Navigating the Advisor Maze
Whether you’re a founder, an investor, or a seasoned executive looking to help the next generation of entrepreneurs, we've taken time to pull together some thoughts on what to look for, what to avoid, and how to maximize the advisory relationship. As you can imagine, we’ve seen some things over the years.
Finding the Perfect Startup Advisor
- Real-World Experience and Expertise: Look for advisors who've walked the walk. Ideally, they're seasoned veterans in starting or scaling businesses. Their wealth of knowledge isn't just theoretical; it's grounded in the nitty-gritty of real-world challenges and successes. This experience is invaluable in domains like growth strategies, marketing, and product development, providing not just advice but actionable strategies.
- Advisor Varieties:
- Strategic Advisors: Think of them as your high-level navigators. They shine when you're at a crossroads—be it a pivot, scaling up, or securing funding.
- Operational Advisors: These are your day-to-day champions. They excel in streamlining your operations and adapting to transformative changes.
- Industry-specific Advisors: They're the specialists. When you're venturing into new markets or focusing on specialized products, their in-depth industry insights are gold.
- Dedication and Reachability: Your ideal advisor is more than a consultant; they're a committed partner in your venture. They should be readily available for deep dives into your challenges and opportunities, with a clearly defined role set out in a formal agreement.
Steering Clear of Advisor Pitfalls
- Conflict of Interest Alert: Be vigilant about advisors whose interests might not align with your startup's vision. It’s also entirely possible that you’re working on a startup that might overlap with a project or business case at another tech-firm. Do your research on what others are working on. A great read is the story of Amazon and Whoop. Be leery of who you bring in.
- Beware of One-Size-Fits-All Advice: Your startup is unique. You need advice that's as specific and nuanced as your business model, not generic platitudes. Your focus should be on filling the gaps in your organization, and that demands a clear understanding of where you might not have all the answers. It also means you understand what the advisor can bring to the table. It's about knowing your blind spots and seeking advice that directly addresses them.
- Relevance Over Resume: A flashy background is great, but relevance is key. Ensure your advisors' experiences align with your current trajectory. We have countless examples of placing and connecting advisors that on paper might not leap off the page, but became operationally irreplaceable to the business. Shameless plug, leverage your investors for advisory connections!
- Common Advisory Missteps: Keep an eye out for advisors who might be spread too thin, lack startup-specific savvy, or fail to provide the hands-on support you need. Equally important is their genuine interest in your mission and their ability to communicate effectively. Lastly, it's important for an advisor to know what they don’t know, it’s okay to not have an answer.
Maximizing the Advisor Relationship
- Setting the Ground Rules: It's all about clarity. Define roles, responsibilities, and expectations right off the bat. And when it comes to compensation, whether it's equity or a retainer, make sure it fits your stage and needs. Remember, not every piece of sage advice equates to an advisory relationship. This relationship should be robust, ongoing, and deliberate. Establish a routine for meetings and hold accountability for outcomes. After all, if you're offering them a financial stake in your company, they should be accountable to you.
- Compensation Done Right: A stake in your venture (typically between 0.25% and 1%) or a monthly retainer? The decision hinges on your startup's phase and the advisor's role. Remember to factor in vesting schedules for equity to ensure fair distribution over time.
- Communication Is Key: Make every interaction with your advisor count. Come prepared, be upfront about your challenges, learn from setbacks, and take their advice to heart. Clear, consistent communication paves the way for a productive partnership.
The right startup advisor brings more than expertise; they bring a partnership mindset, tailored guidance, and a commitment to your venture's success. As a founder, your focus should be on aligning with advisors whose insights resonate with your specific challenges and who can join you in the journey.
Lastly, don't forget to leverage your investors for introductions (broadly), but specifically to advisors. They're often well-connected and can open doors that might otherwise remain closed. If they're not already proactively making connections (they should be) for you, don't hesitate to reach out and ask.
