I’ve just come back from our team meeting in Singapore where we had the wonderful opportunity to catch up with most of our advisors. So it seems the right time to address another important aspect of our startup building blocks – the advisors.
Much has been written already about advisors, so it’s probably worthwhile, my outlining where I’m coming from. Ideally, advisors:
- have years of experience in one or more of the fields a startup is seeking help with
- enjoy a certain financial freedom that allow them to mentor and advise free of charge for some time (at least in the beginning / to see if there is fit)
- are independent of the board and/or the founders and able to freely express and be heard in their opinion
- have a specific focus they’re helping you with and don’t compete with other advisors in that area (though an intersection of say a collaboration expert with a remote working strategist can be very productive)
- can potentially turn into board members (and along with this invest at one point in time)
Typically on the board of directors you’ll find executives that help run a company from governance and compliance aspects to business development and leveraging the relationships they’ve built over the years. Such board members may already have or could potentially take an active role in the company at any point in time and usually are either invested in the company or hold a certain number of shares to incentivise the success one hopes to achieve by leveraging the board members experience and contacts. Therefore it’s important to note, that the company board and the advisory board are two different entities and in my opinion serve different purposes.
To me, building a panel of advisors (or an advisory board) is vastly different from the company’s board of directors. Paul Graham once pointed out that if an advisor doesn’t invest in your company, it doesn’t send the right signal to other investors. This is true, but as entrepreneurs, we should make up our own minds – as it depends what we want and expect from an advisory board. Here at Unified Inbox we really want the advisory board to form and express truly independent opinions and not be influenced by our own, that of the company board or the investors in the company. As an advisor it is all to easy to have a conflict of interest while also being an investor, and to me, the whole point of forming an advisory board is to get independent advice.
Often an advisor would start as a personal mentor for one of the founders or the early team members and help them with the individual challenges they are dealing with. Using the term ‘mentor’ thereby is key, as it usually conveys that there are „no charges“ involved for the transaction of help and expertise and that it is mostly tied to a personal relationship. Mentorship driven relationships are very powerful and useful in the startup world as they allow the mentor and the entrepreneur to get to know each other, learn from each other and to have a common understanding of the vision of the founders.
Having many mentors can be a blessing in the beginning, but it can also lead to quite contrary and confusing advice. This is one of the pitfalls when taking on too many mentors as advisors. Many accelerator programs such as Techstars for instance successfully rely on mentorship based advice for the startups going through their programs and during this phase „more mentors meaning more opinions“ is usually a good thing. But when forming an advisory board, be sure to pick only those that can truly add long-term value to your cause and are compatible with each other in executing your vision going forward.
Be careful not to pick too many. Thomas Korte of Angelpad was recently quoted as saying „The number of advisors on your deck is inversely proportional to how confident you are about your business“. While his may be an investor based view, there is truth in this. Make sure you know why you pick each advisor, what their sweet spot is, who is listed on your deck and how you explain their involvement in your company if an investor questions it.
Personally I’ve had excellent experiences with advisors, especially if I could consider them mentors at first and they then naturally transferred into an official advisory role for our company as a whole. There are also mentors and advisors who can add tremendous value without being officially listed on a deck. Some simply prefer to remain anonymously in the background and just because somebody doesn’t want to be publicly involved, doesn’t mean that they don’t believe in you, your team or your cause. There can be various personal and professional reasons and prior commitments that would create a conflict of interest with an official advisory role. Nevertheless, such ‘invisible’ advisors and mentors can still be incredibly valuable and their input critical to the success of your venture.
In my journey with advisors to date:
- the best advisors did not ask for equity
- they didn’t charge anything up front, but when offered, happily accepted to be part of an equity options plan that values their time and commitment based on the effort they put in (so you should ask eventually)
- before they express their opinion freely, they take time to understand the direction
- after giving advice, they make it a point to ask whether this „makes sense?“ and they are not offended if you take a different direction to what they recommended
- having them as a neutral advisory board rather than a board of directors has been key to balance the interests expressed at company board level
Advisors should help build credibility for your cause and help you and your company grow. Thus they are a key building block in this series.
Independently, advice can come from many directions – sometimes it’s your life partner, kids, family, friends – and can even come from your fierest competitor. Learning awareness on when somebody is going to say or share something which is important advice for you or your startup is the best practise I’ve observed with almost all the successful people I’ve met. Another one is that despite the best advice, you always have to make up your own mind.
So advice is not a decision you should follow, but rather a road sign you look at before deciding which route to take: as many ways may lead to rome, it’s important to find yours.
With this post I really would like to say a sincere thanks to our own advisors as listed here on AngelList. Without you we wouldn’t have been able to navigate the deep waters of startups, investment, people, corporate and government interests and managing our own psychology at times.
Thank you so much!