We’re coming upon the end of the year and a lot of people are planning to take the next steps toward starting a company. I can’t back that with statistics, but as a guy running a marketing agency, I’ve been having a lot of meetings with startup founders who would like help and advice. I rarely have a problem taking a little time to talk with someone about an idea, but there are a few pieces of etiquette you should adhere to when approaching any potential partners or advisors.
Don’t have an NDA waiting
Startups asking everyone they come in contact with to sign an NDA has been covered to excess, by everyone from VC’s to developers, but I’m going to say it again: DO. NOT. ASK. ANYONE. TO. SIGN. AN. NDA. BEFORE. YOU. MEET.
Non disclosure agreements have a time and a place. When you have money, trade secrets, or information that, if released, could reasonably cause your business harm, that makes sense. When your idea is barely past the scribbles on a napkin stage, it’s not time to ask everyone to sign an NDA.
If a company has revenue and legitimate trade secrets, I’ll sign. If you’re asking me to meet with you to talk about an idea that isn’t new, has no technology, no legal structure, no revenue and no ip other than a simple idea, I will not take the meeting unless your name is Prince.
To rephrase: Your concept for a search engine for real estate is not the time to ask someone to sign an NDA. I don’t want to rant about this further, because it’s been covered pretty extensively. Just Google, “Why I won’t sign your NDA”.
Only wanting your idea / product validated
Most companies I work with already have market validation. For example: a moving company, a plumber, an online clothing retailer, a chain of spas, and a car dealership have all been clients of mine within the last year. These are products that fit into an existing market and already had traction (i.e sales and revenue). As a side note, I signed NDA’s for all of these companies because they had validation and were past the idea concept stage.
I know I can improve a PPC campaign for a plumber because I know that other plumbers are making money using PPC. Most pre-money of seed startups have no track record I can draw from, so you probably don’t need someone to suggest only “tweaks”. You have to acknowledge a very real possibility that your product or idea may need to pivot, or at least change to fit a market.
When I’m approached by someone who wants marketing, but isn’t willing to test potential product changes, I try to politely excuse myself from the conversation. I can’t market a bad product, and testing ideas is pretty easy. You can do an online survey, put together a focus group, or simply strike up a polite conversation with someone in a coffee shop or bar. Check out Brandon Mendelson’s post Why you should go offline and buy your customers a beer to get an idea of how easily user testing can get started, But back on topic… If all you want is a safe space for someone to say you have a perfect idea or a perfect product, you shouldn’t waste the time of good advisors, because nothing is perfect.
Understand their skill set
If you call someone and ask to meet with him or her for advice, you should already know something about what that person could bring to your table. This means you should, at the very least, bother to Google the people you’re calling. Read over their LinkedIn profiles and understand what they can do for your startup. This especially applies when you get a friend of a friend introduction.
If you have someone who is an expert in conducting user research and designing product based on that research, you shouldn’t waste your time, or theirs, by asking how you should handle your taxes. And whatever you do, don’t ask them to pitch themselves. Instead, you should focus on problems you have, which their skill set can help you solve.
Give your elevator pitch, answer follow-up questions, and ask the expert you’re meeting with how he would handle A or B problems. If you built an app that is confusing to the point users can’t figure it out, try asking the UX guru I described above how to fix the problem. He will probably tell you user testing should have started before you built the product, but still they are an expert to help you find a solution.
Expect nothing for free
If someone is meeting you for coffee to talk over your project, he is already giving you more than most people will. We all understand startups have limited budgets, but if you expect to meet with someone for advice more than once, you should have something to offer beyond just your charming smile.
A lot of super talented and knowledgeable people will happily talk to you and give you a cup of coffee’s worth of advice. Beyond that, you need to have something to offer. We live in a world where money is currency. That’s why I work with most clients. It stems from my addiction to food and shelter. I understand that startups have limited budgets. What you can offer is equity.
Not everyone’s advice is worth equity and not every startup is worth investing time into. But, if you have nothing else to offer and you’ve found someone who believes in your idea and provides value, it’s worth talking about coughing up some equity. Simply ask if he would be willing to become an advisor and talk over terms.
Don’t ask someone to work for free and then place so little value on their time that you wouldn’t consider giving them equity. Equity isn’t the most valuable thing you have; the multiple on your equity is the most valuable thing. Try to bring on people who increase that multiple.
Understand your value
The idea isn’t half the battle. I understand that you’re excited about your idea, but if you can’t pay real currency that can be exchanged for goods and services, you had better have a darn compelling reason as to why someone should work with you. In all likelihood, your idea will need to change and evolve. Having the idea doesn’t get to be the reason you work 5 hours a month and own half of the pre money company.
I can think of so many people who approached me by pitching the product idea then asked me to pitch myself as a marketer for said idea. Often, I’m asked to work for free or some small amount of equity (5-10% for a three year commitment is common). These same people also tend to make similar offers to designers and developers, as if under the belief that the idea is worth 50% of the company.
I’m a marketing advisor for BlackCert, an SSL company founded by John McAfee. He has a negotiation point that most of you don’t. Between his last name and his knowledge of cyber security and business, he adds a tremendous amount of value. If you add less value than John McAfee, don’t ask for more of the pie.
I’m not saying you should give away all of your equity foolishly. But don’t overestimate your own value. Ideas are a dime a dozen. Good ideas that have a path to revenue, a team capable of implementing it and attracting investment & users are rare. As the “idea guy,” you must also have a skill set and relationships that helps add as much value as the people building the product, if you want comparable equity.