Getting the most from your startup advisors
You know that you need to get advisors to fill the gaps and you have a vague idea that the more prestigious the names you have, then the more impressed your funding partners will be. Two things to get straight here:
1) Sophisticated investors know that entrepreneurs have started collecting ‘advisors’ like baseball cards in an attempt to get credibility from having the highest value assortment. They are also not stupid – Listing someone as an advisor because they agreed to take a call from you occasionally does not provide value in either social proof or contribution.
2) If you want to get some validation from the social proof of a valuable advisor, then you must demonstrate their engagement and how they are helping you chart your course.
3) You actually DO need real advisors, so engage them and take their counsel in a structured fashion.
If you are happy with the above assertions, then read on and I will tell you how.
Advisory Boards with a capital ‘B’
You should form and operate an advisory board with a discipline and process of a normal board of directors. This means that as CEO you play the role of company secretary and schedule monthly board meetings and distribute a formal agenda in advance (at least 2 days). There has been enough written on the topic of board agendas so you can google them, but it is worth repeating the role of the board.
Job #1 of a normal board is to hire and fire the CEO… The good news for you is that this doesn’t apply for advisory boards
Job#2 is to challenge, improve and approve strategy. You should look for advisors that deeply understand your business model and market and most certainly your stage of company (in particualr for first time entrepreneurs).
The informal role of the board includes CEO counseling, introductions (biz dev, funding, key hires). All of which you should look for in an advisory board also.
One big departure from the standard board is that you should have a constant stream of feedback from your advisors in between meetings. The best way I have found to achieve this is to use a tool like http://www.leanlaunchlab.com othat allows you to track your customer development process and to provide advisors with operational metrics in real-time. This encourages adhoc feedback and advice every week.
Getting them engaged
If you are thinking that I expect a lot from my advisors, then you are correct. The reason I receive it is because all my advisors have equity in the business through direct investment or vested grants. The mistake I see made often is that people either don’t give meaningful slices of equity, or they dole it out haphazardly and don’t get the value back.
My firm opinion is that if someone is going to be a committed advisor, then they must believe in your vision and therefore should be prepared to invest (even a token amount) to be a part of the team.
The characteristics of a good advisory team
You know that you have got it right when the following is true:
- You can get the advice you need from you board (directly or through an introduction)
- Advisors risk their social capital by providing introductions to high value connections
- Your advisors proactively suggest introductions due to gaps they see you have’
- Your advisors are asking informed questions because they are staying across your business
A final note – Remember that this is a two way street. You should seek to help your advisors with their personal and professional objectives at every turn. These are key relationships and deserve nourishment.
I wish you luck in finding your consigliere’s – I feel very fortunate to be working with mine.