Vinod Khosla said yesterday at Techcrunch Disrupt that one of the hardest things for entrepreneurs is to figure out whose advice to trust on what topic. That is spot on because as an entrepreneur you will get advice from just about everyone all the time (including random people you have just met for the very first time who don’t know squat about your product or company). Unfortunately that terrific quote will get buried because of a bunch of other things Vinod said right then, such that a lot of VCs add negative value, that he doesn’t go to board meetings much anymore (because other VCs just talk) and that entrepreneurs should pretty much ignore what most VCs say (because they haven’t done enough themselves).
I am not going to argue that we VCs always know what we talk about as we clearly don’t. But unlike Vinod I don’t believe that you have to have done a lot of big things yourself in order to be able to give good advice. It also helps if you have observed a lot of things. The role of an advisor is different from the one of the entrepreneur. There have been many great investors who never built a large company themselves. Just as there have been many great coaches who never excelled at the game they were coaching. Or the best editors aren’t successful writers themselves.
Why is this? There are many reasons but the primary one is being able to see the big picture. The number one problem as an entrepreneur is to get enough distance from the business to be able to see the big picture. You are in it every day. And that narrows your view. Just like it does for the players on the field. This is true for all of us all the time. Stepping outside of your context and analyzing your own situation from “above” is really, really hard. And that’s where a good VC will help you. He or she will help you see the one or two things that are really holding back the company (among the million things competing for your attention).
You still have to determine whether you should trust a particular person on the big picture or not. There are unfortunately very few signals for this and success of companies is an incredibly noisy signal. Therefore my recommendation is: call your fellow entrepreneurs and get their feedback on the quality of advice they have received.
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