Vultures Everywhere: A Founder’s Warning
You’re thinking about starting a venture. Or perhaps you started a company, got some funding from family and friends, and you’re spending many hours a day trying to move your company forward.
You’ve likely realized there’s a lot you still need to learn—new concepts, new responsibilities. After all, you were a researcher or employee, and though you were good at your job, running a company brings challenges you haven’t faced before.
Now it’s your job to keep your new venture alive and make it grow. That’s a heavy burden.
What do you do?
You look for help, for advice, for counsel, and for people who understand the problems you’re facing.
And what do you find?
You’ll meet a number of people who say they help startups. Many of them are great. They’re truly interested, genuinely helpful, and pleased by the chance to assist you.
But be careful. To quote the pickpocket from one of my favorite films, Casablanca:
“I beg of you, Monsieur, watch yourself. Be on guard. This place is full of vultures. Vultures everywhere. Everywhere.”
In my career, I’ve seen some of these folks, but thankfully only about a dozen or so. I’m not saying that everyone who sells services is a vulture.
The majority of accountants, attorneys, and potential mentors bring value to the table. You can decide whether or not they’re the right people, and whether or not their fees are appropriate.
As always, in both my book and my blog, my suggestion is to talk to a range of people, get free advice, and decide when you need help for which you’re going to pay.
How do you tell the vultures from the serious and potentially helpful people?
Here are some characteristics to be alert for:
Vultures talk (about themselves).
They don’t want to hear about you. They do monologues, not dialogues.
Vultures know what you’re looking for.
Of course they do; anyone who knows startups at all knows you’re looking for investment, sales, and connections to useful people. But what sets vultures apart is their tendency to start dangling all sorts of connections in front of you right away:
“I can get you funding.”
“I run an investment group.”
“I know investors with deep pockets.”
“I can raise money for you.”
They start saying these things even before they understand what you do.
They divert direct questions about their backgrounds, their credentials, deals they’ve done.
They say they’ll raise money for you? Ask:
Are you a registered broker/dealer?
How do you get compensated?
Can you give me some references?
Who have you worked with?
They try to come on so strong that you’ll feel awkward about asking questions. They want you to believe without checking.
I saw someone recently at a lunch who, while interrupting others, made a number of big claims. Their supposed educational credentials turned out to be certificates from the executive education programs—that is, short paid courses—at a couple of well-known business schools.
The “angel group” they said they ran? No web presence at all.
It was clear this person wasn’t the hero they claimed to be. I even did a little checking to confirm it.
That’s the kind of checking you should do yourself.
They’re in a hurry.
They try to rush you along, like someone selling cars who tells you that two other people looked at the car today and they’ll buy it if you don’t grab it now.
They have a set speech, a bunch of statements they make over and over.
They don’t want to understand what you do, and how your products fit into an industry. They want you to give them a piece of the action—options or cash—and move on to the next company.
I recall one person from my time at the monthly Cambridge MIT Enterprise Forum dinners, where entrepreneurs would present. He showed up regularly and made the same comments every time.
He’d focus on a single entrepreneur and try to sell them, hard. Sometimes he brought a client along. The next time that client showed up? They’d gotten rid of him.
He was so pushy that we eventually put a rule in place—named after him internally—that said people could only attend every third dinner.
This kind of taking advantage isn’t limited to individuals.
There are some incubators and accelerators that make a lot of noise but don’t really help the companies involved. Again, these are in the minority.
Be sure you:
Understand all the terms—especially what it will cost you in equity and IP
Get references from founders who’ve been through the program
Talk with your attorney before saying yes
The Takeaway
This is a caution to be careful. Don’t be hustled into something that’s not right. Take your time. Keep your company alive.
