Workshop: Building an advisory board that doesn’t suck
By Rock Health intern Jess Hershfield
Watch the full presentation below, or read below for a full recap.
All successful entrepreneurs have one thing in common: they are able to network their butts off. Surrounding yourself with appropriate advisors is vital to growing a thriving product, so building a suitable board is extremely important. In order to coach our teams on how to successfully develop a board, we brought in Jae Chung of goBalto, whose networking techniques have proven successful.
In order to build a board that doesn’t suck, we must first understand what an advisory board is. Jae explained that there are three different types of boards, all of which are essential to a growing business.
- Advisory Board – these individuals will provide you with strategic and tactile advice. Topics discussed may include recruiting polices, how to find angel investing, etc.
- Scientific Advisory Board – Also known as the “Technical Advisory Board,” these individuals have deep subject matter expertise in your chosen space. This people help you really understand your customer and your market.
- Board of Directors – Represent the venture capital firms that invest in your start-up.
So, now that we understand what types of boards we need to build, Jae gave us 7 pieces of advice to go out and start filling these roles.
Understand Your Goals
You will need your advisors to fill different roles, depending on what stage your company is currently situated. If your product is still in its early stages of development, you will most likely need an advisor who has strong subject matter expertise, and who can provide you access to individuals within the field. But as you move closer to product launch, your advisors role will serve more to boost your reputation, and provide access to capital. Jae’s advice is to understand where your product stands, and find advisors who “fit” into the desired roles.
Start by Dating
We have consistently been exposed to the metaphor that networking is like dating. You are first introduced to a potential advisor, and the courting begins until you can decide if he or she would fit into your organization. During the so-called “dating” period, you get to know the advisor better, answering key questions along the way:
- Does this person possess the relent skill set? Do they have the domain expertise, along with technical, functional, and start-up expertise?
- Do they passionately believe in our cause?
- Are they bandwidth constrained? How much time can they realistically give to me?
- Are they well connected? (We are looking to see what sorts of friends they can bring to the table)
- Do we have chemistry?
During this dating phase, if an individual passes these questions, they are most likely going to fit positively into our board. However, Jae warns that you should be very selective! He enthusiastically believes that you have the good idea, and it would be a privilege for any advisor to tag along. They should be convincing you why they should be on your board, not vice versa.
On this topic, Jae warns of one thing: beware of vanity board members. These potential advisors are big shots in the industry, who can potentially bring a lot of spotlight to your start-up. But, these individuals are in high demand, and time is not on their side. They may not have the bandwidth to really contribute to your start-up, so it is important to really weigh the pros and cons before jumping into bed with the vanity board member.
Consider What Advisors Want
Before asking an advisor to join your team, ask yourself what they are trying to get out of the deal. Think from the point of view of the advisor:
- Does your product or space get me excited?
- Will your start-up boost my rep?
- Are you the “real” deal?
- Will your business be around tomorrow?
Think about what would make you consider joining a board, and if their goals align with yours, the most likely will fit in.
Networking is the most important process when building a perfect board. You need to network in order to allow opportunities to meet those potential advisors. Jae describes three avenues he believes most conducive to finding the right people.
- Social networking, most notably, LinkedIn. This type of networking allows you to search for individuals with a very specific skill set.
- Attending conferences, and tracking down the speakers. These individuals love the visibility (they would not be speaking if they didn’t), they are subject matter experts, and they desire to be on the cutting edge. Jae suggests approaching speakers when they have just finished, as they are coming off the high of just speaking.
- Finally, incubators, like Rock Health, are great places to find advisors.
Jae warns against bringing in too many advisors too quickly, as you will be overwhelmed with trying to engage with all of them. As a rule of thumb, your advisory board should include 2 to 3 people, the scientific advisory board should be 2 to 4, and the board of directors 3 people.
Give Them “Homework”
It is extremely important to keep your advisors engaged and active with your start-up. The more involved you allow them to be, the more passionate they will advocate for your success. Jae recommends giving your advisors specific tasks to ensure this commitment. This may range from making an introduction to simply asking for feedback. Also, make sure to always set up the next meeting ahead of time, insuring you stay in frequent contact.
One of the most exciting ideas Jae brought to Rock Health was a “board central wiki.” Jae keeps his advisors up to date and connected to the company through a secured, living site that serves as a knowledge exchange. This site allows Jae to keep his advisors truly abreast of what is happening though posting agendas, meeting minutes, and financials. It also serves as a platform for advisors to comment and provide up-to-date feedback.
Formalize the Agreement
Before officially agreeing to take an advisor on, make sure they are aware of the time commitment expected of them, the scope of their work, and the compensation they will be receiving.
On the topic of compensation, Jae believes the advisor should be compensated with equity, as it will incentivize them to build a truly successful company. Here is how he breaks down how you should compensate your advisor:
Once you have agreed to a compensation plan, make sure to formalize the agreement through signed contracts. For a sample contract, Jae recommends utilizing the Founder Institute’s Founder Advisor Agreement Template.
There we have it! Seven pieces of advice for building the perfect board. If you are interested in more information on the topic, Jae recommends checking out Fred Wilson’s, of Union Square Ventures, blog.
So letting the dating game begin, and take the dive to start building a board that doesn’t suck!