Entrepreneurs ask me about advisors all the time, so I thought I would quickly go through my thought process around advisors. The only difference between a mentor and an advisor is that advisors are equity owners, so make them work for you harder.
- The best advisors do it for free (at least for a while)or invest in the company
- Advisors are not the difference between your company working or not
- At the end of the day, everything you do as a startup should be about showing market strength and helping solve your problem
So the goal of an advisor should be: this person helps me solve the problem more, and better.
Also — ADVICE WHIPLASH IS A THING, EVERYONE WILL HAVE CONFLICTING OPINIONS, YOUR JOB IS TO CHOOSE WHO TO ACTUALLY LISTEN TO, AND WHO YOU SHOULD JUST HEAR FROM.
To a startup, an advisor should act like an investor, with specialized expertise.
And they should probably be an investor at some point. Venture Capitalists are advisors who buy in!
An advisor should:
Be a brand name or be value generating
The goal of a startup is to stack the odds in your favor, if you get a credible brand name in support of your startup (ex. Marc Andreessen or Elon Musk), it will have a positive impact on how people perceive your company. Never over sell your relationship with someone, but if you have people who have agreed to be advisors, talk about it.
On the other side, there are people who can be valuable networks, or have specialized expertise that would be very valuable, and you might find they should be compensated for that value. Generally, a try out the relationship for a while to understand the value proposition.
Fill gaps that might be in the team
If you are building a security business, and the fear that customers have is that your team has minimal security experience, it would be valuable to fill that gap with an advisor or employee who has amazing experience. Having an advisor from a big security company could ease the fear that the customers might be having.
Be very well connected in your industry
A network can be a competitive advantage. If someone has provided an invaluable laundry list of connections, you might want to incentivize that person to help more than they already have.
DO NOT TAKE AN ADVISOR IF:
- They negotiate a cash fee or equity fee up front
- They don’t help you accomplish your goals
- Are not enthusiastic about what you are doing