3 Colorado entrepreneurs on how to pick & manage your advisory board

by Elyse Kent
August 28, 2014
[ibimage==29538==Large==none==self==ibimage_align-center]
Advisory boards are a not much talked about aspect of a startup. Without the prestige and fiduciary responsibilities of a board of directors, many people forsake completely the idea of a board of advisors or neglect to give it the attention it deserves. We have seen that there is a lot of value in advisory boards that are picked and managed correctly. To offer some insight on startup advisory boards, these three serial entrepreneurs, founders, and board members from different tech backgrounds gave us their two cents.
  

1. What is the most important aspect when picking a board? What should founders look for? 

Justin Anthony, serial founder, including BrightNest:

It's hard to say what's most important as your needs as a company will evolve over time.  The good thing about an advisory board is it can evolve and grow over time. 
 
You are ultimately trying to assemble a group of people that can add value on a number of fronts.  I've seen some companies try to get high profile people involved as a sort of "social proof". While I think this can help establish some credibility ("if this important/smart/famous person is involved it must be legit) in the early stages, the benefits taper off as you move forward.  
 
I like the idea of building an advisory board that compliments and/ or supplements the existing skills in the organization.  Finding influencers and connectors with relevant domain experience can really help accelerate growth.  Finding experts in fields where you lack strength can help you avoid mistakes and improve in areas that are critical to your success.   
 

Tom Higley, serial entrepreneur, including Service Metrics, StillSecure, vokl:

If you create an advisory board that is merely a list of "celebrity" players with the hope that you will now bask in their reflected glory and trade on their credibility, you are wasting your time, your equity and your own credibility. Worse, you are squandering an opportunity.
 

Niel Robertson, serial founder, including Ramen, Dilettante, Trada:

It's important for a CEO to decide what the board's function is (operational commentary, governance, recruiting, etc) and try as best as possible to find board members who have the same experience and expectations. A board member who wants to deeply analyze operational numbers with a CEO who wants to focus on strategic issues can cause a mismatch. 
 

2. What have you learned about your board's role over time?

Anthony:

That respect and a little skin in the game go a long way.  If you're competent, capable and have a good idea, it's likely you'll be able to find people willing to help. That being said, I have found that you get a lot more value by being selective with the group you create and thoughtful with how you interact with them.  
 
Those advisors that can add the most value are likely to have busy lives of their own and have limited time. Making sure to communicate clear expectations of what you expect from them in terms of input and time is critical.  Once the relationship is established, creating and formulating very clear requests for what you are looking for help with and when you are looking for that help will get you better results.  
 
I have also found that giving away a small amount of equity leads to greater engagement on the part of the advisor.  
 

Higley:

Good advisors, like mentors, want to help you and help your company. More than that, if you are willing to provide them with some appropriate level of participation in your success, they will roll up their sleeves to help, provide access to their networks and offer counsel that you would be hard pressed to find anywhere at any price.
 

Robertson:

As the company's needs change the CEO has to redefine the board's role and the board has to change as much as the company. The nature of a board meeting of a company with no revenue and five employees a should be very different than that of 1 million ARR and 20 employees.
 
 

3. What changes/alterations have you made to your managerial style since instituting a board?

Anthony:

I have typically leaned on advisors for very specific areas of focus rather than general counsel; in most cases, for insights into how to solve a particular problem or how to grow in a particular area.
 
I think one of the best things about advisors, and what sets them apart from investors, your staff, and your board, is that it's an audience you can be totally transparent with without fear of judgment or consequence. They are a great sounding board for outside the box ideas and a sympathetic ear to vent to when the chips are down. (Disclaimer: your actual board should be the same, but I think it's tough for people with a major equity stake to remain unbiased.)
 

Higley:

Based on my experience, some things to remember:
  • Think about what you need from each advisor and your expectations
  • Think about whether the "advisory board" has value to your company collectively (not just individually)
  • Understand that your advisory board is not your board of directors 
  • They do not "run the company." They do not have a fiduciary duty. You may or may not find their specific advice and counsel appropriate or useful. Remember: the important decisions are yours to make and your responsibility, not theirs. 
  • A "board of advisors" may meet together on some periodic basis (annually, biannually)- but think carefully about whether (and how) such a meeting would be valuable to you and to your company. And think, separately, about whether it offers any value to your advisors.
  • If you are offering equity, provide a specific set of requirements, and tie earned equity to a vesting schedule based on continuing to meet requirements  
  • Ask questions and be specific when asking for help
  • Leverage your advisor's network for introductions, learning and opportunities
  • When an advisor provides real value, show some gratitude

Robertson:

Communication is the most important thing about a board. What is the cadence, what is the detail, how much review do you want at board meetings. The other key thing is that the CEO is vulnerable and honest with the board. This is the hardest dynamic to get right on both sides (it takes as much effort to receive bad news well as give it).
 

Colorado startup guides

LOCAL GUIDE
Best Companies to Work for in Denver & Boulder
LOCAL GUIDE
Coolest Tech Offices in Denver & Colorado Tech
LOCAL GUIDE
Best Perks at Colorado Tech Companies
LOCAL GUIDE
Women in Colorado Tech