“There are no jobs in entrepreneurship”.
Whether you’re on the receiving end or have ashamedly handed out some yourself, bad advice is part and parcel of the entrepreneurial journey. But it isn’t always as obvious as the statement above.
While it’s important to listen and take on guidance from trusted advisors, speaking with “experts” can be a double-edged sword as entrepreneur Ramon Martinez-Mendozah points out.
“You feel obligated to listen to them anyway because you never can be sure when the right piece of advice is coming from the right contact,” he told StartupSmart.
So what does bad advice look like for startups?
We asked Vinomofo, a startup backed on Shark Tank, and a tech leader who has been in the startup game since the dot com era.
Hire the most experienced and qualified
“Everybody says you need to go out and hire the best people in their field,” Vinomofo co-founder Andre Eikemeier tells StartupSmart.
But hiring someone with a proven track record, extensive experience and who can tick all the boxes on paper does not automatically mean they’ll be the best fit for your startup.
“We tried that and it just didn’t work,” he says.
“We’ve gone back to investing in our leaders within our business.”
Eikmeier says the success of the company, which raised $25 million and is about to launch in its third international market, boils down to having a foundation where people are learning, developing and growing constantly.
While this does take active management and ongoing team support, he says it means the heart of Vinomofo keeps beating as the business grows.
“We’re realising the real culture, and the belief, the real ownership – and that ingrained being a part of this – is more valuable,” he says.
For example, Eikmeier says the Vinomofo head buyer is seriously outperforming a highly experienced and qualified professional they previously tried working with, and is a testament to this approach.
“Even though it’s not a skillset she’s had, it’s something she can learn in a couple of months,” he says.
“But you can’t in a couple of months just get Vinomofo.
“Our customers don’t respond to the same sort of tactics and tricks and principles that [the experienced candidate] was used to. It’s definitely feeling and working better.”
Go hard or go home
Those Girls sparked the imagination of multi-millionaire Steve Baxter, one of Australia’s most successful tech investors, when they first met on Channel 10’s Shark Tank.
With a $70,000 investment, founders Elena Andoniou and Lauren Davie haven’t stopped a beat since the episode aired.
What was the worst piece of advice they ever received?
“At the beginning, we were only about a year old and somebody recommended we go into shopping centres,” Andoniou tells StartupSmart.
Instead of jumping at the idea, they undertook due diligence and found the costs and overheads of setting up in a shopping centre, on top of competing with major retailers like Coles and Woolworths, did not make good business sense.
Those Girls has enjoyed strong growth over the past year, with the duo now managing a team of 12 and a searching for a general manager.
The business has a Melbourne head office with three to five active sites.
Andoniou says taking giant leaps and growing at an unmanageable rate leads many founders to their demise.
“You really need to learn how to take baby steps,” she says.
Only saying “yes” or “no” in dispute resolution
Brett Adam, the managing director for Zendesk Australia and New Zealand, has worked in startups since the dot com era and he has survived the more egregious side of business and investment deals.
“There are lot of bad things that happened during that period [like] how to deal with arbitration,” Adam tells StartupSmart.
“Arbitration in theory is supposed to be better, cheaper and faster than going to court.”
But taking advice to only respond with “yes” or “no” during an arbitration threw Adam down a painful path.
“In hindsight, I feel that my counsel gave me far too narrow instructions about how to respond to questions the arbitrator asked,” he says.
“It opened the door to an awful lot of trouble.”
Stay tuned for more examples of bad advice from Australian startups, out next Friday.