The title of this article suggests you’ve already decided that you need one or more advisors. But spend time with your co-founders discussing this to make sure you agree it is something you want and need. In many cases, a really good startup advisor is worth their weight in gold and can demonstrably increase your odds of survival/success versus executing on your own. Let’s explore the secrets to success.
One of the biggest gifts a startup can experience is gaining extra runway (time) to figure things out, optimize the business and reduce the risk of running out of money. This can come from fundraising, effective decision-making, solid execution and/or luck. A good advisor can help with three out of four of these. And even luck has been quoted as that which happens when preparation meets opportunity. So let’s assume an advisor is just what you need and you’ve somehow come across several to consider. How do you go about selecting the right one for your opportunity?
Selecting the right advisor is part art and part science. So let’s drill down a level deeper using those two categories.
The Art of Selecting an Advisor
The items listed below are soft in nature and measurable mostly using your heart and gut instinct.
- Passion – You want an advisor that is genuinely excited about your offering, business model and long-term opportunity. You can partially judge this by the questions they ask, the look in their eyes and the tone of their voice. Do they get it? Are the wheels in their head turning from thinking about where your company could go?
- Chemistry – You want an advisor that you respect and who enjoys spending time helping you. But this doesn’t mean they need to be your best friend. In fact, you want them to challenge you and push you. Basic chemistry and a good overall vibe is what you’re looking for. One indication of this is completely losing track of time and getting lost in conversation when you’re together during the “interview” phase.
The Science of Selecting an Advisor:
The intent here is to leverage an advisor to fill gaps that exist after honestly evaluating the skills and experience of your founding team.
- Target Market – The word “market” can mean different things but, at a minimum, includes things like the industry you sell to (manufacturing, banking, government, biotech, etc) and the end customer of your offering (consumer, SMB, mid-market, enterprise, service provider).
- Offering Type – You might have an offering that fits squarely in a category like a mobile app, enterprise software, hardware or core technology.
- Delivery – Common approaches include software download with e-commerce purchase (your site or an app store), SaaS, physical shipped product or licensed intellectual property.
- Customer Acquisition Model – Startups with a downloadable consumer software product might leverage a freemium model and heavy inbound marketing while those selling enterprise software might rely on direct sales using a field sales team. Customer acquisition can also include alternate routes to market such as using a distribution channel or OEM partnerships.
- Functional Expertise – What sort of executive roles has the advisor served in: sales, marketing, business development, operations, finance, etc.
- Other Expertise – This category might include skills and experience in areas like M&A, fundraising, strategic planning or international business.
I strongly recommend putting more emphasis on the items in the Art category than those in the Science category. Or perhaps a better way to think about it is to consider passion and chemistry as prerequisites to your selection. If there are multiple advisor prospects that pass this initial test, look through the items in the Science category to see how many gaps you can close due to their skills and expertise.
Realize that you likely will need your advisor to serve as a general sounding board and someone who can put on their thinking cap with you. Strong advisors with years of experience can add tremendous value across a wide variety of markets and business models, including ones they haven’t directly experienced themselves. For example, they can help co-founders work through various conflicts that happen from time to time (see related article titled “Avoiding Co-Founder Conflict“).
What Makes a Good Advisor?
You can use the “art” and “science” criteria above to help decide what you’re looking for in the first place and then later to filter through some possible choices, if you’re so lucky. But your exercise isn’t finished with that. The way an advisor conducts themselves and administers advice is very important. In my opinion, the best advisors help their startups without actually telling them what to do. I often say that the best startup advisors don’t give answers as much as helpful questions and relevant stories (ie – Yoda).
The art of asking good questions to get to the root of a particular issue or opportunity is, in itself, an art form. The best advisors are able to do this in such a way that the startups end up seemingly solving difficult puzzle themselves. It might sound silly but Yoda from the Star Wars series is the perfect example. Most of his brilliant insights and advice were framed to Luke Skywalker and others as questions. Like great instructors, the best advisors consider it huge success when they can make the light bulb shine brightly inside your head.
For a warning about taking on career corporate executives as an advisor, read this article.
Try Before You Buy
If at all possible, you should have one or more 1-hour working sessions with a prospective advisor you think you want to formalize a relationship with. Come prepared with one or two topics you need help with and even share that info with them ahead of time. It’s OK if you meet at a coffee shop but if you have access to a small conference room with whiteboard you might get an even better sense for how the advisor likes to operate during sessions like this.
One thing you are looking for is how they engage with you – style, approach, communication, etc. Another thing you’re looking for is “a ha” moments that result. They don’t always happen but if you find that you’re taking lots of notes with high impact ideas, that’s a good signal.
What about Bringing on Two or More Advisors?
It happens all the time and usually takes on the moniker of “advisory board”. When this happens, there is no magic number of advisors to pursue. Having said that, I can say that having more than about 3 advisors at a time can be hard to manage and hard to optimize value from.
My recommendation here is maintain the mantra of seeking passion and chemistry but with a set of advisors that bring different skills and experiences to the table. One advisor helps fill a certain set of the company’s skill/experience gaps while another advisor helps fill others. It’s also possible that you only need one advisor for a short period of time, perhaps to get through a near-term fundraising round, while still needing another advisor for 1-2 years to help with general execution.
It’s nice when your advisors have chemistry with each other because you can meet with them together to help make critical or strategic decisions, but perhaps consider this more of a “nice to have” rather than a hard requirement.
In addition to spending a fair amount of time with each advisor on your prospect list, do reference checks on them by talking to other startups they have advised. This is something you would do if hiring an engineer or sales person, so why wouldn’t you do a reference check on your top advisor candidates? Other startups like you are the best ones to describe where the advisor added the most value, what they were like to work with and how much energy they put into the engagement. Find out if they are a straight shooter (you don’t need someone who doesn’t challenge you) and find out if they understand their role is mostly to give advice and perspective rather than simply tell you what to do.
One final thought. Remember that just because someone has been highly successful throughout their own career doesn’t mean they will make a good advisor. It is similar to saying that just because someone is a genius at math doesn’t necessarily mean they would also be a good math teacher.
OK, now you’re ready to go out and get one or more bad ass (aka “rock star”) advisors that are perfect for you.
This is the first article of a three-part series. See the associated articles titled “Compensating an Advisor” and “Maximizing Value from Your Advisor“.