The early stages of building your company are tough. After all, startups are defined as young companies with the potential to grow into behemoths, but they are also almost always under-resourced, short of just about everything. A great way to circumvent a lack of talent, network, experience or cash is to build your own advisory board. It’s a win-win. Startup CEOs love the power of advisory boards because it gives them the chance to cherry pick the best talent much earlier than would otherwise be possible. Even a tiny company, with the right strategy, can attract big names long before the startup has the kudos or cash to secure top tier talent full-time.
Bethany Koby, CEO of Tech Will Save Us, knew a strong advisory board would allow her to gain high level introductions and strategize how to grow her startup, which provides code kits and STEM toys for kids. Koby saw an opportunity when she approached a professional connection, and asked if she could be introduced to the founder and CEO of Moo, a late stage printing startup with a team of 400. While researching Moo’s operations, she grasped the synergies with her own startup. Namely, both businesses were design led, brand focused companies with physical product to ship. Seeing parallels and an impressive trajectory, Koby knew that she could learn from Richard Moross, Moo’s CEO. Having read up on all things board related, she discussed the opportunity and Moross was excited to formally join as an advisor. Not only does Moross mentor Koby, CEO to CEO, but he regularly has Koby’s team come in to Moo’s office to gain practical insights into customer support, supply chains and logistics.
How do you get started building your board? A startup CEO can shortlist the areas where they need the most authority before finding executives and successful entrepreneurs who fit the bill. Crucially, these roles should be in skillsets that you and your startup are lacking. Reach as high up the ladder as you can. This is a scenario where audacity will take you far. The worst a potential advisor can say is no. You and your business will now have the advantage of being on that person’s radar.
Important to remember, people are always flattered when asked to join an advisory board. It demonstrates that you admire their expertise and value them as an industry leader. You have nothing to lose and everything to gain by trying to bat far beyond your perceived limits for an all star.
What does a board member get out of it? For the advisors, who are often top executives and experienced entrepreneurs, they genuinely enjoy the experience of mentoring young companies, and are able to and get an early “look in” to emerging tech and digital trends. Advisors have in-the-trenches access to the market and a close-up view of future game changers for an industry.
The nitty gritty of the value exchange is easy to learn. Typically an advisory board role is for up to eight hours per calendar month. Industry standard compensation in Silicon Valley is 0.25 to 0.5% in company shares, vesting over three or four years. Unlike in startup employee contracts, there is no one-year cliff for vesting, and both the advisor and the company participate at will, meaning if the relationship isn’t working, either party can pull out. For scrappy entrepreneurs who don’t want to shell out for a lawyer, you can checkout this template agreement by the Founder Institute. Savvy Y Combinator and 500 Startups portfolio CEOs often use this free template as a way to save law firm expenses.
Building your own advisory board is a rare opportunity to surround yourself with industry legends whom you admire. They provide expertise, a network and credibility for your young company. Perhaps even more importantly, as individuals, advisors serve as tangible role models for you. Next time you are lamenting that you don’t have the budget to hire a full dream team for your business, remember that with some gutsiness you can bring leaders into your circle, and even fighting in your corner.
Culled from Forbes