You Grew Your Startup, Now Build Your Advisory Board
Originally published on Entrepreneur.com.
No startup founder reaches success alone. Even when an entrepreneur has grown a kernel of an idea into a full-fledged, successful company, he or she should rely on outside expertise to keep the organization flourishing. It’s time for an advisory board.
Advisory boards provide valuable insight for startups — assuming you listen. For years, Facebook and its CEO, Mark Zuckerberg, ignored its safety advisory board’s warnings that user data could be seriously compromised, according to the Silicon Valley Business Journal. The result? Information about 87 million Facebook users may have been improperly given to political consulting group Cambridge Analytica during the 2016 U.S. presidential election.
The Business Journal highlights ex-advisors for Zuckerberg who said this could’ve been avoided had he heeded the board’s warnings. One said she regularly raised concerns about the lack of user data protection.
“I don’t want this to look like finger-pointing, but I think profits matter to Mark [Zuckerberg] too much, and at some point, you need to recognize that you need to rely on experts in their fields,” said the former advisor. “When you serve for free on an advisory board, you expect somebody’s going to listen to you.”
Respect and embrace your advisory board — it’s there to guide you in your overall mission and quest for success. To ignore good advice — from a team you hand-selected — is counterproductive.
When do you need an advisory board?
Two schools of thought exist about when to start an advisory board. The first recommends putting in the initial work to have a solid business before reaching out for advice. This group prioritizes having revenue and a team to reference when asking the board questions.
The second school of thought recommends having an advisory board on Day 0. For many entrepreneurs, this route makes sense. The list of questions to answer before even starting a business is endless: Is there a market for this? What’s the best way to test the market? How should the business be structured? Bouncing ideas off a board early on helps an entrepreneur make sense of these questions.
So when should you start an advisory board? It depends on the entrepreneur in question. Bear in mind that advisory boards are meant to be fluid — as a startup grows, its needs will change, so the makeup of the advisory board will change with it. But how should you build a board?
Experts on Toptal suggest it’s time for an advisory board when a particular goal is above the abilities of the company’s resources, when an organization needs some positive buzz, when management needs some more skills, or when the team is stuck in a rut. Here are four steps to ensure a board’s success:
1. Identify your deficiencies.
When you’re looking for members to fill your advisory board’s ranks, find those who can bridge your skill gaps. If you (or your team) aren’t great with finance, find someone who is. If regulations in a certain area are unclear, find someone with experience navigating that particular legal headache. Young startup leaders who haven’t hired or fired before should find a seasoned HR professional
Adweek recently announced the installation of its first-ever advisory board. Why? It needed help. In a letter to its readers, Adweek addresses a desire to change its value proposition to keep up with the times, readers’ needs and overall market intelligence.
A portion of the publication’s letter reads: “While we have already started down this path, it became very clear that we can’t go it alone and that we would need a much tighter bond with the people reshaping the brand marketing ecosystem. … In short, we realized we need help beyond our newsroom to deliver on this vision and set out to form Adweek’s first Advisory Board.”
Use your board to fill your knowledge or skill gaps. Even the biggest names have to do it.
2. Tap into your network — but dare to go outside of it, too.
Finding high-level expertise might be easier than some entrepreneurs think. Start with your immediate network: Ask professional connections, mentors and loved ones for recommendations on advisors. They might know the right person for the job, and by asking that individual to help through a trusted connection, there’s less of a barrier to connect. These connections are also likely to be local, making it easier to meet in person.
But don’t discount the power of working with big names and influencers. Sometimes you’re lucky enough to find people who are particularly passionate about your business and its mission.
Questlove, drummer for The Roots, voluntarily joined the advisory board for Edible Schoolyard NYC — a nonprofit seeking to eradicate food insecurity by teaching gardening and cooking in the classroom — because he recalled learning years ago (through Magic Johnson) that a TGI Fridays in Harlem was the only place to order fresh salad for blocks. Frustrated, Questlove joined the board to make a difference, and the nonprofit was immediately found elevated success.
“He’s the real deal,” said Kate Brashares, Edible Schoolyard’s executive director. “He’s opened doors to us we never could have opened without him.” It pays to know the right people. So search locally for members in your network, but don’t hesitate to reach for the stars.
Our company, too, recently looked past our own network: When my team first formed our fiduciary board of directors, our meetings were wildly unstructured — we would often cover just one topic over a few hours. We needed guidance. The best option turned out to be someone none of us knew personally: a local serial entrepreneur with deep experience in helping companies transition through growth stages. While it took time to reach out and convince him to join us, his guidance remains invaluable.
3. Give your board structure and clarity of purpose.
For board members to give useful guidance, do the same for them. Have an objective in mind and be clear about how they can help your company grow. Provide specifics about advice your team is seeking and be open to receiving their feedback. If their meaning is unclear, ask for clarification. Provide all the details: good, bad and ugly. Clarify what type of input is needed, what the goal of the team is and how their advice will be utilized. Give details on meeting cadence and duration.
Every three or four years, our team meets with the advisory board for two to four weeks, reviews the state of business, and offers suggestions to enhance company strategy. The board conducts a deep dive into financials; looks at trends since our last meeting and examines deal size; and segments growth, new logos and efficiency.
Many entrepreneurs will want an advisory board to be long-lasting. As a business becomes more established, it might be best to use the board as a shorter-term, more specific group. The board may take on a role similar to paid consultants. No matter the size of the advisory board or the capacity in which it is used, remember: It’s about diversity in wisdom.