Presentation by Dr. Tom Davis – 355
Today's show presents Dr. Tom Davis' lecture on becoming a consultant to venture capital firms from the 2023 Nonclinical Career Summit.
This serves as a motivational guide for those looking to navigate the consulting landscape successfully. Tom also shares his advice on using the consulting relationship to become a shareholder in selected start-ups.
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Overcoming “The Dip”
Dr. Tom Davis, a board-certified family physician, shares his journey into healthcare consulting. Despite initial struggles and feeling stuck in what Seth Godin calls “The Dip,” Tom persevered. His breakthrough came unexpectedly with a lucrative offer from a venture capital firm, which marked his transformation into a successful professional consultant.
Types of Consulting
Dr. Davis outlines the three primary types of consulting:
- Skills-Based Consulting: Utilizing specific skills clients lack, like creating a motivational video.
- Credibility Consulting: Lending credibility to client decisions, often based on reputation and Google rankings.
- Advisory Services: Providing strategic advice, often under retainer agreements, to venture capitalist firms and other entities.
Building Trust and Value
Dr. Davis emphasizes the importance of consistency and value in establishing trust with clients. Drawing from Seth Godin’s analogy, he highlights the need to offer valuable insights consistently, akin to placing a crisp $10 bill in a neighbor's mailbox daily, to build credibility and eventually secure larger client commitments.
Summary
For more information or to connect with Dr. Tom Davis, visit his website at tomdavisconsulting.com. He also shares valuable insights on LinkedIn, where you can follow his professional updates and articles. Tom is also a professional speaker and podcast guest, sharing his expertise in value-based care and telemedicine.
NOTE: Look below for a transcript of today's episode.
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Transcription PNC Podcast Episode 355
How to Become a Consultant to Venture Capital Firms
- Presentation by Dr. Tom Davis
Dr. Tom Davis: My first love was really consulting and value-based care. That was my goal as I started to pivot, but I was very discouraged at that time because I really wasn't getting the traction I wanted. I was getting clients, but I wasn't succeeding as well as I had thought.
I was in a period that the marketer named Seth Godin called "The Dip." After you've gotten started and you're very excited, then suddenly things just don't move as fast as you want, and you're kind of in the doldrums, and it's important to work through it.
Well, I remember this day. I was just laying on a couch, and it was my day off from my employee position as an FP, and the phone rang. Normally, the phone rings. It's probably another kind of basic engagement, or it's a telemedicine clinician looking for some help. I had been working very hard and diligently trying to engage potential clients in my practice. I had a website up that I blogged on a regular basis. I had a couple books out.
I did some professional speaking. I really was doing everything that I should, but your clients really don't care about that. They only care if you can solve their problems, so when the phone rang, I answered it without a lot of anticipation, and it was this gentleman from a venture capital firm looking for my assistance in helping them place evaluation on an acquisition that they were looking for, and we talked.
He's a very engaging guy, and eventually, he got the fees. He asked me what I would charge for advising them for a period of three months, and I told him I had to find out exactly how much value I could generate, and I didn't like hourly wages. I really liked retainer arrangements, and he responded, "Well, we can't pay you more than $50,000."
Well, I give myself great credit that I didn't choke or sputter because that was 10 times what I had earned in any other previous engagement, and normally you would take that as a starting point and begin to negotiate, but I took that money and ran because it was the very first time I really felt like a professional consultant.
Now, as John said, my name is Tom Davis. I'm a board-certified family physician. I came out of residency, and with my new partners in rural Missouri, we founded Patients First Healthcare, which was the first value-based care health system in the country. Lots of firsts there that I'll spare you from, but in 2012, we were acquired for more money than anybody should ever be paid, and with that acquisition, I decided that I needed to spread the love because practicing as a value-based care physician was just like walking on air. It was wonderful, so I still had three years on a personal service agreement with the folks who acquired us, so I started opening up my consultancy.
I stumbled into telemedicine. I did that on the side just for my own edification and as a service to my fellow clinicians, but that was the course that led me to that afternoon in 2015 when I became a real consultant, and after all, all consulting is, is helping someone, just helping someone fill a need, whatever that particular need is, and there's three basic types of consulting.
There's skilled-based consulting. When you have a skill, you're a web developer or a marketer that the potential client doesn't have, and they need to hire someone outside. For example, last year, I got an engagement to create a three-minute video to kind of rally the troops in this given organization to help them with their value-based care initiative. They paid me $3,000. Actually, they paid me $5,000. I spent three hours going on and creating the video for them, and that was it. So that was a skill I offered. They didn't have it internally.
Boom, it was done. I'm creating my own web, a new web presence for my consulting firm right now. I don't have the expertise in WordPress. I'm hiring somebody to create it. That's skills-based consulting, and that is certainly something that clinicians can do.
The second type of consulting is credibility consulting, and your goal there is really to your client's ass because they have either made a decision or they're about to make a decision, and they need somebody with some credibility that can help justify their decision, and this is something that I have some experience with.
Charissa told the story that back in 2020, when the whole health system went online, she was suddenly very busy with her telemedicine practice. Well, I was in the same place. That first weekend, I took 250 calls in my practice. It was quite hectic, but at the same time, if you Googled telemedicine, telemedicinemastery.com with my name right behind it and the MD there was the fifth non-boosted result that you would get.
Suddenly my phone was ringing off the hook as a telemedicine consultant, and because I was organically that high in Google's rankings, I had credibility, and what I discovered being a credibility consultant is they're really not interested in your expertise. What they're interested in is getting your credibility so that they can justify the decisions that have already been made.
I had engagements with several dozen folks over the first six weeks. Some of them were paid. Many of them were not once I figured out what was going on, but in almost every case, not every case, but almost every case, the client had been given a load of money, and they had already decided how to apportion it, and they simply needed somebody with credibility in order to rubber stamp that decision.
Now, these clients have bosses. Everybody has a boss. Sometimes it was the CEO of an organization had to answer to his board. Sometimes it was someone a little lower on the food chain that had to answer to their boss. Once you get that high up in the corporate structure, it's much less hierarchical than you think. It's very much a group, a collaborative practice where everybody's covering for everybody else. But as a credibility consultant, they wanted somebody that they could say, hey, this guy was high on Google. When we searched, nobody else knows anything about this. This guy is going to support what we want to do.
Now, occasionally, when you're a credibility consultant, there are folks who actually have plans for their money or for their processes, but they still bring you in to rubber stamp them. Then when you try to share your expertise with them, they get angry. That was a lesson I learned too back in 2020, having never been a credibility consultant before and not understanding what these folks want to buy. They simply wanted to buy your credibility. After about six months, my Google searches got suppressed because other folks were boosting theirs, as you can with SEO. My days as a credibility consultant were blessedly limited.
During that time, it was extremely instructive. One of the things I learned was that I didn't want to be a credibility consultant. That doesn't mean that it's not a reasonable path for a clinician, especially when coming out of school and not wanting or able to go into residency. You have to remember, these folks are selling credibility. The folks that they put out in the field are generally young. They're selling things that give them credibility, but they're not selling their expertise.
You don't have to be an expert to be a credibility consultant. You just have to be willing to put in the hours and be good at getting new business. That's the coin of the realm with these credibility consultants. They want you to generate billable hours and they want you to generate new business. It really is the Thunderdome to determine who's going to move up the ranks and be offered a partnership. If that's you, having an MDDO is the equivalent of having a business degree from a branded business school.
A final word on credibility consultants is that I have worked with a significant number of female folks in that industry. They are universal about the amount of misogyny and sexual harassment that goes on from their point of view. Never had a man tell me about that, but had virtually every woman tell me about some pretty significant exploitation.
If you're female and you're thinking about doing that, I felt a word to the wise was indicated. Surprisingly, credibility consulting is not what we're talking about today. It's not venture capital consulting.
Consulting with venture capital folks falls under the third type of consulting and that is advisory services. But advisory services is exactly what it sounds like. People pay you to give them advice. They might take it, they might not, but that's what they're paying you for. Typically, an advisory consultant works under a retainer arrangement, meaning that you get paid a certain amount of money to provide advisory services for a certain period of time. I have an advisory arrangement with a venture capital firm right now.
They paid me back in July for one year. We worked together for about 20 hours and then I haven't heard from them again until this very morning where they wanted to talk to me again. That's fine. We had an arrangement for an entire year. That is usually how they're structured. You can charge for that based on the value that you think that you are providing them because what they want is your expertise.
Now, I didn't start out providing advisory services of venture capital folks. I started to do it to payers, to health systems, to individual clinicians and then I started attracting some vendors, people who are selling technologies to support value-based care billing systems. All this time, I was learning the craft until that fateful day in 2015 that I told you about.
When you're a consultant, any of these three types of consultants, but especially advisory consultants, you are telling your client a story. That's what you want them to buy. You want them to buy the story that you can fill their needs.
For a skills-based consultant, you have the skills and you're going to complete things on time. That's the story that you're selling to them. If they hire you, they bought it.
For credibility consultants, it's, "You know what? We'll keep you safe. We're the safe choice. We'll cover you. We'll endorse whatever you want." That's the credibility consultant. For the advisory consultant, it's "I have expertise. I have something that I have knowledge that you need that can get you to a better place."
Now, when we talk about folks in the VC world, I like to ask audiences what they think that the VC, the people that work in these venture capital and other investing groups want to achieve from their business plan. What is their goal as doing what they're doing? And most folks will say, well, they want to make money. And that's only partially correct. These folks want to make more money than other people. So they're intensely competitive, just as competitive as anybody that we knew in medical school. They don't just don't want to make money. The absolute amount of money is nice, but it matters more that they beat their compatriots. They want an edge. They want to know something that somebody else doesn't know.
Because in the investing world, asymmetrical information is how you make your game. So the story that you're selling them is that you are the diamond in the rough. You're the one that everybody else has missed that has what they need to give you that edge. That's the story that you're selling these folks. And if you sell them that story, if you put that out there, it's just like a lure. Eventually, somebody will bite.
Now, how do you put out that story? Well, it's pretty straightforward. Again, Seth Godin is one of the folks that I read heavily as I was learning how to do this. He gave a great allegory about a next door neighbor that just moved in. And he doesn't know you from Adam. And if you were to go over there the first day that he moved in and ask him to cash a $500 check for you, he would think you are nuts.
He certainly wouldn't take a check from you. But if for 90 days, every morning at 8am as he's pulling out for work, he sees you walk over and put a crisp $10 bill in his mailbox. Then on the 91st day, he will cash that check.
So what you're doing is giving him a small amount of value on a consistent basis in a way that he recognizes in a way that he is easily absorbable. So that when you do make the ask, that he's much more likely to take you up on it. Imagine if instead of a $500 check on that 90th day, 91st day, you just did $100 check. Well, he's much more likely to do that. Then you keep on giving him the 10 bucks. A couple months later, you ask for a $500 check. He'll do that. Then you do for a couple months, you ask for a $750 check. So he's learned to trust you.
He's learned to understand that you are providing value. So he's willing to give you something that he values in return. And that is how you reach out to folks to tell them your story, to get them to give you something that they value, which is their time, their money, the engagement. And how you do that depends on who your customer is.
Now for venture capital, the platform of choice is LinkedIn. LinkedIn is a B2B or a business-to-business platform. And although I'm in the middle of renovating my LinkedIn platform as part of my new updated internet presence, you can still see that I regularly release information on a regular basis that's free. It's high value. And it encourages folks to tell themselves a story that I'm their edge. I'm their angle. And I blogged almost every day for five years. You can still see a portion of that blog on tomdavisconsulting.com. And it's no great shakes. It didn't get millions of hits. In fact, some days it only got one or two.
But the people that saw that are the people who I wanted to tell themselves a story. It's all about releasing information freely on a regular basis, day in and day out. I did professional speaking. I wrote books. I did podcast after podcast after podcast. And just by throwing that hook out every day in the still waters, regardless of what the weather was like, eventually somebody bit. And since that time, the venture capital folks have been my most enjoyable and fulfilling clients. And it's not because they do what I suggest. I usually don't have any idea what they decide based on the information that I ask. But they reach out to me for specific needs. I answer their questions, do the analyses that they ask for. And in return, they're very grateful.
Now, you have to compare and contrast this to doing the same thing with other potential clients like payers or health systems. Those folks, their check's clear. There's no question about that.
But there is a lot more institutional inertia about the types of advice that they'll accept. And sat around the table more than once to get verbally abused by folks that didn't like what I had to say. And again, that's OK. There's no more engaging those folks. And again, their check is cleared. But you did their best for them. That never happens with venture capital. I'm always treated with respect and always treated with professional courtesy. And that is not something that I can say dealing with my fellow clinicians, not by a long shot.
Now, one of the benefits that everybody thinks comes with consulting in venture capital is that you get in on the ground floor. Sometimes you can get a piece of the company early on in exchange for giving advice and instead of getting a fee. And you don't know you'll get a piece of the next eBay or Amazon or something like that.
And there's actually some truth to that, but only if you approach the situation in the right way. So there are companies, usually tech firms, that offer supportive technologies for folks in value-based care. And oftentimes, after an initial engagement of consulting with them, we'll talk about further engagements.
And I'll offer to do that in exchange for a piece of the action. And here's a first technical tip if you ever do get in this position is only ask for a teeny tiny little small slice. And the reason for that is twofold.
One is that the more that you ask, the more they can demand of you. So that puts you in a situation of being a stock picker, of trying to pick and choose the winners in an environment where very, very, very, very few organizations actually reach the finish line and either get acquired or go public. Your best bet, your best strategy, is to take a little, when the opportunity comes, is take a little bit of a whole lot of companies.
And when one converts, then you call that a win. None of those things are going to put you in the cent-a-millionaire club, but when they do convert, it's very, very nice. So there are opportunities to do that, but the wise way to approach that is to simply take small pieces of a number of different companies.
And usually, those opportunities don't present themselves until you've had a successful collaboration with them first. And I've had collaborations with companies that either I didn't do a good job on or they didn't like what I had to say, and so no further offers were forthcoming. And that's okay.
That's just part of life. But when you do get those opportunities, use the technique that I discussed and you will be in a much better position. Now, to reach out to these firms, some of these social media platforms offer opportunities to boost or to do direct mailings.
I don't do any of that stuff. I don't want to annoy or bother any potential clients, just like you don't move the hook around when you're trying to fish. You just offer them something of value. If they want it, they want it. If they don't, they don't. The key is consistency and high value and doing it every day. And you realize over time that what you're doing as a consultant is basically what you're doing as a doctor.
What are we but advisory consultants? We have expertise. The patients come in. We advise them. A lot of times they don't do what we say. Sometimes they do. If we're specialists, we have primary care doctors that send their patients to us for a consultation. In the old days, that's exactly what it was. You send them to another doctor for their opinion. The doctor sent them back to you with recommendations on how to treat them. That's exactly what we do now.
And so when you enter consulting with that mindset, it actually makes things a lot more comfortable. And then as you are more successful consulting in the venture capital space, you will start to realize that it is different than being successful in another space. So when I help a clinician generally, he will refer me to his friends.
When I help a health system, generally, I get referrals for their colleagues who work in other health systems, not ones that are directly competing from them, but other health systems. When I work for vendors, these folks, these technology firms, they collapse all the time and talent gets redistributed. And then I get word of mouth referrals in that fashion.
That's very common. But you have to understand that the story that you're selling in venture capital is that you are the edge that they need. And so they're not going to tell other folks that they're competing with that they need to talk to you. So you're not going to get any word of mouth. And it took me a little while to understand that. Really, you have to rely on them passively coming to you after you have set the hook.
Now, again, this is we've talked again about nine years before you're successful overnight. Being a consultant is very much that path. It was years of blog posting and learning how to be a professional speaker and working on all of my skills before I got that big bite.
I also had a number of consulting engagements where I didn't know what I was doing. And some of those did a bad job. And you just have to learn from your mistakes and move on. The nice part about it in consulting, nobody dies when you make a mistake. I've been fortunate not to have that. But you have to understand it's a learning process.
It is a journey. But if you stick with it, then good things can happen. So it's not something that you want to do right off the gate and say, I'm going to quit my job. And tomorrow, I'm going to earn the same amount of money being consulted. It doesn't work that way. Fortunately, it is a job that you can usually do on the side outside of your non-compete.
You got to always have your lawyer check on that. But non-competes are usually pretty restrictive. And for them to cover something non-clinical like consulting, that's a pretty restrictive non-compete and may be hard to enforce.
It is something that you can start doing right now just by putting yourself out there. Every one of us that are looking at this has expertise that venture capital firms are looking for, because they're always looking to invest in something new, something novel, something that nobody else is investing in.
Now, everything has a fashion. When there's one superhero movie, everybody makes superhero movies. When there's one successful type of tech firm, everybody tries to invest in those tech firms, those similar tech firms. And there's some truth to that. But that's only part of what goes on in the angel investor venture capital world. There are always folks looking for the next thing. There's always folks who have budgeted a certain amount of money to invest in speculative endeavors.
EBay is a great example of something that was totally speculative when it came down. Bidding on the internet, who the heck knows? Nobody knows that. And it subsequently sold for several billion dollars. So there are always people that set aside a little bit of their pile of money to invest in speculative investments. And these are things that you have expertise in.
For me, it's value-based care. For Narissa, it could be working with a person that has developed a new medication or new drug that she has special knowledge about. For sports medicine folks, it could be somebody that's looking at investing a new business-to-consumer rehab platform. You just never know until you put it out there. Because these people are either running their own money or they're running somebody else's money who has aligned incentives with them. And they are looking, looking, looking, looking for that edge that will help them to succeed.
And the internet has lowered the barriers of connectivity to essentially zero. There's really no expense other than your time to put into it. And that's one of the reasons why I really like consulting, because after paying hundreds of thousands of dollars for my medical education, I wasn't ready to lay out any more money, any more capital to invest in a new career.
Consulting is completely unlicensed. It's unregulated, and it's not going to be regulated. Anybody can hang up the shingles and call themselves a consultant. You don't need any credentials. You don't need anything but a story, a story that someone else will accept that you will get them to a better place.
And for my money, the apex is working with these folks who run money. They are very serious. They're very talented. It's very intellectually stimulating and challenging, and you can really make a difference. Also, there's just a teeny, teeny, teeny, tiny little chance that you could, while you're helping other people, while you're still scratching that itch, you could hit it big. And when you do, when that happens, it feels all those failures fall away, and you feel wonderful.
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Transcription PNC Podcast Episode 355
How to Become a Consultant to Venture Capital Firms
- Presentation by Dr. Tom Davis
Dr. Tom Davis: My first love was really consulting and value-based care. That was my goal as I started to pivot, but I was very discouraged at that time because I really wasn't getting the traction I wanted. I was getting clients, but I wasn't succeeding as well as I had thought.
I was in a period that the marketer named Seth Godin called "The Dip." After you've gotten started and you're very excited, then suddenly things just don't move as fast as you want, and you're kind of in the doldrums, and it's important to work through it.
Well, I remember this day. I was just laying on a couch, and it was my day off from my employee position as an FP, and the phone rang. Normally, the phone rings. It's probably another kind of basic engagement, or it's a telemedicine clinician looking for some help. I had been working very hard and diligently trying to engage potential clients in my practice. I had a website up that I blogged on a regular basis. I had a couple books out.
I did some professional speaking. I really was doing everything that I should, but your clients really don't care about that. They only care if you can solve their problems, so when the phone rang, I answered it without a lot of anticipation, and it was this gentleman from a venture capital firm looking for my assistance in helping them place evaluation on an acquisition that they were looking for, and we talked.
He's a very engaging guy, and eventually, he got the fees. He asked me what I would charge for advising them for a period of three months, and I told him I had to find out exactly how much value I could generate, and I didn't like hourly wages. I really liked retainer arrangements, and he responded, "Well, we can't pay you more than $50,000."
Well, I give myself great credit that I didn't choke or sputter because that was 10 times what I had earned in any other previous engagement, and normally you would take that as a starting point and begin to negotiate, but I took that money and ran because it was the very first time I really felt like a professional consultant.
Now, as John said, my name is Tom Davis. I'm a board-certified family physician. I came out of residency, and with my new partners in rural Missouri, we founded Patients First Healthcare, which was the first value-based care health system in the country. Lots of firsts there that I'll spare you from, but in 2012, we were acquired for more money than anybody should ever be paid, and with that acquisition, I decided that I needed to spread the love because practicing as a value-based care physician was just like walking on air. It was wonderful, so I still had three years on a personal service agreement with the folks who acquired us, so I started opening up my consultancy.
I stumbled into telemedicine. I did that on the side just for my own edification and as a service to my fellow clinicians, but that was the course that led me to that afternoon in 2015 when I became a real consultant, and after all, all consulting is, is helping someone, just helping someone fill a need, whatever that particular need is, and there's three basic types of consulting.
There's skilled-based consulting. When you have a skill, you're a web developer or a marketer that the potential client doesn't have, and they need to hire someone outside. For example, last year, I got an engagement to create a three-minute video to kind of rally the troops in this given organization to help them with their value-based care initiative. They paid me $3,000. Actually, they paid me $5,000. I spent three hours going on and creating the video for them, and that was it. So that was a skill I offered. They didn't have it internally.
Boom, it was done. I'm creating my own web, a new web presence for my consulting firm right now. I don't have the expertise in WordPress. I'm hiring somebody to create it. That's skills-based consulting, and that is certainly something that clinicians can do.
The second type of consulting is credibility consulting, and your goal there is really to your client's ass because they have either made a decision or they're about to make a decision, and they need somebody with some credibility that can help justify their decision, and this is something that I have some experience with.
Charissa told the story that back in 2020, when the whole health system went online, she was suddenly very busy with her telemedicine practice. Well, I was in the same place. That first weekend, I took 250 calls in my practice. It was quite hectic, but at the same time, if you Googled telemedicine, telemedicinemastery.com with my name right behind it and the MD there was the fifth non-boosted result that you would get.
Suddenly my phone was ringing off the hook as a telemedicine consultant, and because I was organically that high in Google's rankings, I had credibility, and what I discovered being a credibility consultant is they're really not interested in your expertise. What they're interested in is getting your credibility so that they can justify the decisions that have already been made.
I had engagements with several dozen folks over the first six weeks. Some of them were paid. Many of them were not once I figured out what was going on, but in almost every case, not every case, but almost every case, the client had been given a load of money, and they had already decided how to apportion it, and they simply needed somebody with credibility in order to rubber stamp that decision.
Now, these clients have bosses. Everybody has a boss. Sometimes it was the CEO of an organization had to answer to his board. Sometimes it was someone a little lower on the food chain that had to answer to their boss. Once you get that high up in the corporate structure, it's much less hierarchical than you think. It's very much a group, a collaborative practice where everybody's covering for everybody else. But as a credibility consultant, they wanted somebody that they could say, hey, this guy was high on Google. When we searched, nobody else knows anything about this. This guy is going to support what we want to do.
Now, occasionally, when you're a credibility consultant, there are folks who actually have plans for their money or for their processes, but they still bring you in to rubber stamp them. Then when you try to share your expertise with them, they get angry. That was a lesson I learned too back in 2020, having never been a credibility consultant before and not understanding what these folks want to buy. They simply wanted to buy your credibility. After about six months, my Google searches got suppressed because other folks were boosting theirs, as you can with SEO. My days as a credibility consultant were blessedly limited.
During that time, it was extremely instructive. One of the things I learned was that I didn't want to be a credibility consultant. That doesn't mean that it's not a reasonable path for a clinician, especially when coming out of school and not wanting or able to go into residency. You have to remember, these folks are selling credibility. The folks that they put out in the field are generally young. They're selling things that give them credibility, but they're not selling their expertise.
You don't have to be an expert to be a credibility consultant. You just have to be willing to put in the hours and be good at getting new business. That's the coin of the realm with these credibility consultants. They want you to generate billable hours and they want you to generate new business. It really is the Thunderdome to determine who's going to move up the ranks and be offered a partnership. If that's you, having an MDDO is the equivalent of having a business degree from a branded business school.
A final word on credibility consultants is that I have worked with a significant number of female folks in that industry. They are universal about the amount of misogyny and sexual harassment that goes on from their point of view. Never had a man tell me about that, but had virtually every woman tell me about some pretty significant exploitation.
If you're female and you're thinking about doing that, I felt a word to the wise was indicated. Surprisingly, credibility consulting is not what we're talking about today. It's not venture capital consulting.
Consulting with venture capital folks falls under the third type of consulting and that is advisory services. But advisory services is exactly what it sounds like. People pay you to give them advice. They might take it, they might not, but that's what they're paying you for. Typically, an advisory consultant works under a retainer arrangement, meaning that you get paid a certain amount of money to provide advisory services for a certain period of time. I have an advisory arrangement with a venture capital firm right now.
They paid me back in July for one year. We worked together for about 20 hours and then I haven't heard from them again until this very morning where they wanted to talk to me again. That's fine. We had an arrangement for an entire year. That is usually how they're structured. You can charge for that based on the value that you think that you are providing them because what they want is your expertise.
Now, I didn't start out providing advisory services of venture capital folks. I started to do it to payers, to health systems, to individual clinicians and then I started attracting some vendors, people who are selling technologies to support value-based care billing systems. All this time, I was learning the craft until that fateful day in 2015 that I told you about.
When you're a consultant, any of these three types of consultants, but especially advisory consultants, you are telling your client a story. That's what you want them to buy. You want them to buy the story that you can fill their needs.
For a skills-based consultant, you have the skills and you're going to complete things on time. That's the story that you're selling to them. If they hire you, they bought it.
For credibility consultants, it's, "You know what? We'll keep you safe. We're the safe choice. We'll cover you. We'll endorse whatever you want." That's the credibility consultant. For the advisory consultant, it's "I have expertise. I have something that I have knowledge that you need that can get you to a better place."
Now, when we talk about folks in the VC world, I like to ask audiences what they think that the VC, the people that work in these venture capital and other investing groups want to achieve from their business plan. What is their goal as doing what they're doing? And most folks will say, well, they want to make money. And that's only partially correct. These folks want to make more money than other people. So they're intensely competitive, just as competitive as anybody that we knew in medical school. They don't just don't want to make money. The absolute amount of money is nice, but it matters more that they beat their compatriots. They want an edge. They want to know something that somebody else doesn't know.
Because in the investing world, asymmetrical information is how you make your game. So the story that you're selling them is that you are the diamond in the rough. You're the one that everybody else has missed that has what they need to give you that edge. That's the story that you're selling these folks. And if you sell them that story, if you put that out there, it's just like a lure. Eventually, somebody will bite.
Now, how do you put out that story? Well, it's pretty straightforward. Again, Seth Godin is one of the folks that I read heavily as I was learning how to do this. He gave a great allegory about a next door neighbor that just moved in. And he doesn't know you from Adam. And if you were to go over there the first day that he moved in and ask him to cash a $500 check for you, he would think you are nuts.
He certainly wouldn't take a check from you. But if for 90 days, every morning at 8am as he's pulling out for work, he sees you walk over and put a crisp $10 bill in his mailbox. Then on the 91st day, he will cash that check.
So what you're doing is giving him a small amount of value on a consistent basis in a way that he recognizes in a way that he is easily absorbable. So that when you do make the ask, that he's much more likely to take you up on it. Imagine if instead of a $500 check on that 90th day, 91st day, you just did $100 check. Well, he's much more likely to do that. Then you keep on giving him the 10 bucks. A couple months later, you ask for a $500 check. He'll do that. Then you do for a couple months, you ask for a $750 check. So he's learned to trust you.
He's learned to understand that you are providing value. So he's willing to give you something that he values in return. And that is how you reach out to folks to tell them your story, to get them to give you something that they value, which is their time, their money, the engagement. And how you do that depends on who your customer is.
Now for venture capital, the platform of choice is LinkedIn. LinkedIn is a B2B or a business-to-business platform. And although I'm in the middle of renovating my LinkedIn platform as part of my new updated internet presence, you can still see that I regularly release information on a regular basis that's free. It's high value. And it encourages folks to tell themselves a story that I'm their edge. I'm their angle. And I blogged almost every day for five years. You can still see a portion of that blog on tomdavisconsulting.com. And it's no great shakes. It didn't get millions of hits. In fact, some days it only got one or two.
But the people that saw that are the people who I wanted to tell themselves a story. It's all about releasing information freely on a regular basis, day in and day out. I did professional speaking. I wrote books. I did podcast after podcast after podcast. And just by throwing that hook out every day in the still waters, regardless of what the weather was like, eventually somebody bit. And since that time, the venture capital folks have been my most enjoyable and fulfilling clients. And it's not because they do what I suggest. I usually don't have any idea what they decide based on the information that I ask. But they reach out to me for specific needs. I answer their questions, do the analyses that they ask for. And in return, they're very grateful.
Now, you have to compare and contrast this to doing the same thing with other potential clients like payers or health systems. Those folks, their check's clear. There's no question about that.
But there is a lot more institutional inertia about the types of advice that they'll accept. And sat around the table more than once to get verbally abused by folks that didn't like what I had to say. And again, that's OK. There's no more engaging those folks. And again, their check is cleared. But you did their best for them. That never happens with venture capital. I'm always treated with respect and always treated with professional courtesy. And that is not something that I can say dealing with my fellow clinicians, not by a long shot.
Now, one of the benefits that everybody thinks comes with consulting in venture capital is that you get in on the ground floor. Sometimes you can get a piece of the company early on in exchange for giving advice and instead of getting a fee. And you don't know you'll get a piece of the next eBay or Amazon or something like that.
And there's actually some truth to that, but only if you approach the situation in the right way. So there are companies, usually tech firms, that offer supportive technologies for folks in value-based care. And oftentimes, after an initial engagement of consulting with them, we'll talk about further engagements.
And I'll offer to do that in exchange for a piece of the action. And here's a first technical tip if you ever do get in this position is only ask for a teeny tiny little small slice. And the reason for that is twofold.
One is that the more that you ask, the more they can demand of you. So that puts you in a situation of being a stock picker, of trying to pick and choose the winners in an environment where very, very, very, very few organizations actually reach the finish line and either get acquired or go public. Your best bet, your best strategy, is to take a little, when the opportunity comes, is take a little bit of a whole lot of companies.
And when one converts, then you call that a win. None of those things are going to put you in the cent-a-millionaire club, but when they do convert, it's very, very nice. So there are opportunities to do that, but the wise way to approach that is to simply take small pieces of a number of different companies.
And usually, those opportunities don't present themselves until you've had a successful collaboration with them first. And I've had collaborations with companies that either I didn't do a good job on or they didn't like what I had to say, and so no further offers were forthcoming. And that's okay.
That's just part of life. But when you do get those opportunities, use the technique that I discussed and you will be in a much better position. Now, to reach out to these firms, some of these social media platforms offer opportunities to boost or to do direct mailings.
I don't do any of that stuff. I don't want to annoy or bother any potential clients, just like you don't move the hook around when you're trying to fish. You just offer them something of value. If they want it, they want it. If they don't, they don't. The key is consistency and high value and doing it every day. And you realize over time that what you're doing as a consultant is basically what you're doing as a doctor.
What are we but advisory consultants? We have expertise. The patients come in. We advise them. A lot of times they don't do what we say. Sometimes they do. If we're specialists, we have primary care doctors that send their patients to us for a consultation. In the old days, that's exactly what it was. You send them to another doctor for their opinion. The doctor sent them back to you with recommendations on how to treat them. That's exactly what we do now.
And so when you enter consulting with that mindset, it actually makes things a lot more comfortable. And then as you are more successful consulting in the venture capital space, you will start to realize that it is different than being successful in another space. So when I help a clinician generally, he will refer me to his friends.
When I help a health system, generally, I get referrals for their colleagues who work in other health systems, not ones that are directly competing from them, but other health systems. When I work for vendors, these folks, these technology firms, they collapse all the time and talent gets redistributed. And then I get word of mouth referrals in that fashion.
That's very common. But you have to understand that the story that you're selling in venture capital is that you are the edge that they need. And so they're not going to tell other folks that they're competing with that they need to talk to you. So you're not going to get any word of mouth. And it took me a little while to understand that. Really, you have to rely on them passively coming to you after you have set the hook.
Now, again, this is we've talked again about nine years before you're successful overnight. Being a consultant is very much that path. It was years of blog posting and learning how to be a professional speaker and working on all of my skills before I got that big bite.
I also had a number of consulting engagements where I didn't know what I was doing. And some of those did a bad job. And you just have to learn from your mistakes and move on. The nice part about it in consulting, nobody dies when you make a mistake. I've been fortunate not to have that. But you have to understand it's a learning process.
It is a journey. But if you stick with it, then good things can happen. So it's not something that you want to do right off the gate and say, I'm going to quit my job. And tomorrow, I'm going to earn the same amount of money being consulted. It doesn't work that way. Fortunately, it is a job that you can usually do on the side outside of your non-compete.
You got to always have your lawyer check on that. But non-competes are usually pretty restrictive. And for them to cover something non-clinical like consulting, that's a pretty restrictive non-compete and may be hard to enforce.
It is something that you can start doing right now just by putting yourself out there. Every one of us that are looking at this has expertise that venture capital firms are looking for, because they're always looking to invest in something new, something novel, something that nobody else is investing in.
Now, everything has a fashion. When there's one superhero movie, everybody makes superhero movies. When there's one successful type of tech firm, everybody tries to invest in those tech firms, those similar tech firms. And there's some truth to that. But that's only part of what goes on in the angel investor venture capital world. There are always folks looking for the next thing. There's always folks who have budgeted a certain amount of money to invest in speculative endeavors.
EBay is a great example of something that was totally speculative when it came down. Bidding on the internet, who the heck knows? Nobody knows that. And it subsequently sold for several billion dollars. So there are always people that set aside a little bit of their pile of money to invest in speculative investments. And these are things that you have expertise in.
For me, it's value-based care. For Narissa, it could be working with a person that has developed a new medication or new drug that she has special knowledge about. For sports medicine folks, it could be somebody that's looking at investing a new business-to-consumer rehab platform. You just never know until you put it out there. Because these people are either running their own money or they're running somebody else's money who has aligned incentives with them. And they are looking, looking, looking, looking for that edge that will help them to succeed.
And the internet has lowered the barriers of connectivity to essentially zero. There's really no expense other than your time to put into it. And that's one of the reasons why I really like consulting, because after paying hundreds of thousands of dollars for my medical education, I wasn't ready to lay out any more money, any more capital to invest in a new career.
Consulting is completely unlicensed. It's unregulated, and it's not going to be regulated. Anybody can hang up the shingles and call themselves a consultant. You don't need any credentials. You don't need anything but a story, a story that someone else will accept that you will get them to a better place.
And for my money, the apex is working with these folks who run money. They are very serious. They're very talented. It's very intellectually stimulating and challenging, and you can really make a difference. Also, there's just a teeny, teeny, teeny, tiny little chance that you could, while you're helping other people, while you're still scratching that itch, you could hit it big. And when you do, when that happens, it feels all those failures fall away, and you feel wonderful.
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