PodcastsThe Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch20Growth: Should Startups Hire Advisors? When is the Right Time? How Much Should They Be Paid? How Should Founders Approach the Hiring Process for Advisors? What Should They Expect From Them? What are the Biggest Mistakes Made and more with Ely Lerner

20Growth: Should Startups Hire Advisors? When is the Right Time? How Much Should They Be Paid? How Should Founders Approach the Hiring Process for Advisors? What Should They Expect From Them? What are the Biggest Mistakes Made and more with Ely Lerner
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The PitchTue Oct 24 2023
Growth Strategy:
- Founders should own the strategy for their primary growth lever and not delegate it.
- The strongest lever to drive high functioning engineering teams is engineering ownership of outcomes.
- Focus on offense and defense in product strategy, allocating resources accordingly.
- Offense strategies are targeted at pushing the business to the next level, while defense strategies protect against downside risk.
Advisors:
- There are three main types of advisors: company-level advisors, functional advisors, and domain-specific advisors.
- Company-level advisors provide guidance across the whole business and help with overall strategy.
- Functional advisors focus on specific areas like marketing or SEO and bridge the gap between execution and thought leadership.
- Domain-specific advisors have deep expertise in a particular area, such as international logistics or out-of-home advertising.
- Timing is important when engaging with different types of advisors. Founders should own the strategy initially but may benefit from functional or domain-specific advice later on.
Advisor Compensation:
- Advisor compensation typically includes a mix of cash and equity.
- The exact breakdown depends on factors like time commitment and stage of the company.
- Equity packages for advisory roles are usually scaled back versions of what would be offered to full-time hires.
Setting Up for Success:
- To set up for success with an advisor, founders should ensure they can pull levers related to data, customers, and shipping quickly to learn.
- Alignment around offensive and defensive bets can also contribute to success by providing focused teams working towards common goals.
Offensive Strategies:
- Offensive strategies should be focused on high-leverage opportunities that drive compounding returns over time.
- Companies should choose one or two core offensive bets rather than trying to do everything at once.
Activation:
- Activation is crucial for retention. It involves getting users to experience the core value of a product and build a habit around it.
- Mistakes in activation often stem from not understanding the ideal customer profile (ICP) and trying to convert users who are not a good fit for the product.
Horizontal Products:
- Horizontal products still have an ideal customer profile based on attributes rather than personas.
- The focus should be on addressing the acute problems shared by a core group of people across different verticals.
Advisor Relationships:
- Advisor relationships can end when either party feels they are no longer getting value from the relationship.
- It is important for founders to engage and commit to the advisor relationship for it to be successful.
Integration of Growth Teams:
- While there may be a need for separate growth teams in the early stages, the goal should be to integrate growth into all aspects of the business.
- Aligning org structures around offensive and defensive bets can help prioritize and focus resources effectively.
Activation Mistakes:
- Common mistakes in activation include not understanding the ICP, focusing on conversion instead of retention, and neglecting user education during onboarding.
Biggest Mistake in Product:
- A common mistake is being too focused on solutions (features) rather than outcomes. Product decisions should align with desired outcomes for customers and the business.
Growth tactics:
- The concept of growth hacks has died down in recent years. It's no longer about quick wins through shortcuts; instead, it's about finding leverage and exploiting it. Growth is more focused on sustainable strategies rather than temporary boosts.
- Some growth channels like push notifications may irritate people if they are oversaturated. However, they still have specific niches where they can work effectively. Understanding the target audience and using these channels strategically can yield positive results.
Founding team understanding growth mindset:
- Before starting a new role as a growth leader, it is crucial to assess whether the founding team understands and embraces the growth mindset. A growth-oriented culture starts from the top-down.
- If the top-level leadership doesn't understand or support growth-oriented strategies, it will be challenging for the growth leader to drive meaningful progress. Alignment within the organization is essential for successful growth initiatives.
Data for decision-making:
- Founders don't necessarily need clean and structured data before bringing in a growth hire. However, they should have some data available to iterate towards their learning objectives. This allows the growth team to make informed decisions based on insights.
- The ability to measure key metrics quickly is essential. Founders should be able to identify what data points are important and how to instrument them effectively. Having a solid foundation of data collection and analysis enables effective growth strategies.
Impressive company growth strategy:
- Network effects tend to be one of the most exciting company growth strategies. Marketplaces built around network effects have significant potential for success as they create value through increased participation.
- An example mentioned was Cashflow Portal, which aims to build an angel list for real estate investing by leveraging market shifts and potential network effects. This demonstrates the importance of identifying opportunities where technology or market changes enable new possibilities.