Here’s something they might not have told you when you set up your startup to “be your own boss” — everyone has bosses. Every startup CEO knows that in theory their advisory board is just here to ‘advise’. But some of them, maybe even all them, have a stake in the company, and are actually crucial to your success.
Here are the four types of people you’ll encounter on every startup advisory board and how to deal with them.
The Big Name
These are the guys who will help you get things done. They will help achieve your goals when your company is in its infancy and — more importantly — they will help you raise the money you need to realize your vision.
Who are usually in the role of ‘The Big Name’? More often than not is it a key player in the industry, someone with so much clout that merely mentioning their name will encourage other industry experts to make an investment.
You bring them in when you need money and to grease the wheels when trying to get important accounts. What’s important to remember is that you don’t really pay them with money, but with respect. Make sure to not involve them in miniscule company issues — they’re more “big picture” kind of people who don’t care about the day-to-day dealings. And a key thing to remember is that you only need one “Big Name” on your board, so make sure it’s a big enough “Big Name”.
Here’s the thing to keep in mind when dealing with “The Customer”: this is your advisory board. Sure it’s The Big Name’s goal to raise money and open doors to opportunities, the rest of them are mostly there to advise you.
It’s critical for you to understand who you’re selling to, and you the best type of person to get that kind of advice is The Customer. If you’re selling a B2B product directed at a marketing firm, hire a marketing firm CEO or high level director. And if your startup is built around a photo sharing app destined to kill SnapChat, consider hiring a teenager with a massive following.
You need to understand what makes your customer tick, and The Customer can tell you exactly what does with a clock-like precision.
How do you pay them? Usually it’s best to go with stock options, if your product is good. Your customers, who understand your product’s value, will be the first ones to want to get in on the ground floor, and you can use that to your advantage.
Think of a company you know and like. Now think of their CEO. What do you think about what they’ve done? If you just said “achieved amazing things through brave moves”, you should offer that person a position on your advisory board. Someone who’s been there before and whose style meshes with yours will be a valuable asset to any company as a mentor to the CEO.
The Mentor will probably be most involved out of the four types in your company’s daily happenings. You should meet with The Mentor once every couple of weeks, but keep in mind that you’re working together on your company, meaning you should always lead the conversation. In turn they will guide you down the right path.
You need your Mentor to be someone who believes in your company, so again, stock options are the best way to compensate them. This will make sure you get the right mentoring — their success is your success.
The Industry Expert
Notice that this is not the same as The Big name in the industry. You don’t need another board member to open doors or to have sway with people in the industry. Instead, you need to add someone who knows how to do the actual work.
If you’re having product issues, you’re going to want The Industry Expert to be on your side, whispering in your ear. They’re there to help you tackle product problems and overcome any technical obstacles. Meet with them as needed and reward them with options, and they may even help you create some new opportunities with their industry connections.
Together, the four types of advisory board members can help you build a better company. Smart CEOs know how to interact with each board member in order to gain their unique perspective and advice. Ultimately, the advisory board is there to support you — so choose wisely!