As an advisor, I take on a consultative role to provide advice in my areas of expertise, make introductions into my network of contacts, and act as a reference for potential investors, customers, and candidates. This is not universally true, however. Advisors who are very well known sometimes act as “window dressing,” to burnish the company’s image, but they don’t often participate deeply in the company. I try to avoid these kinds of gigs simply because I like to actually be involved. Otherwise, why bother?
What I also find is that some companies are looking for something more fleeting: they are looking for a mentor and a sounding board, someone who they can talk to about the many challenges they face and can help them solve problems. Being a technology person (rather than, say, a financier, or a sales/marketing/bizdev guy), I bond well with founders/CxOs who are also technology people, and I can provide advice on engineering recruiting and team organization, on development processes, technologies, tools, and methodologies, and product strategy, competition, and implementation plans, in a way that investor board members typically can’t.
One of the benefits of having a well-connected advisor is getting access to the advisor’s network. Startups need access to finance (VCs, angels, debt), candidates, services and consultants (PR, legal, accounting, strategy, M&A), customers (F500/enterprise), partners (hundreds of important technology companies), technology providers, outsourcers, etc. I find myself making at least a dozen intros a week, across all these different categories, and I often join the conversations myself to kick things off since I know what each side wants and needs.
One myth about advisors is that they are somehow part of the corporate structure. But advisers differ from Directors – who serve on the company’s Board of Directors – in that Directors are regulatory positions elected by the shareholders to govern and run the company.
Another myth is that advisors have a predefined set of operational responsibilities. I’ve had some CEOs send me a list of tasks as an appendix to the advisory contract, saying “you will introduce us to such-and-such people, go to this-and-that meeting, etc.” Although I’m always thrilled when CEOs have a good idea of what they want me to participate in, I have never agreed to these kinds of task lists as part of the contract (more on contracts in another post) because I don’t think they capture the consultative nature of the role. If you want someone to do specific things, pay a consultant.
Similarly, I have had CEOs who want me to commit to a certain number of hours or days or per month because they’re concerned that I might be spread too thin and won’t spend enough time with them. But companies go through different phases, and sometimes they require much more time than others, such as during product planning, product launch, a financing round, etc. Other times, they may not need me at all for a month or two or more. What benefit is it to have me spend a day at a company when there’s nothing going on that I can help with? Or to leave an offsite on one day of a two-day event, because I’m only on the hook for one day a month? A good advisor will be there when you need him, and not need a specific time commitment.
There’s a good solution to both task list and the time commitment issues, but I’m going to save that for the post on contracts.
Lets look concretely as some of the advisory work I’ve done recently:
- help hire 3 VPs of engineering. worked on the reqs, made intros to and interviewed candidates
- introduced 2 companies to development processes expert so they could do more agile development
- advised on segmenting business model into web sales, inside sales, and outside sales
- intros to sales candidates in various regions around the country
- intros to PR firms
- lots of strategy meetings on product launch, positioning, competition, etc
- intros to various VCs, all of which resulted in meetings
- advised on deal structure and term sheets
- provided recommendations on the companies to VC
- made confidential background checks on various VCs
- got expert funding help from finance colleagues
- helped identify and recruit CEOs, outside board members, and other advisors
- intros to ibanks to assist with M&A activity
- intros to potential acquirers
- participated in corporate strategy meetings
- intros to OEMs and partners
- intros to technology providers
- intros and interviewed outsourcers
As you can see, the list is mostly networking and providing advice, and no operations, save an interview here and there. It also covers a much broader area of the business than just technology, which, for a guy who still thinks of himself as a programmer, surprises even me.
In the next segment, I’m going to talk about finding, recruiting, and hiring advisors.