Does the Australian startup ecosystem have a problem with armchair ‘experts’?

For anyone active in the Australian startup scene, a scroll through your LinkedIn feed will probably feel like a needle caught on a scratch. Personal bios spruiking people as innovators, strategists, consultants and, inevitably, entrepreneurs are widespread and prominent, each eager to mentor and advise new founders on the best way to run their business.

All the while, drummed into startup founders’ brains is the importance of finding a mentor and getting an advisor, with new ventures regularly started by ambitious, inexperienced founders with a hunger for someone else’s knowledge.

In recent years, rumblings of discontent have begun to brew around the rise of self-proclaimed business experts and ‘entrepreneurs’. Poor advice passed on to gullible early-stage startup founders has led some founders and investors to question if Australia’s startup scene is being overrun by armchair consultants, investors and other experts who are not themselves running startups.

These individuals are largely non-founders, often having worked in government, big corporates or financial institutions. They’ve likely left their posts to pursue a life in startup land with the hopes of either starting their own business or advising someone else on how to best start theirs.

Often these individuals have valuable and valid advice to pass on, and this is by no means an attack on those who genuinely strive to help. But prominent members of Australia’s startup industry are warning founders to be wary of the intentions and “vested interests” of non-founders providing advice.

One such member is Cloudpeeps founder Kate Kendall: a three-times Aussie startup founder with a history in communications, well-known for finding success in Silicon Valley before bringing her online freelance platform back home to Australia.

After more than five years abroad seeing how things were done in the engine room that is Silicon Valley, Kendall returned to the local ecosystem last year. Seeing how differently things were ran in Australia, the founder sent out a tweet:

Much of the Australian startup ecosystem and discussion is led by armchair investors, employees at tech cos., state government, and service providers – there needs to be more power and focus back on full-time founders.

— Kate Kendall (@KateKendall) December 11, 2017

The rise of the armchair expert

Speaking to StartupSmart this week, Kendall still thinks that non-founders and government hold more sway on the ecosystem than they ought, and reinforced her call for entrepreneurs to be educated by other entrepreneurs.

“I think that in order to know how to interact with entrepreneurs you have to have been an entrepreneur yourself, or at least have been very involved with them,” she says.

“It’s hard to know what entrepreneurs need if you’ve not gone through that experience. The best kind of education I’ve had as a founder has been from other founders themselves.”

Comparing Melbourne to San Francisco, Kendall also laments the number of government-backed programs, co-working spaces, accelerators and events in Australia, claiming they do little when it comes to achieving real outcomes for startups, and contribute towards portraying the startup scene as more lucrative than it really is.

It’s this portrayal Kendall believes brings the startup shysters out of the woodwork.

“People who aren’t familiar with fast growth tech startups think it’s lucrative, but it’s not a lucrative space,” she says.

“Founders give back their time because they want to help people, not because there’s money. I’ve seen a few stories of advisors and mentors entering the space thinking startups have all the money, but that’s just not the way.”

And even if entrepreneurs find themselves with a founder mentor, Kendall says they should go one step further and question the sort of business they’ve ran in the past.

“With founders, you need to ask if they’ve taken risks to generate their own paychecks, or if they’ve done a known model like a consultancy. Go start an AI startup with no funding or path to revenue — it’s a much different life,” she says.

“I don’t discount non-founders but there’s so much hard work involved with being an entrepreneur. It’s like being a mother — you can’t know what it’s like until it’s happened to you.”

“Sometimes they might just need to chat”

Another member of Australia’s startup scene who’s observed a similar phenomenon to Kendall is Peta Ellis, chief executive of startup hub River City Labs. After discussion fired up again earlier last month around this topic, Ellis penned a blog post, which both acknowledged the issue and defended the non-founder contributors within the sector.

Running a startup hub has seen Ellis interact with both founders and non-founders equally, and her view is that everyone is entitled to the opportunities entrepreneurship presents. Ellis is a former startup founder herself, but notes she only calls herself an entrepreneur on a good day, saying she had “no idea” what she was doing in her previous ventures.

Speaking to StartupSmart, the River City Labs chief says the issue has always been one bubbling in the background of the ecosystem and there’s “no doubt” Australia needs more experienced entrepreneurs, mentors and advisors getting involved.

“Every entrepreneur should have an experienced entrepreneur as a mentor for their personal development and their company’s development. They need to have someone who understands their headspace,” she says.

“To be empathetic of other founders it helps if the other person has been through the founder experience themselves.”

The onus for making sure their advisors have the know-how should be on founders, says Ellis, who believes there are numerous advisors and consultants in the ecosystem who are “amazing” experts in their fields. But everyone involved should know what their roles are, argues Ellis, and founders should be asking the hard questions if they begin to receive questionable advice.

This is especially relevant in startup hubs and co-working programs, where Ellis says a lot of young founders tend to “do what they’re told” rather than always making the right calls for themselves and their companies.

That being said, Ellis reinforces there’s no ‘one size fits all’ solution for situations such as these, and it’s hard to make blanket statements about what founders do and don’t need from advisors, especially those in startup hubs or co-working spaces.

“Sometimes they might just need to chat to someone, and a staff member at a startup hub can do exactly that,” she says.

“We don’t want to discourage more people getting involved with our startups, but you should always question the intent behind it. Like at River City Labs, we don’t let salespeople come in to sell to startups because we like to ensure everyone’s interest is authentic.”

Founder connections necessary

Both Ellis and Kendall agree more needs to be done to create a flow of experienced founders willing to help out their fellow entrepreneurs. In particular, this help needs to come at the scaling-up stage for a startup, with Ellis noting there’s already a good deal of help available at the grassroots level for new startups.

Impostor syndrome can play a part in founders’ reluctance to put their hands up to help out, says Ellis, who recalls a recent conversation with an entrepreneur who was surprised she was being asked to speak at an event.

“She was speaking to a group of parents about founder journeys and she questioned if she had anything to offer. I told her they just want to hear your story, to see that someone has started this journey and survived,” Ellis says.

“Tall poppy syndrome also plays a part, because if you spruik your own success too much you’ll get shot down in Australia.”

Drawing on her experience in Silicon Valley, Kendall believes more founders should seek to form and join local founder networks to have the opportunity to speak and confide in other entrepreneurs having the same problems they have.

“I know that in Melbourne alone there’s a number of hidden, informal networks. That’s fine if you’ve been here a long time, but if you’re newer it’s a bit harder to get in,” she says.

“So there needs to be more transparency and inclusion there.”

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