Why Startup Advisors Are Often Full of Sh*t

"No one knows anything." This famous quote from screenwriting guru William Goldman encapsulates the uncertainty inherent in predicting successes and failures, hits and flops in the creative industries. This sentiment seems especially relevant in the chaotic world of startups where ideas live or die by the whims of users and investors. In the early days of a startup, founders are overwhelmed with well-meaning advice from all corners - investors, mentors, friends and family. Everyone has an opinion on what you should do, what features to build, who to hire, what business model to adopt. But the reality is that when you're pioneering something, nobody actually knows if your idea will succeed or fail. Some people just don't know that they don't know.

This was the case with many legendary startups in their infancy. When Facebook launched, it was widely predicted to be a niche service for college students. When Airbnb launched, renting rooms or apartments to strangers seemed too dangerous to ever go mainstream. YouTube was scoffed at by VCs who didn't think user-generated video would ever be a viable business. The list goes on. In the early stages of a startup journey, everything is uncertain - the product, the business model, customer demand. There are simply too many variables at play for anyone to predict success confidently. Yet many investors and advisors act like they have supreme confidence that their advice will lead to certain success. This confidence likely comes more from ego and bravado rather than actual insight.

This overabundance of advice can be dangerous to impressionable startup founders. Whose advice do you actually follow when everyone seems so sure of themselves yet data points for your unique idea are scarce? Going down the wrong path early by following poor advice can waste precious time and resources for bootstrapped startups. So what's the solution? Savvy founders learn to smile and nod at all the free advice, extract some nuggets of wisdom, but ultimately let the hard data and intuition dictate major decisions. They design small, rapid experiments to test assumptions and form their own informed opinions on product direction and business strategy. They resist the temptation to follow the most confident voice in the room.

The Allure of Advice

Why do startup founders find advice, even from questionable sources, so irresistible? Firstly, with no track record behind an unproven idea, data-driven decisions are difficult. Advice fills this void, providing opinions to tilt your decision making when facts are scarce. Secondly, startups can feel psychologically lonely in those early rollercoaster days. Founders crave reassurance and validation when facing tall odds and endless stresses on zero sleep. An inbound advice call is a nice emotional boost, even if the content itself is questionable.

But perhaps the biggest driver comes down to overconfidence bias on both sides of the table. Founders fall victim to “delusions of grandeur” in believing their solution is destined for greatness regardless of what naysayers think. Similarly, investors and advisors suffer from overconfidence in their own sage opinions formed through past experiences. Most advice tends to dramatize the upside using selection bias of personal investment wins. But past returns don’t guarantee future outcomes in highly stochastic domains like startups.

How Advice Goes Wrong

So when does advice go from questionable to downright dangerous? Here are a few common pitfalls to watch out for:

• Premature Scaling Advice - Investors often push founders to scale prematurely before finding any product/market fit. This wastes time "upstreaming" sales, marketing, tech when the startup should still be searching for core value drivers.
• Irrelevant Pattern Matching - Advisors often draw false equivalences by plugging your startup into positive frameworks they’ve seen work before. But analogies to Facebook, Uber or Airbnb resonate more from an ego perspective versus reflecting truthful analysis.
• Loss Aversion - Incumbent voices often suffer from loss aversion bias rooted in fears of cannibalization. Leaders of large companies facing disruption from startups often provide advice mapping to their own interests over that of agile startups.

How to Leverage Advice Better

Does this mean advice has no value in the startup world? Of course not. There are nuggets of wisdom to extract, as long as founders view advice inputs through an objective, stochastic lens. Here are a few tips:

• Seek specific experience over broad opinions - Ask advisors about experiences directly relevant to your company versus broad analogies to other famous startups. You want specialization more than generalization.
• Diversify advisor inputs - Build a board of advisors with divergent backgrounds and minimally overlapping biases to ensure you hear multifaceted perspectives. Remember that a broad spectrum of opinion often holds more signal than the confident voice of one advisor.
• Always balance advice with your own experiments - Take advice as inputs to hypothesis generation rather than absolute directive. Design small experiments to test assumptions within your startup's unique context instead of big bold bets.

The Takeaway

At the end of the day, remember that early stage startups face tremendous uncertainty. No one truly knows what will resonate with markets or which strategy will prove successful - regardless of how persuasively they pitch their advice. As the saying goes, take advice with a grain of salt. Let the customer data separate narrative from truth as you chart your own path. While advice from experts seems indispensable in the chaotic startup world, founders must remember that no one truly knows what ideas will succeed or fail, especially for pioneering startups doing something new. Some advisors just don't know that they don't know. Only the market knows. Founders must block out the noise, run smart experiments and let the customer data separate fact from opinion.