by Frans Nauta, founder ClimateLaunchpad
Crucial resources that can turn your venture into a success are talent and networks. Get ready to convince the smartest, most knowledgeable and best-connected people to join you in your quest to revolutionize the energy system and the world. You not only need these people on your team, you also need them as advisors.
We cannot stress it enough: get yourself an advisory board as soon as possible. But take note, these people are going to be your close advisors the coming years. So what kind of people do you want on board for the ride? Here is a list of things to look for:
Having people on your advisory board that have long-term experience in the industry and deep knowledge of the market you’re aiming for is priceless. These are the people that don’t need lengthy explanations about companies you are engaging with, technology puzzles you’re working on, or market dynamics. As a result, you’ll be able to have extremely fast back and forth discussions with them, by phone, e-mail or by texting. I’ve had 2-minute phone calls with advisory board members that completely changed the trajectory of a company, simply because I was lucky enough to have great advisors whose brains I could pick.
One of the most difficult things to explain to outsiders is how excruciatingly hard it can be to run your own start-up. Yes, there are those glorious moments when you achieve a major milestone or you have a major breakthrough. But often a lot of it is just plain painful. Failed lab tests. Firing people. Going into your 87th investor meeting and still not close to a ‘Yes’. The x-to-the-nth sales conversation that turns out to be a waste of time. Discovering you’re still at work at 4 AM in the morning. The loneliness of being a founder. It’s extremely helpful to have someone on your advisory board that knows what it’s like. Someone you can give a quick call and they simply say: ‘Yes, I know it’s hard. But you’re doing great.’ Someone that gets it.
So make sure you have a start-up founder on your advisory board. Not just for the emotional support, they’ll also have great practical tips on how to run your business. But never forget: it’s your company.
Another thing you need from your advisory board is connections. Whether it’s introductions to potential customers, suggestions for amazing people to join your team, finding consultants that will hit the ground running (instead of needing two months to ‘get to know your market’). Finding the best people is crucial to optimize your chances of turning your big idea into a big company. And unlike all other things that you have to deal with as a start-up founder, your team is the one thing you have full control over. You better make sure you have amazing people in your advisory board to help you attract the best possible team.
It’s sheer delight to have smart people on your advisory board capable of asking intelligent questions about your technology. Um, let me re-phrase that: it’s often a pain in the rear to have smart people on your advisory board that understand your technology as well as you do, or even better. But that’s what they are for: tackling hard questions in the tech development phase will save you tons of valuable time and money further down the road. Tough love is what we like to call it. See if you can find people smarter and more knowledgeable than you are. You’ll be a much better entrepreneur if you are not the smartest person in the room (or at least not all the time).
Picture this: you run into a conflict with one of your suppliers, and they threaten to sue you. Not a very nice prospect, is it? But it happens every now and then. Or you may run into IP issues, a conflict with an employee or an argument with co-founders that needs to be mediated. Getting support in all these cases can be quite expensive, and it’s the last place you want to spend your money. See if you can get a fantastic person with a legal background in your advisory board to help you out for free the first period.
A lot of your future success depends on your reputation. We’ve said it before, nobody get’s fired for hiring IBM, but for buying from a start-up people actually have been fired. So from day one you have to make sure you have a stellar reputation. One of the assets that come with joining an accelerator like Cyclotron Road, Climate-KIC or YCombinator is that you’ll be thoroughly vetted by very smart people. Getting in was extremely hard, which is great for your reputation.
Your advisory board is a great way to further strengthen that reputation. If senior, well respected, successful, smart, charismatic, wonderful, amazing (the list can go on…) people are willing to be part of your advisory board, it means they consider you worth their time, and worth their reputation. That’s a BIG thing.
It can be really helpful to have a person on your board that has a high net worth, and that is investing as a business angel. Not necessarily because you want them to invest in your company, but because of their network. It is highly likely that they’re part of one or more business angel networks, and well connected within the venture capital world. And that can never hurt.
Excel is your friend
So here you go, seven criteria to help you build your rock solid advisory board. What I would do is make a nice excel sheet, brainstorm on names of people that you want on your board, and score them on each of these criteria. Feel free to add your own criteria. Nobody will score high on all variables, but see if you can make a nice mix of people that covers most bases.
How to connect
The next step is to get in touch with these amazing people. The best way of course is through someone you know. Since you are looking for impressive people, they are probably quite busy. A warm introduction via someone they know increases your chances of getting their attention. Scout your own network and find out if anyone knows anyone close to the people you’re looking for.
Chances are you don’t have a link to them. No worries. See if you can find your dreamed advisor at a public event. A friend of mine once got five minutes with Elon Musk that way (true story!). If that doesn’t work, there is always cold calling and cold emailing. I personally prefer not to cold-call people for things like this, because well, it’s kind of ‘in their face’. But I know people who are comfortable with it and have become skilled and successful cold-callers.
My own preference is to write an email. Of course it has to be a VERY GOOD email, one of the best they will read this year. One that clearly states what it is what you do, why you want them on board, and what you ask of them. Your ask should not be ‘Will you join my board’, but should instead be ‘Can I come by your office the coming week for a 20 minute meeting to discuss this?’ In my experience, most people are willing to spend 20 minutes when they are intrigued.
Now keep in mind, these are busy people, with a ton of email. So don’t worry if they don’t respond rapidly. Send them a gentle reminder every week. I once wrote a series of twelve emails, where I used the subject line for my message. I sent them all within 30 seconds, so my target had all those messages on top of each other. Together it read like an email. That’s finally when he responded (yes, I am talking about you, Vincent…).
Aim for the very best
Often when I discuss the advisory board with teams, they tend to aim for people they expect to say yes. People not too famous, not too rich, and not too stellar in their reputation. That’s not the way to go about this. You want to have the best possible chance to make your company a big success. So always aim for the best. Not necessarily the most famous, but the best. People with a stellar reputation in their field, and that are well known. If you want a Nobel Prize winner, or the CEO of a company, or a former prime minister on your advisory board, make sure you try. Worst-case scenario they say ‘No’. The smallest chance of a ‘Yes’ makes it worth the shot.
Should you pay your advisors? Generally: no, you shouldn’t, not in the early stage of your company. Maybe sometimes you find someone that has a unique skill that you can’t do without: okay, pay them. But make sure to pay as little cash as possible, focus on equity.
Should you pay equity to your advisors? Of course you should. Not a lot, and not in the first year. Giving them a small percentage in your company though, makes it much more interesting for them to invest time and energy. And it creates a fun dynamic; they are now truly part of your team.
A final word of advice: there is a good template contract to formalize your relationship with people on your advisory board that you can also use to figure out a fair compensation for your advisors. It’s called FAST: Founder/ Advisor Standard Template. Don’t copy-paste it, take the parts you like and create your own version of it. See: http://fi.co/FAST
Any feedback? I’d love to hear from you.