A Founder’s Guide To Taking Advice

by James Currier (@James Currier). James is a Managing Partner at NFX, a seed-stage venture firm headquartered in San Francisco.

Founder's Guide to Taking Advice

As Founders, we get a lot of advice… from a lot of people.

Investors, advisors, customers, employees, roommates, parents of college buddies…everyone has an opinion. Some of it is highly valuable. Most of it is not.

And that’s the challenge with advice: high variability of value combined with high volume.

Several gems of advice I received as a CEO honestly transformed the five companies I ran. They were “company-making” insights, and I couldn’t be more grateful. I also know I’ve spent 100’s of hours listening to advice that I had to ignore or risk being derailed.

Here are four key areas to navigating advice:

1) First, choose carefully who is in the network of people giving you advice.
2) Second, manage the psychology of advice — both your psychology and that of the advice givers.
3) Third, differentiate the types of decisions you are trying to make when getting advice.
4) Fourth, learn judgment about good advice vs bad advice.

Herodotus noted that understanding what advice to take is like well reasoned thought. He wrote,

“To think well and to consent to obey someone giving good advice are the same thing.”

-Herodotus

 

1. The Network of People Giving You Advice

Your network determines the quality of advice you receive. Many founders fail to realize it. You are only as good as the 5 people you spend the most time with.

Your advice network can be an unfair advantage. Cultivate it properly. You need to be brutal. Judge the quality of your surrounding network nodes and assess whether you should take advice from them. Ideally, you should bias towards taking advice from the higher quality nodes in your network—the people who have more experience and have closer proximity to the outcomes you are chasing.

Assess your network of advisors compared to the best in the business. Your advisor network is probably not in the 90th percentile.

After you recognize this, think about your network. What types of people would you like to add? Make a list. How do you get them?

Asking for advice or investment is the most direct way to recruit a new advisor into the fold. But three things to notice:

First, your goal should be to establish a real connection with the person. You want to like and trust each other.

Second, the best advisors are busy and selective, so you have to do the work to be more attractive than other founders requesting their advice. You have to research what will make them interested in you and your company. Don’t expect the best to come running. In fact, if they come running, they aren’t likely the best.

Third, if you want investment, don’t start by asking for advice, or vice versa. If you want investment, just say that up front. Getting hijacked in a meeting you thought was for advice but is really for investment is not a good way to establish a real connection.

There’s a lot of advice being given all over the world to startups. Most of it isn’t good. Because clusters of startup excellence tend to be highly concentrated in a handful of geographic areas. If you are outside of those areas your advisor network is probably not as high quality as you may need it to be. You will need to overcompensate with extra effort and travel to make sure that you have a solid advice network. If you’re truly ambitious, a relocation could be the most important thing you do in your career as it reconstitutes your advice network.

Type of Advisors in Your Network

Mapping Out Your Advice Network

We created a worksheet to help you map out your network of advisors. The best Founders intentionally build their advice networks, making it an unfair advantage for them and their company.

As you continue, reference the worksheet and map out your network of advisors. We’ve prepared the worksheet in Google Docs, Notion, and Evernote. Enter your email below and you can select whatever source works best for you.

The Center Point: You

Don’t forget, people believe in you. You have an inner compass, a center, an instinct that needs to guide you. Your company is a unique piece of art. Only you could build your company at this time, in this way. You are your number one advisor. Take your own advice first.

Ring 1: Inner Circle Advisors

The first layer outside of you is your Inner Circle. These are individuals who have equity, and they are the first calls you make when seeking advice. They are high frequency and long term. You should like, be comfortable with, and trust each of them.

This is why you should never take capital from a VC you don’t feel comfortable with. It will make your life miserable and reduce the probability of a significant success. A VC who is tough on you is a good thing as long as you are comfortable with them and like them.

I can’t emphasize how much you need to do your due diligence on investors. During the fundraising process, when the pressure is on — to raise the money quickly, to raise at the highest valuation, to raise from the strongest brand, to keep the company growing at a fast pace —this is exactly the time to call CEOs who have worked with your prospective VC before and find out what they are really like. Do this before you marry the VC for seven to ten years.

Note that the members of your inner circle don’t need to trust each other. In fact, frequently they don’t like each other. That’s fine. They have strong opinions and those opinions will differ. They will have different incentives, and different types of stock. But they do need to respect each other. You will take the best advice from each of them and synthesize it.

From this inner circle, bad advice is worse than no advice. A bad advisor wastes your time and crowds out other more productive activities.

So how to know good advisors from bad? The best advisors share a few key criteria. They usually are:

  • Successful former CEOs, founders and executives.
  • Other CEOs say, “They were the best advisor I had.”
  • Natural teachers who are good at explaining.
  • Humble.
  • Possess a superior network of other top people.
  • Have domain knowledge related to your business.

If you find yourself wondering whether the advisor is actually worth talking to, then you have your answer. They are not. Move on. Once you are sure you have a rockstar advisor— the kind with 10x ideas — compensate them generously. Their advice can make your company. You want their engagement.

Ring 2: Quarterly Advisors

The next tier is typically about 6 advisors you speak to approximately every quarter. These are typically other CEOs, sector experts, or personal mentors. More frequent conversations mean you are spending too much time with them. Less frequent conversations mean they don’t know enough of the context to be helpful.

Ring 3: Infrequent Advisors

These are typically 15 people you see in your orbit that you can go to for specific advice. For instance, on sales team compensation, running a reduction in force, viral engineering, traffic buying, onboarding funnel design, etc.

Edge Nodes

Sometimes the best advice comes from people you may not know all that well. They might not be who you are expecting to hear something smart from. Separating your feelings about the messenger from the substance of the advice is a good practice with edge nodes. It opens you up to hearing something important. These people can also open you up to new networks of customers or investors. If one of them proves to be a gem, you can refresh your inner circle of more frequent advisors.

2. The Psychology of Advice

Your Psychology in Receiving Advice

Picking through the flow of advice to find the gems — and then gathering the strength to act on those gems —is mostly about your psychology. That’s why understanding your own psychology about receiving advice is something to be learned and practiced.

First, note that you, your team, and your board will tend to favor certain types of advice. You need to counterbalance these biases when listening to, and judging, advice. You will favor advice that:

1. Confirms your prior beliefs — aka: “confirmation bias”.
2. Feeds your ego – e.g. Raise more money. Announce on stage or TV. Get the beautiful office.
3. Helps delay difficult conversations and loss of faith. It’s emotionally easier to continue on as things are and not admit things that aren’t positive.
4. Is more recent. We all tend to more readily remember new information and discount old. This is also known as “recency bias.”
5. Advice that came in first. The order in which you receive advice affects your thinking. This is also known as “anchoring”.
6. Comes from a person that you or your team favors.
7. Comes in a personal style you favor.

We all have many cognitive biases. Nobel Prize-Winning sociologist Daniel Kahneman’s iconic book “Thinking Fast, Thinking Slow” is a great read on this subject.

Paralysis

One of the best pieces of advice about advice I received came from Dennis Hightower, the former head of Disney International. “There are 13 ways of doing anything, and 11 of them will work. Just pick one and do it,” he told me. In other words, there is not usually only one right choice. So most of the time, making a decision quickly and moving forward is the best way to take advice. Don’t worry about finding the one true path because often there may be many paths that lead to success. Don’t get caught in advice paralysis.

“There are 13 ways of doing anything, and 11 of them will work. Just pick one and do it.” - Dennis Hightower

Advice that goes counter to your psychology, core values, and company DNA is probably bad advice. For example, if an advisor tells you to adopt a confrontational marketing strategy that publicly trashes your competition but your internal culture and brand image is more collaborative and considered, this will create uncomfortable dissonance that will hinder execution. Don’t go against your psychology and culture.

Actively seek out negative advice. This is psychologically and emotionally hard to do. Critical advice is the hardest advice to accept. We all want to think we are pretty good at what we do. Solicit from each advisor in private what you could do better. When people are willing to shred your plans and explain why, this shows two things: they want to be truthful and they are not afraid to speak their minds. Advisors who do this well are gold.

You are going to like some of your advisors more, and will weigh their advice more heavily. This is appropriate and effective. Just be aware you’re doing it, acknowledge them for it, and manage the psychology of other advisors who might feel disappointed or threatened that they aren’t the chosen advisors.

Advisors’ Psychology Around Giving Advice

I would say, in over 90% of the cases, the advice giver genuinely wants to help. Despite their good intentions, the advice giver also struggles with cognitive biases:

1. Projecting their own experiences on you. Nearly all of us look at our own experience and think “This is how it is.” rather than “This is what happened to me.”
2. Projecting their own personality on you. Most people think you should react in the same way they would.
3. Projecting their own situation. People with more capital, influence, or employees than you have learned to move through life very differently. They now have a hard time remembering what the world looks like from your vantage point. In other words, what works at Series C might not work at seed, and vice versa.
4. Projecting their time into the present. What worked when they were operating, or when they made their 100X investment 12 years ago, might not work today. What worked in the Apple App Store 5 years ago is not the same as what works today.
5. Being overly protective. “I would be pissed off if I were you” and “You deserve better” are common comments intended to show support for you more than being good advice. Don’t confuse the two.
6. Group think. Advisor groups with homogeneous gender, race, age and political views lead to reinforcing thinking.
7. Difficulty empathizing. If they are giving you advice about something related to your customer, team, or investors, they might not be able to put themselves in the shoes of those people.

Because advice giving and receiving is a game with many turns over time, there are relationship consequences for soliciting or not soliciting advice, and for following or not following advice.

For instance, consistently ignoring advice from your co-founder or lead investor might strain your relationships. The most common reason for startup failure is founder breakup over strategic direction. You should weigh the overall value of the person in your network and include that weight in your decision. Sometimes it’s better to try a quick experiment in their direction and maintain the relationship, even if you dislike the advice. If they are right, acknowledge their contribution and admit they were right. You have to think about their psychology over time.

Another example — 18 months after you didn’t follow someone’s advice, you might hear them voice something that essentially says, “You didn’t follow my advice? Well, no wonder it went badly.” This advisor/investor/co-founder has now lost faith in you and might withdraw support. They might tell others, “They don’t have good judgment.” or “They don’t listen very well.” That starts to undermine your momentum. So keep the big picture in mind.

Also note that those giving you advice will often remember their advice differently than you remember it. A year or two later, they might remember that they always wanted you to do X, even though you remember them advocating for Y. Perhaps they are misremembering, and perhaps you didn’t hear what they thought they were saying. Either way, don’t be surprised when people disagree about what was advised in the past.

Everyone, including you, will typically remember themselves as the hero. My advice is to let it go, but keep a record in your mind in case there’s a bad pattern emerging of claiming credit or not remembering correctly.

When you are taking advice from multiple parties, someone’s advice will be ignored, and they might feel bad about it. This is part of being a founder and it’s inevitable. Everyone wants to be valued. Make sure you communicate clearly that even advice you ignore is helpful and that you hope they can continue to advise you.

3. What Types of Decisions Do You Need Advice For?

A. Smaller, Tactical Decisions

It can be remarkably efficient to ask a few domain experts for advice on smaller decisions. What CRM to use, what benefits platform is best for startups, and how to conduct a team offsite are all questions that a handful of discussions with domain experts would resolve.

Yes, you can search online. But often your network will give you better advice, faster. In these types of situations, listen closely and take their advice the vast majority of the time. Make these decisions quickly and move on.

Regardless, for these tactical decisions, be sure to include your team. They will have to live with your tactical decision on a daily basis. It’s easier for all of us to be committed when we feel we’ve been included in a decision.

Even better, delegate these decisions to people on your team and let them gather the advice and make the call.

B. Bigger Decisions

Big decisions can lead to advice paralysis as you check in with many people and spend too much time weighing the pros and cons. You can’t wait for perfect information.

Jeff Bezos says he divides decisions into two types: those with lower stakes that can be reversed and those that are mission-critical, bet-the-farm decisions that cannot easily be reversed.

For those irreversible decisions, taking advice is important. But a good rule of thumb is to still make the decision when you feel you have 70% of the information you need. This means that even on big decisions you need to be comfortable with uncertainty, right up until the decision is made.

4. What is Good Advice and What is Bad Advice?

What are the signs of golden nuggets of wizardry buried in the avalanche of inputs?

An Advice Matrix

Advice can be delivered either in a way that matches your communication style or rubs you the wrong way. It’s easy to listen closely to advice when the messenger speaks your language.

What’s harder to recognize is when good advice comes in a package you dislike.

Most dangerous of all is when bad advice comes in style that makes you want to believe it.

Bad advice vs good advice from your advisors

If All Your Advisors Are In Agreement, That’s a Strong Signal

Prediction markets are effective at foretelling the future because the wisdom of the crowd typically beats the views of one person. If all your advisors are in agreement on a matter, then there is a high likelihood that decision is the right one and you should play the odds. It may feel right to cling to your conviction and believe all your advisors are wrong. But the math is against you.

Assess the Second and Third-Order Impacts

Sometimes what may on the surface sound like good advice may reveal itself to be bad advice when you think about the second and third-order impacts. For example, a decision to roll out a new feature to appeal to a certain demographic might make perfect sense through the lens of immediate user acquisition, but that same feature might put you on the radar of bigger competitors, putting a target on your back. Always take advice and run it through your decision trees to see where it leads.

Cliched Advice is Lame. Cliched Advice is Right. Both Are True.

Often, advisors speak in clichés or maxims. You might roll your eyes, as shallow maxims don’t show a lot of original thought from an advisor. But don’t roll your eyes immediately. The funny thing is that clichés can actually be pretty good advice. That’s why they stick around long enough to be clichés.

The other thing to note is that every maxim has an equal and opposite maxim.

Haste makes waste vs She/He who hesitates is lost
Go big or go 扑克之星亚洲版home vs Live to fight another day

For instance “Stick to your guns,” could be great advice if you are trying to adhere to an arduous path of product transformation. “Know when to fold,” can be equally good advice if you have been on an arduous path of product transformation, are over budget, and the product is late with no end in sight.

When you hear a cliché, listen carefully. There’s a good chance the cliché is right.

It Starts With You

Building and learning how to operate your advice network will give you decision superpowers and an unfair advantage. Managing that network well creates a feedback loop that makes it stronger.

Never forget that you, the founding CEO, are the single greatest point of leverage in a company. So managing your own mind is a key part of your job description.

Because a significant part of your job is asking for, listening to, and processing advice, fine tuning your mental attack can transform your leadership in rather amazing ways.

The magic is that your brain plus your network is far greater than the sum of the parts.

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