Guest author, Eli Portnoy, is the co-founder and CEO of Sense360 and former co-founder and GM of Thinknear. Eli is also a mentor for Techstars in LA.
Advisory boards get a bad rep, and most of them deserve it. They are generally nothing more than head shots on a slide deck — impressive people who “validate” that the company is interesting. But advisory boards can and should be so much more.
Over the last two companies I have co-founded, advisors played an outsized role in whatever success we have had. They have helped me think through tough problems, fill-in knowledge gaps, made key introductions, and generally made me smarter and better. The only thing they haven’t done is validate our business.
I think the problem with advisory boards comes down to how CEOs approach them. They look for the big names, like the CEOs with multiple hundred million dollar exits, the luminaries in the field, and the well-known personalities. This sounds like a good idea, but is it really helpful?
Perceived Benefits of a Big Name
First of all, it feels terrific when someone who’s “made it” thinks what you are doing is great. I’ve been there. You’re hands down working so hard, being questioned all the time, going through the typical ups and painful downs of a startup, and one day this super important person says they like your business. Not only that, but they want to be involved. This feels like a stamp of approval you can take to investors, employees, and even to let your friends know that you aren’t absolutely crazy. I don’t underestimate the little ego wins in startups to maintaining sanity, but does it really help the company? My experience is that almost no sophisticated investor (or recruit or partner or customer) pays too much attention to your advisor slide, probably because you are giving them equity for free. Investors actually have to pay for their equity.
The second argument for a big shot advisor is that they must be incredibly smart and know a lot more about how to make your business successful than you. Their advice is going to be gold!
Maybe, but in general big shots are pretty removed from the day to day of building a company and almost certainly not the expert you are in what you are trying to do. I am betting that they will likely learn more from you than you will from them.
The other reason why I don’t believe impressive advisors provide that much help is that they are generally extremely busy and don’t have the time to dive deep with you on your business.
A third rationale for getting a high profile advisor is that they are generally very well connected and will open doors for you. This could be huge, but you need to make sure that you set expectations. I’ve seen it many times where an advisor agrees to join a board, but then is reluctant to tap into his or her personal network.
What Makes a Great Advisory Board
In my opinion, a great advisory board is a set of people who make you better. Being a startup CEO is a very difficult job, you have an ever evolving organization, an ever changing set of problems, and an ever increasing set of new challenges. You are constantly doing things you have never done before. Scaling from 5 to 10 people, hiring a VP of Sales, raising a Series A, selling to a new market, signing a multi-year BD contact, sponsoring your first conference, firing a senior executive, dealing with your first PR fiasco. A CEO needs a stable of advisors he or she can turn to to get quick help.
So what should you look for?
Subject Matter Expertise
Due to the multitude of areas a CEO needs to be competent in, it helps to find advisors that fill in your knowledge gaps. If you’ve never sold or built a sales team, find a CRO advisor rather than a CEO. Yes, CEO’s have dealt with sales teams, but the subject matter expertise is going to reside with a CRO. Find the people who are experts at solving a set of problems you have, bring them on, and turn to them whenever you have issues related to that problem.
During my time at Thinknear, I needed to sell to agencies. I had never sold anything – let alone sold ads to a media buyer — and I was really struggling. I brought on Stu Libby as an advisor. He was an acting CRO selling every day into media agencies and he helped me quickly get up to speed — giving me advice on my deck, how to talk to agencies, what things mattered. I was soon selling millions of dollars.
Another quick example: we were building an AdTech focused product but felt like we were missing some of the subtle elements that mattered in this new industry. We convinced Nat Turner to join our advisory board as he was considered one of the very best product people in AdTech (and had just sold Invite Media to Google). He quickly helped us understand the nuances of the customer and how to build the right products for them.
In addition to industry and functional-level advisors, I think every startup CEO should also have one advisor for CEO-specific issues, like boards and fundraising. Having someone to turn to who understands the nuances of being a startup CEO is critical, but I think more than one is overkill.
Advisors Who Can Commit The Time
Once you’ve identified the areas that you want to hire advisors for, you need to gauge their willingness to commit time. Be upfront about your expectations and only bring on people who will really give you the time you need. I typically put in my advisory agreement a minimum of one meeting/call every other week, and one lunch or dinner a quarter. As soon as they join I set up a recurring meeting and I am aggressive to make sure I get my time.
When I interview advisors I am always trying to get a sense for how well they will be able to teach me what they know.
Being a subject matter expert isn’t enough if all they know is how to do, but not how to teach me to do. I am not hiring advisors to actually do the work, only to advise me so I can do the work. So after affirming that they are in fact subject matter experts, most of what I try to suss out is if they are deep thinkers who can externalize their expertise and pass it on.
A Final Note: Firing Advisors
No one bats 1000 when building an advisory board. Some advisors just don’t provide as much value as they intended or don’t live up to the promised time commitment. It is incredibly uncomfortable, but if someone isn’t pulling their weight you cannot dilute the rest of the shareholders by continuing to give them equity. I suggest all advisory agreements vest equity over two years so that if it isn’t working the two parties can part ways.
Advisory boards can be an entrepreneur’s secret weapon — giving you access to a group of experts who help you solve problems you would have had to spend years figuring out on your own. This is an amazingly powerful opportunity available to almost every startup CEO, yet many squander it in search of false validation.
I hope you take full advantage and build a terrific advisory board of people you can turn to regularly to help you solve your hardest challenges. This will help you build a better business, make you a better CEO, and ultimately lead to the greatest validation of all — a hugely successful company.
Learn more about advisory boards and how to the best CEO you can be from other Techstars Mentors.
This post was originally published on Medium.