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Startups: Need A Consultant... Or A Coach?

Euphemistically stated, a consultant cannot educate someone with a more than 50% imbalance on skills and instincts. Therefore, coach arrives, who wishes to have a complete learning and research experience with live cases

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A new breed of startup founders are a rage for a nation that is guided by neo-capitalism. The initiative has been taken by an erstwhile entrepreneur himself - PM Narendra Modi. Well, is he also a businessman? Of course, he had this tea stall. Without really getting into his entrepreneurship foray, let us talk about his blurred vision of creating an India full of opportunities with small companies trading big volumes. Although similar to the visionary PM is a breed of visionaries that has cropped up with a great business idea with hopes to 'make a mark in the corporate world'! A lookout for a multi-million dollar investment to start with the vision, take it to the peak and run through generations with the greatest corporate buzzword 'Innovation'.

Usually, most of the startups die an early death because the founders miss on one particular notion of them, GM, Merc, Tesla were not created on business models, they have survived over generations with taking orders and executing them meticulously.

Founders' behavior on incentive are shaped by predictable mental shortcuts such as strongly avoiding losses. He is strongly influenced by what others do. He is 'go with the flow' of pre-set options. Their attention is drawn to what is novel and seems relevant to him. The acts are often influenced by sub-conscious cues while emotional associations can powerfully shaped by actions.

To overcome this predicament, a consultant is hired who will only do all which is put on contract! Another breed of those who are beyond being consultants are coaches. In the course of consulting, I have come across young lads who want to 'make a mark in the corporate world' as they describe! These guys have forgotten the old Hindi saying ..udne ke liye bhi satah ke zarurat hoti hai.. (i.e. to fly even, a base is the prime requirement).

Euphemistically stated, a consultant cannot educate someone with a more than 50% imbalance on skills and instincts. Therefore, coach arrives, who wishes to have a complete learning and research experience with live cases. 'Coaching' is a holistic way of treating clients-founders herein, beyond professional spaces. 'Consulting' only focuses on tangible business solutions. While the coach does not necessarily provide business solutions, he instead enables the client to opt for business solutions themselves. 'Coaches' rarely work on 'retainership basis' as for new breed of startup founders, they are either 'Uncle'/'Sir' helping them to 'change their lives'! Wonder, why can't such coaches preach themselves to become super rich? Not taking that personally, I did this to have a good database for my own researches within Behavioral Economics!

Overcoming sentiments is the first approach to running business smoothly. To infuse that into a 'founder's' brain is difficult. They do understand what a 'separate legal entity' is but the obsession with 'their unique idea' is much to handle with! How will a coach handle such situation? Well, this is a reverse process. The coach spends most of his time to let the 'founder' know the worth of their business eight years later. Considering the market and related factors, it could be half good. The opportunity cost of 'founder's efforts at business' and the 'investor perception of risk associated with founders business', the whole revenue function appears to be differentiated to point of maxima. Meaning, a reiteration of effort from ground zero. Consultants cannot be blamed because they work under assumptions, strict copy of a non-disclosure and non-circumvention, and an agreement not to indemnify for losses due to their acts. With so much, another question to ask is: Will a 'founder' have the budget to hire a consultant? No, the coach takes charge, resolves, negotiates and waits for the 'founder' to comply with upon no terms settled between them. Ostensibly elicits a different notion on Coach's ability, as 'founder' when successful, claims to be his while failures can be attributed to the Coach and for his inadequate research on the former's vision.

Team for the 'founder' is his brother, a close friend and wife who is a stakeholder and serves tea on board. Coach is not a team member. He is the 'sweet uncle', who is willful of spending (wasting) his time to hear the whims, fancies and future plans of the tech startup to diversify into serving non-veg meals on street during nights (apparently when there is no one to serve food and also when no one is there to compete).

Wonder, they also have a revenue model done basis a real time analysis, why is IT such a perfect source, don't they understand that economics is only until people believe into it. What will coach do? Smile and keep smiling until another hour when the 'founder' thinks that his McKinsey experience at handling clients got him an award from the ZZE Magazine within the presence of Bill Gates (in the backdrop). Rest coach-God helps!

Founder says to coach, "Uncle, can we have Chris Cote, who is with Harvard Belfer Center on board with us, you have great contacts and an immense convincing ability, why don't you try it out?" Coach intrinsically knows that Belfer Center is for geo-politics and does not connect with the founder's business anywhere. He also understands that the claim to have a Harvard grad on board will be resounded to the investor and will be rudder for them to go for second rounds! If the Coach refutes, implies, he is not aligned with 'founder's vision', another great predicament.

'Real Time Logistics using Robotics' is a great resounding success in US, with households installing such Robots for their households. Can we replicate the same business models in India? Why not. After all we have the 'typical human adults-IIT undergraduates'. Coach to founder, "Great idea? Have you done the market feasibility study?" Founder replies, "Uncle, I say what Say says, 'supply creates its own demand'. Coach cannot differ though refutations to the postulation are in principled, the lad did not study beyond this postulation, after all, IIT curriculum has Economics for Engineers as an elective!

Management teams including reputed professionals, which is an endorsement to an ascertained work with Startup. Founder wants people to be associated but he has not understood the mechanism! How will Coach help him? By introducing his own networks to the founder, which is gain for the latter! The 'founder' leads the team including management structure. Ego clashes between management team and founder are obvious. An incapability to keep people glued to ones purpose is a 'calling for humility', and requires creation of 'margin of acceptance' on the leader. Again the young lad is perplexed between his vision ensuring growth of business at a much high velocity than what is genuine is not well understood by professionals who have seen bigger businesses rolling in! An expectation with no commensurate benefit to the professionals makes it difficult for them to remain within team. Failure to carry with team is a dead-man's chest again borne by the Coach. Reason thereof, 'it was you Uncle, I will not have hired them ever! Their mistake…only that they did not align with the founder's vision!

The Coach Uncle again is seen as a resort to raising capital. By the second round, investors are looking to remove the founder with a professional who has been working with the VC firm! 'Uncle, you have to handle this situation, you got them on board, this is my company and how can Gabe talk to me like that! I am the founder, I conceptualized the product, this is my company- my business.' Where the hell from can they guide their terms to me so brutally?' Poor Coach Uncle cannot overhear, he complies because it had been him who negotiated and is also aware of the consequences if he does not. The fall of company will be a loss of economic wealth.

Finally, plan to exit- the response is a mayhem- founder believes in his business so much that he will go with it over generations. He does not understand that the business model done by Coach Uncle has a gestation lag and maturity period after which the Investor will ask for an exit and will reiterate upon their multiplier gains!

However, to a coach (against a consultant)- mentoring is what goes in the name of improving the left brain-right brain imbalance. As it is said, best businessmen in this world are those with left brain more functional than the right one.

When does the coach exit? Immediately when his team in US states sufficiency of information to conduct Randomized Control Trial (RCTs) and Dual Programming Models under Behavioral Economics, known as the gold standard approach to understanding whether something works or not. Put in two different situations, responses can be based on conscious and unconscious behaviors. The cognitive biases or heuristics lead to irrational decision-making through the governing of automatic choice - aligned with our need to make decisions quickly and with limited information. We are heavily influenced by who communicates information.

The information is processed to understand how to simulate indigenous entrepreneurial spirit in India and consequent reflections of growth of Indian economy by way of Modi's vision. The reports will then be sold to think tanks associated with the US Department of State who will then devise policies for market access to Indian business startups within US economy.

Coach is a researcher but knows business for himself too!

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Apoorva Srivastava

Apoorva Srivastava is a PhD in Finance, Wharton Doctoral Programme. He is a consultant with Energy Hedge Funds. Startups are his extended interest

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