On “Paying” Your Mentors and Advisors: The 2.5x Rule
And then the CXO added: “But I don’t have any equity budget to pay them.”
To go big, especially in SaaS, you absolutely need a mentor if you can get one, and/or at least a couple of great advisors, to excel. Maybe you know it all in SaaS. But most of us don’t. Do you really understand building and growing a SaaS sales team? How demand gen marketing really works? What enterprise grade tech ops really means? How to drive customer success? Very few of us know it all. Even fewer truly have experience in bringing it all together, and then scaling it to success.
The good news is you will find great mentors and advisors if you work at it. They key especially if you are in Silicon Valley is just to meet as many talented and senior people as you can, ideally through a qualified introduction.
If you are doing something interesting, and you hustle and try to meet as many great people as you can … you probably will eventually connect with someone that could be a good mentor or mini-mentor.
Don’t suck up to them too much. A little, yes. That always works.
But what they’ll really be interested in is what you are doing. Why it’s interesting, big … and relevant to what they are interested in.
If it’s a good fit, and you are doing something big enough, valuable and of interest to this potential mentor, and timing is perfect … it will come together.
Because mentors are looking, even if they don’t know it, for 1-2 “mentees”.
OK but once you’ve found them — don’t screw it up. And don’t get confused by the fact that at first, advice seems “free”. But what can you offer in return?
Well, first it’s not cash. Your successful entrepreneur advisor / mentor already has enough cash. At least most of them do. You can’t pay them $X00 an hour or whatever. It doesn’t matter or move any needle if they’ve got millions in the bank. (There are exceptions. But I’d reserve cash for consultants, not mentors and advisors).
Second, it’s not just the wonderful experience of talking to you. That’s not enough either. Maybe they want to learn through you, and do want to help. But time is precious and valuable. There’s a reason even Marc Cuban charges $170+- a minute to talk to him.>> So I’ve come up with a 2.5x “rule” or at least axiom.
With advisors and such, I think after 2 1/2 meetings, after 2 1/2 intros to VCs or potential VP hires, after 2 1/2 times they “help” … you need to “pay” or they go away. Until then, you don’t have to pay. And many people if they are interested in you will make a few connections and help for free. 2-3 times.
Then you do have to “pay”.
And since cash doesn’t really work, the only way you can really pay most folks like this is to (x) give them some (a material number but the exact amount doesn’t matter) stock options and (y) if you can, let them invest in your seed, A and B rounds IF they want to. Don’t connect the two. The first is a (for now) unquantifiable “payment” for helping. The second is a “thank you”. Don’t confuse the two, but try to do both.
FWIW if it helps.
Again, while I don’t think you have to pay for 2.5 meetings, favors and intros … don’t wait to “pay” too long. Because after that, the (prospective) mentor will fade away.