I had a stimulating conversation yesterday with Richard Banfield, CEO of Fresh Tilled Soil., a premier Boston area design firm. The first thing Richard said was, “don’t pay any attention to anything I say after I give you referrals to two corporate incubators. You can use my name when contacting them or I’ll make introductions. He then proceeded to look up the names and send me an email with their contact info in mere moments. I like people who not only do what they say they will do, but do it very quickly!
We then proceeded into a lengthy dialog about his taxonomy of outside contributors to startups. We agreed to disagree on his definitions. I’m going to proceed with my definitions, but I want to thank Richard for taking the time to talk with me and give me detailed feedback on our business concept of improving the results of corporate incubators by providing mentoring service. Long story short, Richard agreed with the problem, but not with our solution. Sorry for not taking your advice Richard to ignore everything you told me after the names of the incubator contacts!
Every startup needs varying types of outside advice, counsel, and even work done by people outside the company, depending on the startup’s stage in life.
Mentors are experienced and trusted advisors who often belong to mentoring organizations and do pro bono mentoring for academic and social benefit entrepreneurs.The MIT Venture Mentoring service is now 16 years old and is one of the most successful mentoring organizations of its type in the company. Mentors almost always have experience starting and running startup companies. Virtually all are successful entrepreneurs. Mentors may also be senior staff in a company who see it as part of their responsibility to help develop the company’s talent by mentoring.
In Richard’s definition, coaches help the startup achieve a specific outcome. They may work one to one, such as executive coaches often do with CEOs or one to many. Coaches get paid market rate for their assignment. Their role is similar to sports coach, but they don’t often have a continuing role with the company. See my post about the difference between coaches and mentors.
Unlike mentors, advisors aren’t necessarily former or current entrepreneurs. Rather they have specific domain expertise relevant to the company’s mission, such as deep knowledge and experience building supply chains for perishable products. Advisors often belong to a company’s strategic advisory board and are compensated in several ways: they get a ringside seat at the creation and growth of a startup; they get to work with fellow advisors and senior staff of the company which is both fun and intellectually stimulating; they build their personal brand, increase their network of contacts, and generally they receive stock options in the company. Look for a future post on advisory boards.
Professional Service Firms
Every startup at some point needs a law firm, accounting firm and perhaps other professional service firms, such as investment bankers. These firms perform specific assignments, such as incorporating the startup, setting up its books, helping to acquire another company, etc. They are usually paid market rate, but may offer discounts to a startup in the hope they’ll get future business. In some cases they will defer their fees until the startup completes a funding round. Many professional service firms, such as the law firms and accounting firms, have special programs tailored specifically for startups. These programs are worth searching out and evaluating.
Consultants have deep and specific expertise. That expertise may be technical, scientific, financial, design or any type of expertise that the startup either lacks or needs to bring more firepower to. Consultants may have short term or long term relationships with the firm and generally are paid market rate. Occasionally individual consultants end up as employees because they fit so well with the company, which is win win situation.
Contractors for startups are a hot topic these days, as they tend to perform very similar tasks to employees, but do not receive any company benefits. Each state has its own definition of contractor, which makes it difficult for a company like Uber, which employs thousands of contractors across the country (and the world). You may need advice from your legal firm before you start hiring contractors. Generally contractors are paid by the hour, or the day and may have long term relationships with the company. Companies like to use contractors because they are less expensive – no costly benefit plans – and terminating a contractor is far less messy than terminating an employee. Contractors tend to like the flexibility of hours and the ability to work from home or their own office.
This role is courtesy of Richard Banfield and I agree with him on this one. Richard advises startups to have two role models: one living, one dead. We didn’t get into why he recommends this specific arrangement, but one advantage of a dead role model is you won’t get to know them and discover their feet of clay. I think Steve Jobs served as a role model for many CEOs, though only a few ever worked with him and saw the “dark side” of his personality.
Finding role models might be a good team exercise in company values clarification. Give it a try.