Oct 25, 2023 · 1h 1m · news
Ely Lerner: Should Startups Hire Advisors & How much should they be paid? | E1075 · 20VC with Harry Stebbings
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In this interview, startup advisor Ely Lerner shares actionable frameworks for scaling startups, explaining how to effectively hire and compensate advisors, implement an "Offense vs. Defense" engineering framework, and optimize user activation aligned with an Ideal Customer Profile (ICP).
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 18.2% of the talking time here. How this is scored →
Harry as informed peer 3.2 Guest teaching 3.1 Guest disagreement 0.6 Harry pushing back 2.0
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 20:35 Ely rejecting host's delegation framing
Ely directly tells Harry 'You are [wrong]' when Harry forcefully insists that advisors should work with functional heads rather than guiding the CEO on primary growth strategy.
Hardest push from Harry ▶ 20:35 Harry aggressively challenging advisor access boundariesHarry forcefully rejects Ely's boundary that advisors must work through the CEO, using colorful language ('just fuck off... talk to my head of product') to challenge the premise.
Biggest teaching moment ▶ 36:00 Ely explaining diminishing returns on defensive tech investmentsEly educates Harry on how over-investing in defensive engineering like security and scaling past the point of diminishing returns creates a massive hidden opportunity cost against compounding offensive growth.
Harry holds his own ▶ 29:36 Harry calling out elite advisor compensation realitiesHarry demonstrates sharp domain knowledge by naming top advisors Elena Verna and Casey Winters, bluntly pressing Ely on market expectations by stating 'you gotta pay the fuck up'.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Ely's Entry Into Product, Growth, and Yelp | 1 | 2 | 0 | 0 | Harry opens with a warm welcome and asks Ely about his career transition into product across Yelp and Chime. Ely delivers a detailed background monologue about his experience with 0-to-1 internal incubations and the Eat24 acquisition. | |
| Zero-to-One Internal Startups vs. Corporate AI Hype | 4 | 3 | 1 | 4 | Harry challenges why top talent would build zero-to-one products inside incumbents without equity. Ely explains the unique leverage of corporate assets, and Harry adds that speed to distribution is a major motivator. | |
| Incentive Alignment: Product Lessons from Yelp and Chime | 3 | 3 | 0 | 0 | Ely explains incentive alignment as his key takeaway from Yelp and Chime. Harry links this to Brian Balfour's Reforge episode on business model fit before asking Ely to define modern advisory roles. | |
| Startup Timing: When to Bring in Functional Advisors | 2 | 4 | 1 | 3 | Ely advises founders never to delegate strategy for their primary growth lever. Harry probes whether that strategy can be delegated even if the company hires a full-time functional executive. | |
| Advisors vs. Hires: Navigating the Startup Gap | 3 | 2 | 0 | 1 | Harry asks how startups decide between hiring an advisor versus a full-time Head of Growth. Ely outlines the startup growth gap, and Harry offers a practical scenario involving an out-of-home marketing expert. | |
| Hands-On vs. Traditional Company-Level Advisory | 2 | 4 | 0 | 1 | Ely breaks down the distinction between traditional high-level monthly advising and his hands-on weekly model. Harry guides the explanation with direct questions on advisor evaluation criteria. | |
| The Limits of Advising: Teach to Fish | 5 | 5 | 6 | 8 | Harry forcefully challenges Ely's premise that advisors should only work with founders rather than functional heads, using colorful language ('just fuck off'). Ely directly rejects Harry's framing and insists founders must own primary growth levers. | |
| Evaluating Advisor Fit by Stage, Playbook, and Geography | 3 | 3 | 0 | 2 | Harry questions whether seed stage is too early for growth advisors given the lack of initial flywheels. Ely clarifies that seed advisors should help founders discover their growth model rather than scale an existing playbook. | |
| The 'Freemium Trial' Approach to Advisor Fit | 4 | 2 | 0 | 1 | Harry asks how founders can verify an advisor's true attribution claims. Ely explains his model of offering free help first, which Harry aptly re-frames as a 'freemium trial' for advisory services. | |
| Advisory Compensation: Structuring Equity and Cash | 6 | 3 | 1 | 5 | Harry injects real-world market context by citing top-tier advisors like Elena Verna and Casey Winters, bluntly stating founders 'gotta pay the fuck up'. Ely agrees and explains how cash-equity splits are structured. | |
| Ensuring Success: Overcoming Engineering Bottlenecks | 2 | 3 | 0 | 2 | Harry interrupts Ely's overview of first-month success signals to ask why engineering teams struggle to ship fast. Harry forces Ely to precisely define output versus outcome-driven engineering. | |
| The Offense vs. Defense Engineering Framework | 5 | 4 | 0 | 2 | Ely presents his Offense vs. Defense framework for engineering focus. Harry demonstrates strong product grasp by offering Figma's co-pilot as an offensive example and correctly summarizing the opportunity cost of chasing 100% reliability. | |
| Transitioning Growth Loops from Offense to Defense | 3 | 4 | 0 | 1 | Harry asks if offensive bets can transition into defensive ones and vice versa. Ely details S-curve growth loop decay and cites Airbnb's trust and safety as a defensive initiative that became offensive. | |
| Coordination and Conflicts in Outcome-Aligned Teams | 2 | 3 | 0 | 1 | Harry asks about potential org conflicts between offensive and defensive teams. Ely explains codebase coordination taxes and common founder mistakes like setting too many top-level OKRs. | |
| Managing Failed Bets and Validating Key Assumptions | 5 | 4 | 1 | 3 | Harry references Meta's Alex Schultz to argue that retention is king in growth prioritization. Ely agrees but reframes retention focus around activation and proper ICP tracking rather than churn reduction. | |
| Why Advisor Relationships Fail | 3 | 3 | 0 | 1 | Harry asks why advisor relationships fail and equates knowing when to end an advisory contract to changing therapists. Ely outlines capacity limits and alignment criteria. | |
| The Loneliness of the Solopreneur Advisor | 2 | 3 | 0 | 1 | Ely discusses the loneliness of solopreneur advising. Harry pivots quickly to ask whether growth teams should operate independently or embedded within core product teams. | |
| Avoiding Activation Pitfalls by Tracking the ICP | 4 | 4 | 1 | 2 | Harry points out that horizontal product founders frequently fail to understand their ICP. Ely builds on this by explaining that horizontal ICPs must be defined by shared user attributes rather than demographic personas. | |
| Staying Narrow in Horizontal Product Positioning | 3 | 3 | 1 | 4 | Harry pushes back on horizontal positioning, arguing that overly broad messaging fails to resonate with specific verticals like dentists or product orgs. Ely explains staying narrow horizontally. | |
| Quick Fire: The Death of Broad Growth Hacks | 2 | 2 | 0 | 1 | Harry initiates the quick-fire round. Ely asserts that the entire paradigm of broad 'growth hacks' has died, and Harry asks about data cleanliness requirements for growth hires. | |
| Quick Fire: Impressive Growth Strategies and Real Estate Network Effects | 3 | 2 | 0 | 0 | Harry asks for recent impressive growth strategies, citing Canva's TikTok and Notion's YouTube channels. Ely praises network effect models and highlights early-stage Cashflow Portal. |
Statements from this episode (46)
Lerner: Startups must focus on one or two bets to succeed
“The whole point of strategy is to say no to most things and focus in on a small number of really high leverage things. Like you have to make that bet. When you see companies with nine company level OKRs at the top level or whatever, right? They're just trying …”
Yelp sold Eat24 to Grubhub for double its acquisition price
“Now we bought a company called eat 24 is a food delivery startup. And so I kind of got dropped in to be had a product for that subsidiary helped grow that business. This wasn't our original intent, but we actually sold it to Grubhub just about two years later …”
Lerner: Incubating zero-to-one products in legacy orgs reduces success
“One of the things that I have seen myself and with companies that I advise is if you're trying to do true zero to one inside of a later stage company and like find your next horizon, trying to do it inside of the sort of legacy product product org vastly reduc…”
Lerner: Internal corporate startups need P&L control and staged funding
“It's like the leader of that doesn't have P and L you're not a startup within a big company. Right. I think that is the important piece, which is like, you need to fund this as an independent unit that is looking at a business line holistically and is autonomo…”
Lerner: Building totally adjacent products inside large corporations is a mistake
“If you are trying to build a totally adjacent business inside of a large company, don't do that. The company shouldn't do it. You shouldn't do it. It's not a good idea.”
Lerner: Corporate product development accelerates learning speed via controllable distribution
“In terms of speed of learning, right, I actually think it's a fantastic sort of like, as you said, accelerant to the speed of learning in a bunch of these areas because you can turn on distribution however you want overnight when you're ready to do it.”
Lerner: Chime is fundamentally a consumer product company, not fintech
“Chime is actually much more of a consumer product company than it is a fintech at the end of the day.”
Lerner: Incentive alignment is the most powerful lever in business
“Incentive alignment is the most powerful lever you have in a business, definitely in a marketplace.”
Lerner: Startup advising spans company-level, functional, and domain expertise
“I see kind of like three top level shapes of advising today. The first one is company level advising or founder level advising, where the perspective is across the whole company, the whole business. You're really like a partner to that founder. This is the kin…”
Lerner: Company advising grows the business; executive coaching develops the leader
“And so company level advising is really that, like, I'm helping you do your job at that highest level with the goal of Growing this company. Whereas coaching is, I'm helping you become a better version of yourself.”
Lerner: Founders must own strategy for primary growth levers
“As a founder, you should be owning the strategy for your primary growth lever. If that's product marketing sales, right? Like whatever the primary growth lever for your business is, you should not delegate that thing. I think a lot of founders are like, Hey, I…”
Lerner: Non-founders will not take necessary risks on growth levers
“If it's the primary growth lever for your business, it is the most important piece of your business, and at the end of the day, the person you hire will not have the full company perspective that you do. They will not have the right level of skin in the game, …”
Lerner: Fractional executives bridge the gap before startups justify full-time hires
“There tends to be a gap Period for most startups where they are not yet big enough. It doesn't yet make sense to hire a full head of growth, head of marketing, head of product, but it's getting big enough that it's taking too much of that founder's time, or it…”
Lerner: High-level monthly advising fails to provide real thought partnership
“Which is something you don't get to do when you're doing the high level advising. You're just not close enough to the ground to really be a thought partner.”
Lerner: Match advisor hiring to playbook creation versus playbook scaling
“I think the things that matter most are one is like, did they develop the playbook or did they scale the playbook? I think you see a lot of split between somebody who scaled the playbook that was developed prior to them, or they developed the playbook from scr…”
Lerner: Performance marketing advisors cannot effectively advise virality-driven startups
“On the growth side, like if your primary lever is virality, definitely get somebody that did virality stuff, right? If they come from a performance world, they're gonna not have, they're gonna struggle to help you with the core virality stuff and vice versa, r…”
Lerner: Performance marketing translates globally while brand and fintech stay local
“Brand people need to know that the culture of the place that they are doing branding too. Performance works pretty similarly in a lot of different places, right? And then like maybe fintech is a good example where just like the core business models and the inf…”
Ely Lerner uses a freemium model before formalizing startup advisory agreements
“My model is I meet as many founders as I can, and I help them as much as I can for free. And we work together. And if at some point we feel like I have capacity and there's a good fit and I'm bringing a lot of value, then we formalize the relationship.”
Ely Lerner structures startup advisory deals on a month-to-month flexible basis
“My advising is month to month, week to week. Like the way that I'm doing my engagements is we just work together. And if any given time, either of us feels like we're not getting enough value out of the relationship, we just stop. And there's, you're not, ther…”
Lerner: Fractional executive pay should scale without equity cliffs
“Usually what you would do is you would look at what you would hire a full-time C-level in that position for, and then you would just scale it back by the fraction. So usually it's like two days a week or three days a week. Those tend to be the most common vers…”
Ely Lerner structures startup advisor compensation as 80% cash and 20% equity
“The package that I do is, let's call it, eighty-twenty cash and equity, right? And, but again, on a month-to-month basis for this hands-on advising.”
Ely Lerner: Outcome ownership drives high-functioning engineering teams
“I think that, like, the strongest lever that you can pull to really drive high-functioning engineering teams is engineering ownership of outcomes.”
Lerner: Startups should not spend engineering resources pushing downside risk to zero
“A key aspect of defense is that there's almost always a diminishing returns curve. There's a point on that curve where you have reduced the risk of the downside to a significant amount, not to zero, because if you try, like, if you try to move the risk to zero…”
Lerner: Consolidate defensive engineering into a dedicated core experience team
“One of the things that I've seen be really effective is when you have a core experience org that owns every piece Of the defense. All of the defenses within that org and no non-defense is in that org. That really lets them prioritize apples to apples defense a…”
Lerner: Maturing growth loops transition from offensive bets to defensive maintenance
“Once it starts topping out, you still need to invest in it. Like you still need to be right. Like if it's a virality loop, like you can't just be like, okay, it's, we're starting to get lower returns. We're just going to ignore it from now on. It starts turnin…”
Lerner: Airbnb turned trust and safety into an offensive growth driver
“Airbnb is a good example, actually, where trust and safety becomes offense because like a core barrier for Airbnb is this idea that like, I mean, somebody else's home, right? Like that's a core barrier to value delivery for your product. And so that's a place …”
Lerner: Defensive engineering is as critical as offensive growth for startups
“The one thing to remember here is defense is equally important to offense, if not more important, right? Like the whole point is that these are existential. If you do not do these things, you're not going to have a company to invest in offense.”
Lerner: Startups must celebrate resource efficiency over pure metric growth
“I think this is another thing that people do wrong is they tend to celebrate offense. They tend to celebrate metrics movers. Right. In their org. And that makes people working on defensive things feel crappy because they never get celebrated. But really you ne…”
Ely Lerner: Feature-owned engineering teams fail to drive business outcomes
“The old style was we have teams that own features, right? Which like is very nice from a, we touch this piece of the code base. Nobody else touches this piece of the code base, but isn't very good for driving business outcomes.”
Ely Lerner: Startup offensive strategy must focus on leverage points, not solutions
“Offense should not be about the solution. Your offense is not the solution. The offense is the leverage point that you are trying to move.”
Lerner: Building product teams focused on churn is a mistake
“People tend to build teams focused on churn, and I think that's a mistake. I don't think you want to focus teams on churn.”
Lerner: New user activation is the strongest lever for retention
“Generally new user activation and getting people to the place where they experience the core value of your product and then build a habit around that value is your strongest lever to retention, which is the thing that is going to impact your churn metric.”
Ely Lerner: Startup advisors fail when pushing playbooks without contextual fit
“When you get a kind of advisor who has done a bunch of things before, and essentially their advice is do the things I did because they worked for me. That happens a lot. And what ha what the challenge is if their situation was meaningfully different from yours…”
Lerner: Startups must cycle advisors as business problems evolve
“And as your business progresses, if you move into things that they are not as good at, you're going to pretty quickly know that you're not getting the same level of value from that relationship. And you need to start looking for somebody who is really good at …”
Lerner: Startups should ultimately integrate growth into all product teams
“So if it is, if you are a company that is at the first stage, it may well be the right step for you to go to having a separate growth org, but you should think that your end goal is to integrate growth into everything that you're doing.”
Ely Lerner: Retention compounds business growth by driving engagement and virality
“And again, this is back to the, like retention is king, right? Like retention stacks your business. Retention drives engagement, which drives virality. Like it's just all the things.”
Lerner: Optimizing overall conversion without ICP tracking wastes growth resources
“One of the biggest things I see people do wrong is they see they have a conversion problem. They point a team at conversion and they look at the conversion metric overall. The problem is a bunch of those people are not ICP and they're never going to convert an…”
Lerner: Horizontal product ICPs are defined by attributes, not personas
“Horizontal products also have an ICP. This is, I love this one. I'm going to call this out even though you didn't ask. I think it's an important one for so many people. Horizontal products have an ICP because the true ICP should be defined in terms of attribut…”
Lerner: Early horizontal startups must focus narrowly on a specific acute problem
“So you shouldn't try to be everything to everyone. You, again, actually like when you're first starting a product, the general wisdom, and this holds true for horizontal as well, is that you should probably be pretty narrow. It's just in horizontal, you're nar…”
Lerner: Zero-to-one product roles force leaders to own full business outcomes
“When you start out your product career or growth career working on a more mature product, it's easy to not really see the forest for the trees, right? Like you've got a lot going on and there's a lot of things already there. You're sort of a small piece. When …”
Ely Lerner: Growth hacks are dead; growth requires finding specific leverage
“I mean, honestly, the concept of growth tactics has died to death. Like, this whole idea of growth hacks, and there's a set of growth hacks that everybody can throw on to get quick wins. Growth is not about growth hacks, right? Growth is about intentionally fi…”
Ely Lerner: Push notifications and paid marketing only work in specific niches
“Paid is oversaturated in a lot of ways. I would say, though, that they're not, these things are not dead. They're dead as broad brush tools. Paid has channel, like, has specific niches where it works well. Push notifications have specific niches where they wor…”
Lerner: Growth leaders must vet founding team mindset before joining
“I'd say the most important things are understand that business. Like, is there opportunity Is there leverage to be had in the business? I think this is something like they're hiring you because they need to help to grow, but you want to figure out if they're a…”
Lerner: Early startups need data agility over perfect data
“I don't think it needs to be clean and structured, but they need to be able to iterate towards the things they need to learn. And so they need to have some data and they need to have the ability to say, hey, we need to be able to measure X because X is really …”
Lerner: Middle zone for marketplace network effect startups is empty
“You've got your Instacart, your Uber, your Lyft. They've kind of, like, gotten to where they need to be. There isn't actually very many people in that middle zone in terms of Marketplace network effects today.”
Lerner: Cashflow Portal is building AngelList for real estate investing
“I know a founder of this company called cashflow portal that is essentially building the angel list for real estate investing in a way that it's just never been done before. And I think this is a place where there are potential for network effects where there …”