I’ve been asked this question a number of times recently so I thought I’d share some thoughts to help answer the best way to proceed within your organization.
Most startups have at least a few unofficial advisors as they get their business going. These tend be family, friends and colleagues who act in a mentoring role or as a sounding board to the founders of a young company. Sometimes, if the startup is a bit lucky, the advisors are seasoned veterans of the industry who have been there and done that. In Silicon Valley, this is done all the time; it often seems like everyone there either has outside advisors or is doing some advising themselves. Sometimes both.
Advisors are individuals that provide advice or mentoring to a company – usually to the founder(s) or CEO or a member of the “executive staff.” The advice they give is usually ad hoc, consisting of an occasional phone call or a coffee or a standing monthly meeting at the local watering hole. Advisors like this are usually chosen because they have certain knowledge that can be valuable to the company. One advisor may be a money person, or a marketing person, or a coding wizard, or maybe an operations guru, for example. Advisors are generally compensated for their advice. In startups and small companies, the compensation is almost exclusively stock or stock options in the company.
An advisory board consists of a number of individual advisors meeting together with the company to discuss things like strategy, messaging, finances and funding, hiring needs, etc. These advisors may (and should) still have the occasional ad hoc call or independent get-together as needed. Sometimes getting too deep into the weeds on a particular subject with one advisor doesn’t make sense in a larger meeting. The primary goal of an advisory board is to work with the company as a group, comparing and contrasting ideas and experiences. Often times with an advisory board, the company may pose a question to the group and then sit back to listen and learn while the advisors themselves discuss (maybe even argue) the question and answers. Almost always they come to some sort of consensus to offer the company. The company takes this input under advisement, and proceeds to do what seems best for the company.
Pros and Cons
There are benefits to having individual advisors as well as gathering them into group advisory board discussions. If you only have individual advisors and not an advisory board, you are missing out on a great way to gather information and learn in a way that you might have never gotten with only individuals. A well-run advisory board can be worth its weight in gold, and can prove to be invaluable to the growth of a small company. Many companies credit advisory boards with items such as cutting costs, improving go-to-market strategy and improved product road map goals.
About the Author
Greg Duplessie has spent more than 21 years in the data storage industry as a business development executive and management consultant. He is also the Managing Director of IABPro (Industry Advisory Board Professionals) as well as the founder of the ExecEvent, a boutique conference business for technology executives.