Posted by rbpasker on August 10, 2007
As I mentioned, advisors often act as mentors, so the first thing to do is make a list of people you already know who would make good professional mentors. For most people, former bosses and professors seem to make the top of the list, since they already know you, both the good parts and the bad. My friend and colleague, Bill Donner, has played this role for me for 25 years, and a couple of years ago I was honored to become an advisor to his startup. The benefit to having a former boss or professor as an advisor is that they know you well, and will usually give you candid advice, even when others are more circumspect. Mentors are among the easiest advisors to recruit, since you already have a relationship with them.
The second step is to go through your contacts and list the people you know who have been successful entrepreneurs or work in a leadership capacity in a larger company. These people know your industry, have been through many of the same things you are about to go through, have lots of contacts, and carry some weight in the industry. Recruiting advisors from this group is more difficult, as these people are either too busy or possibly retired.
Now that you have your list, go around to all the rest of the people who are involved with your company: board members, angels, investors, and employees, and even friends and colleagues. Go through the same discovery process with them, adding their mentors, entrepreneurs and experts they know to your list.
You now have to remove a few groups of people from the list: potential customers, acquirers, and angel investors.
You have to remove potential customers because their being on your advisory board could call into question their objectivity when you are ready to sell to that company. Say you are trying to sell to a bank, and your colleague happens to lead a team which could make good use of your product. You recruit your colleague as an advisor to your company. When the time comes to sell to that bank, your friend would probably have to sit out the negotiations, because he has a conflict of interest. Its better to keep your customer friends on the other side of the table, if you think you might be selling to them. After they become a customer, you can always add them to your advisory board.
You probably also have to remove from the list those who work at potential acquiring companies because their company might already be working on something competitive, or they are talking to your competitors. Having a potential acquirer as an advisor could also create a conflict of interest, or worse, hurt your company’s prospects by leaking confidential information. Whether they stay on your list is a judgment call based the level of trust you have with them.
Lastly, you need to remove potential investors, but not completely! I once said to Marc Hedlund “investors were the only people in a company who would give you money and then work for you, instead of the other way around.” So move your angel investors from the advisor list to your investor list. No reason to have them as an advisor if they will pay you instead of the other way around!
Now categorize your list into groups, such as: sales/marketing experts, operations experts, technology experts, etc., based on your company’s needs and goals. Then prioritize your list in two ways: those who are easy to reach and recruit, and those who will be the most help, keeping in mind the list of things you might need done, as I described in my previous post. This grouped, prioritized list should give you a pretty good idea of how to compose your advisory board.
Next up: recruiting advisors.