Most founders assume that it’s stuff that you don’t know that will hurt you. But things you don’t know – like if you should file a patent on your invention or trademark your product, can be easily answered by others. That’s why an army of lawyers, accountants, tax experts, and consultants swarm around founders and are paid a lot of money to tell them what they don’t know but need to know.
But how in the world are you supposed to find out what you don’t know that you don’t know? That’s where mentors come in. Why in the world for example would a typical founder know what an 83B election is? I just ran into a situation where an entire founding team neglected to file 83Bs when they should have, which will come back to bite them in the future. I won’t get into the tax ramifications of 83B here, that’s what the link to Cooley’s site is for, but it’s a good example of stuff that you don’t know that you don’t know.
There are dozens of other similar issues including exactly what questions you may or may not ask job applicants.
Mentors have been there, done that. They’ve made their share of mistakes, or in my case, far more than my fair share. As mentors we know you will make mistakes, but our job is to ensure you don’t make the same ones we did. Be creative!
So that’s why it’s so important to get a mentor or mentors as soon as you plan your venture, so whether it’s protecting your IP, improving your tax position in years to come, avoiding law suits from candidates you turn down or staff you let go, you get early warning. In the days of the Cold War there was something called the Distant Early Warning System or DEW line for short. It was set up to detect incoming Soviet bombers during the Cold War, and provide early warning of any sea-and-land invasion. Think of your mentors and advisors as your DEW line.
Once you have legal and accounting firms that represent the company they will act as your DEW line for many issues. But there will be others that fall outside of their expertise. That’s where both familiarity with your venture’s domain, say mobile software applications development, is important as is diversity of experience of advisors, from technical experts to financial, sales, and marketing experts.
Obviously it’s time consuming and quite difficult for a very early stage company to have a full advisory board as DEW line, so in the mean time you may want to rely on generalist mentors like myself who have founded several companies, advised many, many others and have a good sense of the typical things founders don’t know they don’t know. Decades after I first learned about the danger of the things you don’t know you don’t know our former Secretary of Defense, Donald Rumsfeld was quoted in a similar vein:
There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.
What’s not included in his quote is that it’s the unknown unknowns that will bite you. I don’t know if Mr. Rumsfeld is doing any mentoring of startups these days, but make sure whomever you get as a mentor is familiar with the insidious trap of the “unknown unknowns.”