Here are answers to some frequently asked questions about advisors. If you have additional questions, email us at email@example.com.
General (answers follow)
Compensation (in Part 2)
They provide advice, introductions, investment, and social proof. Any combination of these is useful, except for an advisor who just provides social proof—savvy folks don’t take those advisors seriously.
A “board” of advisors is not a formal legal entity like a board of directors, which is defined in the Constitution and shit. You don’t need a board to collect advisors.
Create a board if it makes you and your advisors happy. Perhaps some advisors feel fancy if they’re on a board. But it really doesn’t mean anything.
Ask questions. I usually ask questions about my immediate goals for the next day and week. This sounds obvious but most people simply don’t know how to get good advice and apply it.
Some entrepreneurs set up quarterly advisory board meetings and that probably works well for them. But we find savvy entrepreneurs tend to be transactional—they ping their advisors as needed and skip the advisory board meetings.
Don’t follow advice. Instead, learn from your advisor and apply the lessons to your company.
Your advisor isn’t you: he doesn’t have your goals, history, or strengths and weaknesses. He doesn’t know your company like you do. So take the advice and apply it to your specific situation. This is the advisor paradox: hire advisors for good advice but don’t follow it, apply it.
Even good advisors may guide you with conventional wisdom. And startups are about applying unconventional wisdom. Your task is to hire the maverick advisors in the crowd.
“You can’t be normal and expect abnormal returns.”
From your network and cold calls. There is no magic solution. Hiring advisors is an ongoing effort. Start now and continue until you’re dead.
If you’re working on something interesting, smart people will offer to help you. The contrapositive is also true: if smart people don’t offer to help you, you’re probably not working on something interesting.
Personally, I’m always asking people for advice. I try to turn the folks that give great answers into advisors.
Try before you buy. Most advice is awful. Including advice from successful entrepreneurs. (Successful people probably have an intrinsic lead on making introductions though—they tend to have better networks.)
If you’re considering a prospective advisor, (i) talk to his other advisees and find out exactly what he’s done for them, and (ii) get some advice or introductions first. Then hire him if you like the results. No worthwhile advisor will resist this test.
You can gauge the quality of advice by asking questions (see above). Does the prospective advisor give you the best answers you have ever heard? Could he teach a course at Harvard on the topic? Would you invest in him? If no, move on. If yes, engage him and squeeze his brain dry.
In Part 2, we cover advisor compensation.