The common mistake I see entrepreneurs make is selecting their board based on some random criteria (which often is “how good does it look/make me feel to have this person associated with my company”).
Surround yourself with amazing people. People who support you, who act as a sounding board and who challenge you. Tweet This Quote
The way you want to approach this is much more strategic: Ask yourself what you need, then find the best possible person to help you. Write a job spec for each advisor, then fill this position just like you would fill any other open position in your company.
Say, for example, your company builds a consumer mobile app. You identify the need for a strong user experience. With the need identified you write your “job spec” for the ideal advisor, create a long list of potential candidates and start reaching out to them. When talking to your potential future advisor make it utterly clear why you want them on your board, what the expected commitment from your advisor is (e.g. one hour of feedback per month plus introductions to people in your advisor’s network as appropriate) and what’s in it for them.
And lastly: The onus is on you to manage the relationship. You have to set up the calls; you have to follow up; you have to make life as easy as possible for your advisor. Simply treat them like the messiah!
Compensating Your Advisory Board
The compensation question is fairly easy to answer: First of all, unless you run a publicly traded company (or a company of equal heft), you generally don’t compensate advisors monetarily (i.e. you don’t pay them money). The exception to this rule might be covering travel expenses if you want the advisor to attend out of town meetings, etc.
Consider “trying out” an advisor for one to three months. Tweet This Quote
To align incentives and put some skin into the game, it’s fairly common to give advisors some stock (usually somewhere in the 0.1 to 0.25% range). Put that stock (like all stock grants you issue) on a vesting schedule and be clear about what you expect from your advisor in terms of support, meeting frequency, time invest, etc.
I often recommend arrangements where you “try out” an advisor for one to three months. This gives you and the advisor the chance to see if you like each other, if you enjoy working together and if the relationship is effective.
Interacting With Your Advisory Board
Which brings us to the question of how to structure your relationship. This is a bit more complicated as it depends a lot on the parties involved, their geographic proximity, their working style, etc. As a general rule of thumb though: The onus is on you to structure the relationship, schedule meetings, keep everyone organized. Your advisors are part of your team, thus treat them accordingly: You define what they should help you with, you assign tasks to them and you should expect them to do what they say they do. Especially if they are not only doing it out of the good of their hearts but are compensated through equity.
And one last thing: The best advisor relationships I’ve seen are based on genuine curiosity on both sides, and a mentee who is pushing for the hard truth (and then implements what she learns).
Now find those awesome advisors, get them to work, and build the future together!