Advisory boards come up often in conversations with founders, especially early in a company’s life when they’re looking to build out expertise, industry relationships and social proof. I’m not a big fan of the “social proof” motivation, pairing the right advisors with shared expectations can create value which goes way beyond the small amount of equity they’re awarded.
I’ve found you can separate advisors into roughly two types – Practitioners and Coaches. Practitioners are advisors whose value is based on a specific skill or ability (for example, make introductions or teach your marketing team about SEM). I’ve written previously about looking for Practitioner advisors who can “teach, not tell.” You want them leaving your organization stronger, not just telling stories about what they did at company XYZ.
Coaches are a bit different. As opposed to imparting a skill or filling a gap, they’re more like mentors, helping you – or another executive on your team – perform at a high level. For example, you might have a Coach Advisor who has built out large inside sales teams before and they can work with you over the course of several years on hiring, training, rewarding and evolving this part of your organization.
What are some differences in the structure of advisor agreements for Practitioners versus Coaches?
- Length: Advisory agreements are standard two years. For Practitioners you might consider a shorter span since their input is likely to be more concentrated. I wouldn’t go for less than 12 months though – if you need someone for less time, just set up a contracting agreement.
- Frequency of Interactions: Practitioners can often just drop in and add value whereas Coaches need to understand your strategy, capability and culture. Accordingly you probably want to establish some frequency of meeting with Coaches (anywhere from monthly to quarterly) whereas general email updates are fine for Practitioners since they’ll be used “as needed.”
- Investment: Giving Coaches a chance to invest in the company (or asking them to do so) makes sense because of the deeper interaction and ongoing commitment. You want them to feel connected to the enterprise. With Practitioners, it’s a nice complement but not a necessity.
While not everyone is a fan of Advisory Boards, I believe they can be valuable. Does your startup have advisors? Have the been worth the time and equity?