Yesterday I had lunch with the CEO of a young startup in town. He’s in the process of putting together an advisory board and wanted to chat about it. For those of you that were unable to join us for lunch, here are my rules for great advisory boards:
Be selfish: Advisory boards are not for the company, they are for you. As leader of your company, the advisors are there to provide you with a personal, confidential, trusted sounding board.
Start small: You don’t need a big board, though size does not matter since you won’t actually bring everyone together for meetings. I suggest the following:
- A consligliere: This is your trusted personal adviser. Once your company is big enough to have a full time CFO this person fills much of this role. Until then get someone like a CFO on your advisory board who can provide counsel on key legal, structural, strategic and financial issues.
- An entrepreneur: Unless you’ve led venture-backed startups before, it’s a good idea to have someone who has done it on your board.
- A networker: Where do you most need relationships? This could be someone with ties to the VC community to help with intros for your next financing. It could also be an industry person who can help with intros to partners and customers.
- A guru: Depending on the strengths of your internal team, you may want someone technical on your advisory board. If you sell to big enterprise, the CIO of a target customer would be a great choice.
Be specific: Your advisers are not outsourced team members. Other than intros they should not be “doing” work for your company. They just provide advice. Still, be as specific as possible in what you want from them.
Make it fun: People whose advice is valuable generally are busy and have many responsibilities. You need to make this fun and rewarding for them. I have sat on advisory boards before and have just joined one now. My reward comes from the confidential relationship I have with the CEO and from the impact my guidance can have. Also, as a good Scotsman, I always ensure our meetings take place over drinks.
That’s it. I think all young startups should have advisory boards. They are low cost and high impact.