One of the most effective ways to get smart advice early is to get a trusted advisor. Most companies I know get up to 3 advisors on board with different competencies, skills and expertise. Typically you’d like one advisor who has entrepreneurial background for customer and investor introductions, one for go to market expertise and one for technology excellence.
Once you have selected and recruited your advisors, I’d highly recommend a scheduled cadence to meet and consult your advisors (early on, once a month is good). Typically, most startups will (if all goes according to plan, which it never does, but nonetheless) need a new set of advisors every 18-24 months. Most advisors are paid in equity. Your advisor’s main role is to give you confidence, but many help with their strategic thinking or insights as well.
In this post I am going to talk about market dynamics using an example to help share a concept that I think you need to get advice from an external person for.
Let’s say you are trying to build a mobile application that replaces Siri or Google Now. This has been attempted before by many folks, so it is not a new idea, but I am taking a crack at shaping and outlining the landscape for discussion.
This will be a “smart assistant” that allows consumers to get personalized recommendations for many of their daily questions based on observed patterns on their phone – including usage of other applications.
In this particular case, there are 5 major “interested parties” – the consumer, who wants personalized recommendations, and needs the service, the app developers who have the data, the app store and platform which control the experience, the phone manufacturer, who makes the phone and the mobile carrier who provides the service.
Even though the first pass suggests that you should build the consumer service, focus on acquiring users and then get the app developers on board, it turns out unless you have the data (either from the platform or from the 3rd party app developers) you don’t have a valuable service.
Distribution might be easier for your product via the mobile carrier (if they choose to bundle it with the phones on their network) or even from the phone manufacturer, but unless you have many users, the carriers and the manufacturers don’t want to take a risk.
Consumers find that without their favorite applications (services) integrated into the platform, the assistant is of not much help.
So you realize it has to be the platform (Android, IoS, Windows phone, etc.) or the 3rd party app provider.
Since most consumers are using their favorite apps – such as Yelp, Uber, etc. the data is proprietary to that 3rd party app providers, who have little incentive to give you their “crown jewels”.
The best way to get the 3rd party app developers is to find a way to give them value, so they get consumers more engaged with their app, or acquire new users or monetize better.
While you still have to get consumers after you get the 3rd party app developers on board, that’s the “next problem” – the sequencing matters. Getting app developers quickly and the key (right ones, not anyone that will listen) ones is critical.
This is a good example of a market dynamic that typically you can get from an “insider”. Many of the seasoned investors will help you understand and navigate this landscape as well.
I would highly recommend you talk to potential advisors and help outline the problem statement so they can give you their perspective before you sign them up as an advisor. That way, you are able to gauge their expertise and understanding of strategy as well.
What do you think about this landscape? How would you analyze this better or differently?