May 23, 2006

Stowependous Advice

I gobbled up every word of Stowe's great post about having to fire one of his advisory capital clients because of holes in the no assholes rule -- a post that should be required reading for everyone who's signing on as an advisor to any Web 2.0 (or other) company. For me, Stowe's post was a signpost. That sign says: Girl, You Got a Lot to Learn.

First off, I didn't know there was a No Assholes Rule, because if I had known that, I would have invoked its special clauses two years ago. That having been said, I gleaned some great insight reading this post that reminded me how ignorant I am about what I'm saying yes to, even though I'm now signed on as an advisor to--I think 4?--webby cos.

It's not like I haven't done any research on my own mind you. In fact, the second time I said "yes" to becoming an advisor (without much thought as to what it meant except to offer to help out in exchange for some good karma -- warning, I don't give away the farm for good karma anymore), I did what any smart blogger would do. I called a longtime indie blog buddy and asked how this shit works.

He said, most of these companies have standard advisory agreements that are the same for each advisor--in other words, every advisor gets the same deal, which typically involves some equity in return for x amount of commitment/time, say 20 hours per month. So, he said, tell them you want their standard advisory agreement. If they say they don't have a standard agreement, tell them you want 20% better than the best deal they've given so far.

Rim shot.

Of course I was also advised not to count on making a living -- or a late night trip to Walmart for diet coke -- as an advisor.

According to Stowe though, there's a lot more to know. And in reading his post, I came up with some questions I still have on how the typical Web 2.0 Advisor/Advisee relationship is structured (if there is a "typical" relationship):

1) Do you always document the advise/counsel/ideas you deliver? I would think that there should be a recommended process/format/flow for the regular exchange of ideas between advisors and advisees. (currently this is different for each of my advisees).

2) Sounds like Stowe typically does a front-end consulting gig to evaluate the company/offering and THEN signs on as an equity-based advisor if all signs are go? That's really smart. He's getting paid for his initial evaluation. I haven't done it that way. Yet.

3) Sounds like Stowe offers discounted consulting rates for clients who commit to longer-term, retainer contracts. I do this too. You commit to me and pay me on X date every Y weeks, on time, without drama or trauma, and I give you a break. Direct deposit knocks off more. Nothing like waiting for the Pony Express to trot up with a check. What other ways can we reward/incent clients (in general) for/to making it easy to get paid a specified amount at specific times?

4) I want this, from Stowe, on a poster. One that I can hang on the INSIDE of my eyelids:


"After all, once rule #1 is broken -- the "No Assholes" rule -- then there is no hope. People can learn to moderate their behavior, but never their basic psychological makeup. Once they start fucking you over, there is no end, because if they rationalize doing it once they will always be able to go through the same thinking process again and again."

THIS is the big rule of indie consulting in general. Once they indulge in fucking you over, they can't stop. And even when they do temporarily, all you have is a dry asshole. And that's just as bad.

5) Stowe's contract amendment also offers words to live--or at least work--by: "If the contract is terminated for any reason other than cause (and cause will be limited to felonies, or other really unambiguously bad acts, like breaking an NDA) then the one year stock grant will be accelerated, and whatever discount has been granted will be rescinded for all time expended since the outset of the contract."

SO, in other words, I think what this means is, YOU TURN INTO A DEMONSTRABLE ASSHOLE DURING OUR TIME TOGETHER, AND YOU OWE ME ASSHOLE RATES BACKDATED TO THE START OF OUR AGREEMENT. Damn, do I like that idea -- for all of my discounted-rate clients.

6) What's a one-year stock grant, and what does accelerating it mean?

I certainly look forward to Stowe packaging these "best practices in avoiding the worst clients" into something sharable. Like he says, most of the companies out there who are actually SEEKING our help are the product of good people who really want help and guidance on how to best nail down and achieve their objectives. I LOVE MY CLIENTS. They are doing cool things and want input from real people to make their product even better.

Then you have the assholes. ;-)

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