Beware Mentors Who Aren’t

Posted on July 23, 2011. Filed under: Advice, Mentor, Recruitment | Tags: , , , , , |

Have you ever sought a mentor to help you with your business? If so, you will have asked yourself how you find a good one.

Mentors can provide a lot of help but some can do a lot of damage. Just as there is a lot of damage that can be done if you get involved with the wrong investors.

Now it’s relatively easy to tell an angel by just asking questions about what investments they have made. But how do you verify a mentor? After all we can all claim to be mentors. Far fewer can claim and prove to be angel investors. An angel investment is not one unless it involves a concrete monetary transaction.

Anyway what defines a mentor-mentee transaction?

  • A conversation in a corridor?
  • An in-depth frank conversation between you and a critical friend?
  • A constructive exchange between a junior executive and experienced senior colleague?

It’s not so clear is it?  Mentoring is a fuzzy topic.

So how do you tell if somebody is going to be a good business mentor for you?

Here are some things you can do:

  1. Ask who they have mentored before? When was that? For how long did the relationship last?
  2. Ask for references and even better ask to speak with previous mentees
  3. You might also ask other mentors what they think your prospective mentor.

Now you can do that yourself but I am glad to say that a new organisation has recently been set-up that does that for you. The Association of Business Mentors does that for members before they join. Quite astonishingly no such organisation like this existed, in the UK, until now. So I am delighted that is no longer the case and I am flattered to have been asked to be an inaugural member.

More importantly the aim of this not-for-profit Association is to link you with credible, successful mentors so that business owners can feel confident when seeking a business mentor. All members of the association have been carefully screened, ensuring that you will receive a professional service and that your chosen mentor has a proven record of successful mentoring. All members are required to sign up to a code of ethics, are encouraged to undertake regular training and share best practice. The entire emphasis for members is on their client’s success.

This is a great service to our business community but it should not stop you from doing your own due diligence too. Nowadays it’s easy using LinkedIn and other online profiles. Remember too that gaps and non-disclosure on a LinkedIn profile can be as bad a sign as they are on a CV.

If the mentor is not on LinkedIn, or their profile is thin, then you have to question how much they can help you anyway. Embracing social media is nowadays, or soon wil be, vital for every business. Do you really want a mentor who does not get it?

Good mentors won’t feel you are bothering them if you ask them questions. Indeed they will be impressed with your professionalism.

So ask yourself questions like:

  • Does he listen? Or does he/she interrupt or talk over you? How much of the time does he/she spend talking and how much do you?
  • At what stage do they start asking about money?
  • Ask yourself if this person feels more like a consultant than a mentor.
  • Do you really think this person cares about you?
  • Do you trust this person?

Last but not least: Trust your gut instincts.

Do you have experiences of mentors you are willing to share here, for the benefit of other readers?

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If you want money, ask for advice

Posted on November 22, 2010. Filed under: Investors | Tags: , , , , , , , |

For the last 3 years I have been helping start-ups and early stage companies raise investment finance in the equity gap.

Having been through a successful trade exit (Century Dynamics, sold in 2005 to ANSYS (NASDAQ: ANSS)), I am often asked: “Why have you not made investments in the companies that your are helping?”. The short answer, for most cases, is that I cannot: As a Portfolio Director, with the Innovation & Growth Teams, I am paid to be a impartial supporter to companies and to sit on their side of the table.

Now, I have helped in my spare time, other entrepreneurs and companies who fall outside the remit of my day job with the Innovation & Growth Team which has a geographical boundary. So there is a longer answer and angel investing was something I considered. However back in 2006 my personal enquiries into angel investing led me to the apparent collective wisdom that:

  1. You need to make at least 10 investments to hedge your bets
  2. One should expect only one of those 10 investments to do very well and compensate for complete losses on 6 or more of the others
  3. Investing as part of a syndicate (group of angels) is likely to be more successful
  4. Only invest money which you would not lose sleep over losing

So on balance the priorities of investing in my young kids or making 10 investments and not worrying about losing all the money were clear.

More recent research in a report “Siding with the Angels” by NESTA backs up what I learnt a few years before: “In the UK, 9 per cent of the exits produced 80 per cent of the cash returned. In the US, 10 per cent of the exits produced 90 per cent of all the cash returned”. Other conclusions from that report are:

  • Angels with entrepreneurial expertise outperformed those without it, especially in earlier-stage opportunities
  • Those who invested in opportunities where they have specific industry expertise failed significantly less
  • Those who perform at least some due diligence, even just 20 hours, experienced fewer failed investments
  • Post investment some involvement with the venture was related to improved investment outcomes

Over time, I have come to regard the “collective wisdom” in numbered points 1 to 3 above as being rather pessimistic in outlook. Wise perhaps but it rather comes across to me as being all about risk management rather than opportunity creation. After all, there are other ways to balance your investment portfolio which I won’t go into here. Some other aspects of some angel investor behaviour also irritate me:

  • Lack of interest in meeting with the entrepreneurs face-to-face early on. Why assess a business plan when the business is run by people. Business models and plans can and do change. People don’t change much! If I want to hear about an investment proposition I would rather hear a pitch by a CEO than receive a business plan.
  • Lack of politeness: Many angels do not even bother to send any response to propositions unless they are interested and currently investing. Nobody is too busy to write a short email of response simply saying: “Thanks for sharing this short investment proposition with me. It’s not really for me this time but I wish you well in your efforts”. I can understand sending no response to unsolicited, dreadfully prepared and presented, propositions. But is this wise, on the part of the angel, to a well prepared solicited proposition?
  • Middle men: Those who will take an upfront fee to introduce you to their network of investors and then take a success fee (typically 5%) of the money raised. If you are good enough at this why do you need an upfront fee? Some of these people are great but many are a waste of space. I could do a whole rant on this topic alone but it’s been done by others notably Jason Calacanis here.

So what would interest me enough to invest? You may ask, and my answer is, in rough order of importance:

  1. A great CEO and/or founding team
  2. An idea , technology or business model with disruptive potential
  3. A business where I can contribute with much more than money
  4. A business that through success makes the world a better place
  5. A new interesting challenge where there is an opportunity to learn and grow

And, of course, since it’s an investment a big potential upside and good return.

Well after four years of mentoring entrepreneurs, working closely with around 100 early stage businesses and interacting with angel investors, I have now made an investment for an exceptional case.

Three months ago at a TWiST (This Week in Startups) London event I saw 4 great pitches by @Teamly, @opentwit, @campingninja and @Tripbod. You can read more about this great little event organised by all action Steve Schofield of  @Fidgetstick here.  The video for the winning pitch by Sally Broom, founder and CEO of Tripbod is here. To say, I was impressed would be an understatement and afterwards in conversation with Sally she enquired as to whether I was an investor and I replied that I wasn’t, explaining some of the reasons why. Shortly afterwards she asked me if I could provide some advice. Naturally, I was delighted to be of help to enthusiastic entrepreneur with a interesting business. In short, this led onto much interaction over several weeks. It was clear that advice and guidance was helpful to them but some financial support was required too. I really did want to help and by this time had got to know Sally and the business well. It just goes to show that the old adage “If you need money, ask for advice” does work!

This whole process has reinforced my contention that you should invest in people first. Sally has many great attributes but perhaps most of all she is relentlessly resourceful. The same  applies to her co-founder Liz.  So what is  Tripbod?

  • A Tripbod is a trusted local person, with local knowledge, who can help you plan your trip before you go
  • Tripbod provides on-line personalised bespoke trip planning across the globe
  • The one-to-one service includes unlimited on-line contact with your Tripbod through a private trip planning page and personal calendar before you go

Some of you may be wondering whether I have any relevant industry experience to contribute to Tripbod. Well, I don’t. I can certainly claim to have a lot of experience of international travel both as an independent tourist and businessman. However, no worries there, as I am being delighted to be joining as an investor and active board member with Martin Dunford, who was a co-founder of Rough Guides, and who stayed with them through acquisitions by Penguin and Pearson until last year.

No doubt, I’ll be blogging about progress with Tripbod in future posts, so I’ll leave it there. If you’ve read this far, thank you for your interest. We would love your feedback on what you think of Tripbod. Would you use it? Do you think a local travel expert can enhance your next trip? Let us know here.

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Companies, Stars and You can’t have it all

Posted on August 24, 2010. Filed under: Astronomy, Companies, Customers, Investors | Tags: , , , , , , |

CEOs, entrepreneurs & boards all struggle with how to satisfy 1) shareholders, 2) staff and 3) customers.

It’s hard to do that really well. Indeed most companies, with some lifespan, probably make a reasonable first of keeping two, of those three, stakeholders happy. Now I reckon striking a balance and keeping all three stakeholders happy, and importantly maintaining that balance, is nigh impossible.

I could bore you with a long post trying to prove this via examples.

Rather I’m going to can explain it conceptually, as a three-sided hill, looking like this from above.

 

Supernova remnant

 

Companies that gravitate to satisfying investors/shareholders and users/customers tend to expand (very fast in the case of VC fuelled growth), get well-known, achieve success for a (relatively) short while then, so often, fade from view: Let’s call them supernovae. Think MySpace or Boo.com, one of 10 failures you never heard of or forgot about. OK, the analogy is imperfect (supernovae are the death knell of stars) but you get the drift.

What about those companies that keep investors and founders happy but ignore customers? Well they end up building something customers don’t even want. Typically these companies develop a solution then go looking for a problem. There may be lots of energy, noise, activity and engineering going on in that company but nothing much comes out of it. A bit like a black hole really!

 

A star near us

 

Companies that look after their staff and customers well are more like stars: They often have a much longer life (like companies with a sustainable business) and have a more gradual start and end, when they burn out.

Indeed some stars turn into black holes and others get wiped about by supernovae.


You know it’s hard to keep a ball on top of a hill.

 

What do you think? Got some good examples? Perhaps you disagree with my broad thesis and can cite an example that disproves it.

Any comments are welcome. I don’t expect you, or anybody, to do so on this first substantive post, but go on surprise me.

Images sources: NASA and painting of Cerberus by William Blake


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    About

    I help entrepreneurs and small high growth potential companies in Sussex, Surrey, London & sometimes further afield. Flexible to your needs but typically help in raising investment finance and mentoring. Previously I was co-founder, CTO then CEO of a software company which we sold to a NASDAQ listed company

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