Investors Need to Lose Their Egos and Founders Need to Gain Some Confidence

Editor’s Note: This blog post has been excerpted from an article that was originally published by Paul Singh on his blog.

Across every startup ecosystem I’ve seen, it seems to me that there’s only one real way to help startup ecosystems mature: investors need to lose their egos, and founders need to gain some confidence. This applies to any startup ecosystem outside Silicon Valley — both in the US and internationally.

Early-stage investors are increasingly useless for anything other than money or introductions

My last exit was in 2009 (read: 2009 was pretty much the last time I was actually in the trenches). More broadly, many (definitely not all) of the investors out there today probably were never founders (or even worked at startups) themselves. To put it bluntly, being an investor is probably one of the few jobs on the planet where you’re considered a genius if you’re only right 1% of the time. The rest of the time, we get to make hand-wavy assertions (perhaps like this one…) and pat ourselves on the back while founders listen intently.

Here’s the thing, though: what worked yesterday probably won’t work today — as the web gets bigger, more startups come online, causing the most common customer acquisition channels to get saturated. In other words, the pace of change in the startup world seems to only increase, and investors can’t help much when it comes to many of the tactical issues that founders face.

At best, investors can provide high-level strategic guidance or direct introductions to mentors that have recent tactical experience in the areas that a founder might need help. If a founder needs tactical advice on legal and finance, it’s probably OK to ask an investor for specific advice. Otherwise, smart founders should ask an investor for an introduction to someone that might be able to help with an issue.

Most of the tactical help that founders need is available online or from other founders

Most of the challenges that startups face have already been dealt with by others, and those people probably talked about it on their blog, Quora, Hacker News, or some other online community.

What this really means is that founders need to stop asking for so much advice — most of what they really need to know is already online or via other founders.

As I said earlier, investors need to lose their egos — these days, there’s little we can do to directly help a startup succeed. Rather than pretend to have superhero-like powers, let’s just try to stay out of the way until our founders call us.

On the other side of this, founders need to gain some confidence — don’t ask an investor for “feedback” on your idea – talk to your customers. The default state of your startup is failure, and the only one who can change that is you.

Let’s all do our respective parts to make the startup ecosystem better. Everywhere.

Guest author Paul Singh is a partner at 500 Startups. Follow him on Twitter @paulsingh.

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