technologies can be extremely powerful, but only to the right customer need and use case. Teams that start too focused on the specifics of the idea can ignore feedback from the market either during the interview process or in user testing, then become overly dejected when things get too difficult, then want to throw out the idea entirely and start over.
How to overcome this challenge: ensure that teams start with their “why” – meaning that they are driving towards solving a problem that they have turned into a mission that guides their direction. This will allow the team the flexibility to adapt to feedback and adjust to the inevitable feedback throughout the entrepreneurial process. They can ask open-ended questions about frustrations during their market research, plus can ensure their user testing is objective-oriented towards meeting the vision versus just forcing a specific solution. In a first meeting with the team, dig deep into why the team wants to start a company and what matters to each person. You can bring the team back to these objectives when they get caught up in challenges throughout the process.
2) Staying on track—
When starting up it’s easy to get caught up in the excitement and neglect the bigger picture in favor of concentrating on unimportant details. Success takes time, and with a thousand things on the to-do list of any startup, it becomes easy to feel overwhelmed. Knowing how to prioritize, delegate, and work efficiently is vital.
How to overcome this challenge: Mentors can help entrepreneurs keep focus and make them aware of blind spots – that bit of distance makes a huge difference. Plus, you can help the team manage their time by encouraging them to prioritize, manage their time, and attend to tasks effectively and patiently. This can be done by having them develop a prioritized timeline of key milestones to review with you, and talk through the biggest potential challenges to meeting the planned timeline.
Many entrepreneurs want to jump straight to developing a refined prototype, thinking they need a fully-functional app or a beautiful product prototype from a 3D printer or other maker space technique. The desire to jump straight to this level of an offering is tempting and understandable – technology today makes it easier than ever to build something without the previous amount of intensive time investment. But it does still take a lot of time in planning and building, then can leave the team troubleshooting on the wrong challenges of the resulting offering, seeking to refine the interface or the flow of the app, or seeking to make the product angles more friendly, instead of ensuring the baseline functionality is prioritizing the customer needs.
How to overcome this challenge: Encourage teams to start with the lowest fidelity mock-up that they possibly can. Even if they are amazing in a makerspace or with coding, they should start simpler. Products can start with simple foam and clay mockups to see how people would actually interact with and relate to the product. Meanwhile, services that will ultimately require an app can start by manually connecting customers through email or a simple google form, learning countless lessons that can make the final development of the app much more efficient. And even when an app does need to be developed, a good first step can be to do a mockup in a service like Invisionapp, which allows the team to layout the screens and logical flow and let users test the logic and use before any coding, simplifying and minimizing the long hours of development. A bit of planning and testing will save tons of time in learning and iteration.
4) Marketing and Sales–
The hardest part of starting a company isn’t coming up with a great idea but in commercializing that idea. Some new entrepreneurs believe a great product will sell itself, or that a bit of social media or a website will be enough to get customer awareness and purchases. In reality, though, it takes a lot more hustle to have customers change their current behaviors and try something new.
How to overcome this challenge: You can help the team develop connections and relationships with potential partners and customers. Plus, encourage them to get out there and make connections of their own – going to networking events, trade shows, walking into restaurants if that is their customer or into daycares if they sell to parents – wherever they may be able to find potential customers to talk with. Help them come up with a big list and clear next steps of exact functions and dates that they’ll attend events. This is a huge mental barrier to overcome since it can be scary to put yourself and your company on the line, and the entrepreneur will put this off if they can, so help bring down the barriers and excuses for them to start getting in front of customers. Help them practice their elevator pitch, plus you can ask them some questions that they may get from customers, so that they feel ready and confident for what may come their way.
5) Financial Understanding and Management–
Another common challenge of startups is in understanding and managing their financials. Many new entrepreneurs believe they need a lot of startup capital, while having a poor understanding of the dynamics of pricing, margins, and volume.
How to overcome this challenge: The team doesn’t need to have a math whiz or to have built a beautiful excel proforma, but some simple early calculations can go a long way to ensuring there is a healthy foundation for potential value. Encourage the following:
- Do a lot with a little: most companies don’t require much to get started. The average investment of startups is $10k-30k (depending on the source), and that factors in all of those huge investment numbers you see in the media! This means that most companies require way less. Look back at the section on prototyping and marketing and encourage the team to be scrappy.
- Do some “back of the envelope” calculations:
Unit Economics: Have the team do some really rough unit economics.
Margin: From this, you’ll get an approximate margin per unit by subtracting the unit cost from the price.
Unit Costs: Then estimate the the BOM (bill of materials) and COCA (cost of customer acquisition).
Pricing: Refer to some of their customer research to get a rough idea of how much the customer may value an offering (start here before doing costs so that they aren’t biased by trying to do a cost-plus pricing model).
Breakeven: Next, have the team start to build some intuition about how the pricing and costs impacts how many customers they need to break even.
Development Costs: Have the team think through what costs they will incur at the outset of starting their business. This may include their prototyping, setting up manufacturing, setting up their business entity, etc. Ensure you push back on these costs – there will be areas that they overestimate based on the way media portrays it, though often areas that they underestimate such as marketing.
Volume: Given the margin and development costs, you can then have the team calculate the number of customers, or volume, it will take to breakeven. This is done simply by dividing the development costs by the unit margin. You can then encourage the team to think critically about how they can adjust numbers to require less customers to breakeven, thereby requiring less initial startup capital.
Tips to Be a Great Startup Mentor
Throughout the process, remember the old adage of “If you give a man a fish, he’ll eat for a day. But if you teach a man to fish, he’ll eat for a lifetime.”
In the context of being a great startup mentor, this means that you are invested in developing the entrepreneurs, not just the startup.
Teach, Don’t Tell:
- The role of a mentor is not to criticize a business model. You may want to say to the founders “That’s a terrible idea” or “That will never work.” You are probably right, but that’s not necessarily because you know best. If you predict failure, you’ll be right 9 out of 10 times. It’s the nature of startups.
- Your role is not to replace the founder’s business model assumptions and market guesses with your own. You, as a mentor, should teach the founders how to test and validate (or likely invalidate) their assumptions.
- Don’t just rehash experiences that have worked for you in the past. Each business scenario whether marketing, product development, customer value proposition and so forth is completely unique and needs to be analyzed for the context of its specific industry, customer, etc.
- Guide the team through questions and stories, not through giving answers. The Socratic approach allows you to ask thoughtful questions to let the team get to answers on their own, giving them ownership of the solution. The best learning is often through growing in skills and mindset, and not just through transfer of knowledge. Questions may take the form of asking about the decisions they have made through the simple yet powerful question of “why” or through specific questions that allow you to get to the root of their objectives and direction.
- Be a sounding board, allowing the team to talk through their decisions and challenges.
Focus Your Advice:
- Provide both high level strategic guidance and support with specifics of customer research approach and analysis, development of product mock-ups and user testing, commercialization tactics, and financials. Making connections can be helpful when teams need to do an interview with a specialist, or are finding potential partners, suppliers, or customers.
- Ask the team to articulate a clear objective for any particular mentoring session. This allows you to give more focused advice versus just vague, general advice. Have the team send you questions that they may have for you in advance of the meeting.
- When giving advice, try to avoid opening with saying “Have you ever thought of…” Sometimes this is appropriate to try and get founders to think about things in a new way, but more often than not, the conversation is being hijacked away from the objective.
- The best mentors have the ability to ‘score’ their confidence level of the advice they give. In other words, they will say something like, “Listen, I’m just shooting from the hip here, I don’t truly know, but I think…” or “I’m pretty confident about this, because…”
- Use the 10x rule – for each hour the team spends with you, they should be saving 10 hours. You can do this through making introductions or connections for the team, pointing them to resources, and improving their decision making efficiency.
- Help the team test what is known versus what is unknown. Many new entrepreneurs are coached to act as if they know it all. After all, the thinking goes, if you don’t know, you’re not really ready to launch the business. The difficulty in starting an innovative business, though, is that it will start with a lot of unknowns. Starting the company is essentially a process of focusing on executing what is known and learning what is unknown.
- Challenge the team’s thinking by pointing out their assumptions that need to be validated. It’s great that entrepreneurs are passionate about their product idea, but this conviction can blind them to harsh realizations. Help founders devise experiments, provide introductions to customers, or come up with other ways to learn what is unknown, such as looking for analogs in the marketplace. Force difficult realizations when needed, but also ensure that teams are not discouraged when things don’t go as they expect. Ensure they have a bigger vision and multiple options for how to problem solve towards the same goal, and don’t just throw away the entire idea or startup.