You can find out more about my business at my website. Frequently when working with clients I ask them about their advisory board. More often than not they don't have one. If they do, they are, more often than not, poorly utilized.
Here are a few suggestions that I give to them about advisory boards:
- Understand what you need: Any start-up can be broken down into 5 or 6 categories of key skill set or experience needs. Things like:
- Building and selling a company or IPO
- A set of customers
- Some customer oriented skill (i.e., selling into enterprises or governments)
- Some technology or medical innovation
- A current competitive environment
...among other things. My suggestion to CEO's is to evaluate your organization and see where you have holes and then fill it with your advisory board. More often than not #1 and access to #2 are the keys that aren't covered. Consider the advisory board an extension of your company, they do.
- Ask people to join: At a minimum people are flattered to be asked to join a board. More often than not, they do. Most of my contacts who are on boards are on multiple boards. And, by the way, there are a TON of my contacts who would be terrific board members who are not.
- Compensate them: Ithink a fair price is between 0.5% and 2.5% of the company. I think the percentage chosen should be based on the value they can and do bring and their participation on the board.
- Involve them: This one is the strangest of all for me. I've met several companies that have a board, with seemingly good people on it who NEVER meet. I just worked with a company as part of my Band of Angels relationship that has its first customer on its board.
The fact is, it's in your customer's best interest that you survive. It's also nice to put them on and them give them a big price break instead of equity because of the potential conflict of interest.
- Customer Advisory Board: Finally, this one doesn't quite fit anywhere. I think that a start-up benefits tremendously from creating a customer advisory board. Let them pull you to the specs and even signal you on the price rather than shooting relatively blind on both.
I sit on one advisory board for Three Rings Design. Daniel used me perfectly. He engaged me early on for advice and I intro'd him to an early strategic partner in Germany. After the first year or so, he went on (very successful!!) auto-pilot. He communicates to me and the board periodically, but for me at this point he got what he wanted and needed out of me.
I'm not at all suggesting that I'm a huge reason Three Rings is succeeding as much as they are. They are succeeding because Daniel is a superb CEO and he's got a great team. He also knows how to get the most out of relationships when necessary. And I'm happy to be fully vested in the package that he gave me!