The role of company advisors (Part II)

Part II of a series of guest posts by Gerald Joseph on the role of company advisors. If you missed it, see Part I here.

There are various types of advisors with differing skill sets and motivations. The key is to work with Advisors that have skill sets that help solve your company’s current and near-term problems. Here is a fractional categorization of the various types of Advisors Startups usually encounter in the Venture community.

The Researchers

– these are the inquisitive minds we find in Academia. They are our professors, faculty advisors, and fellow students. They ponder the proverbial "What if’s?" and "Why not’s?" that are responsible for much innovation. They are best utilized during the product/service development, design, and testing cycles. They handle the most onerous technical details well, but may not be suitable for ideation related to revenue models and monetization.

The Associates

– VC firm Associates can be tremendously helpful in pointing out the "third rails" or specific areas in need of improvement such as corporate governance, accounting, IP, employment contracts, founder agreements, etc. that act as impediments to VC funding. Associates can be instrumental in making critical introductions and giving Founders a sense of market analysis from the VC perspective.

The Idea Guys/Gals

– often in the development of early stage companies the first idea or product/service leads to an even better series of radically different products/services. It is worthwhile for startup founders to engage frequently with hyper creative types who possess unique perspectives and extremely innovative ideas. Idea people have very agile minds. They often make unusual theoretical judgments and technological juxtapositions that result in unique mashups of new and existing products/services.

The Serial Entrepreneurs

– the importance of culling folks that have "been there and done that" can not be underestimated. Many former entrepreneurs in a post-climactic phase after exiting a company or investment are very anxious to find "the next thing." Their proven track records and established networks can lend an air of credibility to your company and open up multiple funding options.

The Walking Rolodexes

– the world is full of opportunists with huge networks who work as consultants or investment brokers in many late stage deals (brokers are taboo for early stage companies). They know everyone you will ever need to know in your life as an entrepreneur. If you are an early stage company founder, these persons are often difficult to deal with since they are usually interested in cash not illiquid stock. However, it is necessary to seek them out since maintaining alliances with well-connected persons is a key element in the growth of your company.

The VC Partner/Angel Investor

– this is the best Angel investor and Advisor an entrepreneur can have. Along with a highly developed network and sophisticated knowledge of sourcing/structuring deals, many VC’s are best at advising/mentoring entrepreneurs. They have great interpersonal skills and unusually accurate "bullshit detectors" that can help startups avoid unnecessary difficulties.

The key is to try to get at least one Advisor from each category to round out your Advisory Board, then add additional Advisors to the mix as needed.

One overlooked factor in Advisor/Startup relationships is compatibility. Startups should work with Advisors that share their communication styles, work ethics, interests, and curiosities. It is extremely important to work with people you like and respect. Founders should never choose an Advisor that they do not like. Moreover, all Founders have to be convinced unequivocally that the prospective Advisor can make a substantial contribution to the company.

  • Mike Johnston

    Nice post. You mispelled 'role' in the title.

    • sethlevine

      yikes! proof that i should start blogging in the morning until i've had my first cup of coffee. all fixed. thanks mike.

  • Aziz Grieser

    Succinct. I'd only add that it is not easy to find AND get to know a VC Parter Angel investor that is ALSO not already too busy to give you that much time, unless there is some very unique circumstance, and by unique I am referring to luck or good fortune. There is one more role I'd add: that of the “doer”. Get someone who is focused on taking care of business as part of a meeting. After the initial brief discussion, each subsequent discussion involves a conference call connecting you to someone, an in-depth review of your work, co-developing a product road map, and constantly acting and not thinking to solve your startup's biggest problems.

    Unrelated to this post: Why do you find snapshots useful to you? It gets in my way whenever I scroll anywhere on the page, displays an IntenseDebate popup which I could have seen directly at IntenseDebate (I hate popups), and doesn't have any legible that I can discern except for unrelated link advertisements distracting and leading people away from your world. Not attacking, really just curious to the value.

    • sethlevine

      aziz – re: snapshots, i like the idea of previewing where i'm going (or sending my readers) before they leave my page (since i lose them when they click away, but i like to provide links to other relevant content in my posts). i agree that it can be annoying at times – my preference would be the power to enable it by link (i.e., turn it on where its relevant and keep it off things like intense debate, where it just gets in the way). s

  • sethlevine

    from shane (comments were not working when he tried to put this up):

    Another type that might work for the list is ‘The Prospective Customer’. For consumer products/services, I don’t think it makes much sense, but for enterprise software it’s critical. Most early adopters don’t even get interested in your company until you have a very good demo to get them excited. However, if your idea is any good, there will be at least a few prospective customers that share your vision and passion for the solution that could play a key role on the advisory team. Part cheerleader, part subject matter expert, part critic. They’ll answer you honestly when you ask how much they would be willing to pay for a product like this. Eventually, this advisor could be your flagship case study and lead a customer advisory board after you gain some market share.

  • Shane Jones

    Looks like comments are working for me now.

  • Gerald Joseph

    The VC Partner/Angel Investor can be easy to find, but difficult to get on board. I guess there are a number of factors that can work in your favor – timing, luck/good fortune, geography, mutual interests (similar technical backgrounds and career trajectories), organizational or institutional affiliations (alumni, frat/soror membership), etc. I think the key is to keep your eyes open, network, stay active in regard to all possible self-branding/PR methods at your disposable, and remember that luck favors the prepared.

    The prospective Customer is actually the most direct “Advisor” and “Financier” a Startup can find since the relationship dynamics are straightforward and fairly predictable. If you listen to the customer in various ways and adapt Product Development whenever possible to suit Customer needs and tastes, then you increase your potential success.

    • Aziz Grieser

      Thanks Gerald. I try to keep my eyes open. One thing I said incorrectly is that I don't believe in luck. I think you make your own. Everyone's heard this argument, it's not new. Matter of fact, I believe Seth and Brad write about it regularly.

      It falls in line with your point, that you have to actively search for those relationships.