Tuesday, September 11, 2007

Startup to IPO: Building an Advisory Board

When you’re building a new company there is so much you just don’t know. You need answers to questions, both tactical and strategic, that you think someone knows (ie they are not waiting to be invented) but just not you – especially if you are going into a market that is new to you.

When this is the case it can be energizing and a huge help to build an advisory board.

This is typically an informal group with some key characteristics:
1. They like you, want to see you succeed and are willing to put time in for no guarantee of payment

2. They are typically paid in stock options (see #1)

3. They are diverse in experiences. Best case you have:
- a couple of customers
- a couple of execs from parallel companies who have been through, or are going through, similar issues to yours
- a marketing/sales type
- a couple of technologists or professors
- an industry observer or two (journalist, industry researcher etc)

4. They respect confidentiality – and will sign an NDA

5. They are willing to openly brainstorm with you and your management team about what to do

6. They don’t take offense if you don’t follow their advice – but they love it when you do.

Once the group is built I like to hold advisory board meetings once a quarter. Since these are not formal board meetings they need to be fun and interesting for your advisors. A good flow for these meetings is
- social preamble – check in with everyone
- brief overview of company status – make sure everyone is up to speed on major developments and customer wins
- present 2 or 3 questions for discussion

The last is where all the value is. The trick is to bring in the 2 or 3 questions you are genuinely wrestling with and to get the discussion going so you get input from everyone around the table. You can then formulate decisions live with the group, try them out and see if you are on the mark – especially if you then test those decisions real time against the customers in the room.

I’ve held the meetings in my garden (before we had an office or on lovely California summer days), in conference rooms (when we needed to make a technical presentation or demo), and great restaurants (when I wanted a free flowing discussion about go-to-market questions). I don’t think formality is necessary (unlike a directors meeting) but the free flow of ideas is.

I recently joined an advisory board for a new company being run by a friend of mine – Raul Camposano at Xoomsys. I can certainly say that for me, to be able to help a small company on just a couple of hours a month, and to know it is making a difference is great fun and very rewarding.

2 comments:

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