Startup’s Perfect Recipe for an Effective Board of Advisors
Marsh Sutherland | On 28, Oct 2013
Latest posts by Marsh Sutherland (see all)
- Startup’s Perfect Recipe for an Effective Board of Advisors - October 28, 2013
Just like combining the perfect ingredients for cooking a to-die-for lasagna dish, there is also a perfect synergistic combination of advisor backgrounds and personalities to accelerate a startup’s growth trajectory.
I know this. I’ve had 3 startups myself. My startup, ReferralBonus, had the most velocity, because we were pushed and held accountable by our stellar, world-class advisors who had “been there, done that.”
This is especially important for rookie entrepreneurs, because they may have a great idea, but really have zero idea how to execute on launching an application or marketing it.
My recipe for a tech startup’s perfect Board of Advisors includes the following ingredients:
- Industry Expert
- Tech Guru
- Marketing Guru
- Private Equity Guru
The Champion is the founder’s main advisor on how to execute on a plan and making the hard decisions, like firing fellow co-founders who aren’t pulling their weight. The Champion is often a seasoned entrepreneur who has led and launched several startups him/herself. Often, the Champion will also have felt the pain, first-hand, that your startup’s solution is focused on fixing. My Champion for ReferralBonus was Shawn Broderick, a seasoned entrepreneur who felt the headaches of hiring well and was also the first Boston Director for TechStars. He’s my go-to guy when I get stuck or have second thoughts, for whatever cockamamie ideas pop into my head, and whether to do some customer validation on my concepts.
The Industry Expert is the person who has worked for a mature company in your industry’s space, ideally a former employee of the behemoth in your space. I was lucky. I had 3 Industry Experts on my Board of Advisors. One was John Norman, the founding CTO of H3.com, another candidate referral automation startup popular last decade. The other two Industry Experts I can’t disclose here, but they were 2 of the top recruiting industry thought leaders in the country. They were walking encyclopedias of the recruiting industry and kept me up-to-date with news I may have missed and made great functionality suggestions.
The Tech Guru is the seasoned CTO that is an expert in your tech stack. We were fortunate to have John Norman as our Tech Guru advisor since he was hands-on with Ruby on Rails, former CTO of H3, and a Ruby on Rails lecturer at Harvard University. Often your CTO may be a young developer who doesn’t know best practices. Your Tech Guru is there for your CTO to ask advice from. If you are hiring an outside tech consultant to develop your software, then your Tech Guru can do code reviews for you and see if the consultant is doing the work properly since many founders are not technical themselves.
The Marketing Guru is the seasoned startup CMO (ideally with industry experience) who has “been there, done that” from the early to later stages. Don’t get a big name CMO from a big name company who is used to an unlimited budget. You don’t have that type of liquidity. You have to be smart and strategic with your marketing at each phase of the startup lifecycle. Our Marketing Guru was Dean Harris, former early stage CMO at Vonage and Kayak and also SVP of Marketing at HotJobs.
The Private Equity Guru is the advisor with both VC and Angel connections who, ideally, has experience and connections in your industry. Often, your Private Equity Guru will be an Angel investor or work at a VC firm. Be sure to check their portfolio to ensure that they don’t have a conflict of interest by having invested in a competitor of your startup. Our private equity guru was the Fresh Pond Partners, including Facebook co-founder Andrew McCollum. They gave us great advice in terms of best positioning our startup for investment and helped us with our pitch decks.
How do you find these advisors? If you don’t already have people in mind, then search for them on LinkedIn or AngelList. Create a one or two page executive summary. Send them the executive summary asking to speak with them about joining your board of advisors for vesting options. Ask members of your professional network and friends if they know anyone fitting the above profiles to join your board of advisors.
Being on a Board of Advisors is a way for seasoned veterans to enjoy the thrill and adrenaline rush of a startup along with a potential nice pay day in the future without the huge time commitment. Standard options offer to advisors is around 0.25% to 1% (depending on how important they are) of the company vesting over 2 years. Get a Board of Advisors agreement from your attorney.
Good luck in building your Board of Advisors!