But don’t just take My advice
May 23, 2011
It may have meant something once, but now the term “Advisor” has become little more than Pitch-fodder. A checklist item in every start-up’s deck . . . thrown in for it’s implied endorsement value.
In fact, the role of Advisor has become so devalued that one start-up CEO who pitched me last week felt compelled to describe the group he had assembled as “working Advisors”. As opposed to the other kind, I assume.
That’s really a shame, because entrepreneurs can use all the advice they can get. Especially these days, when a potent cocktail of powerful software tools, easy access to seed capital, and a broad network of incubators have made it possible for an ambitious entrepreneur with a great idea to get her product up, running and funded in a matter of months.
I’m now seeing more great startups coming out in a month than I used to see in a year. But I’m also seeing a corresponding number of bright young entrepreneurs with that deer-in-the-headlights look, the result of having to be buck-stoppers for hundreds of decisions they never imagined facing and never were prepped for in start-up camp.
So then why am I knocking the concept of having an Advisor? Because most people don’t really need one. At least not at first.
What they do need is a “Mentor”. And despite some blurring of terminology in recent years, an “Advisor” and a “Mentor” are truly worlds apart. Let me expand on that a little.
The first few years after I left Netflix I was definitely an Advisor and, for me, it was a deeply unsatisfying experience. The basic model went something like this: I would meet with the team a couple of times, I would toss out some pithy and astute suggestions, they would invite me to join their Advisory board, and then — with very few exceptions — that would be the last I would hear from them.
Or, to be honest, think of them.
I never got to really know the team. I never really got to understand their market. And I certainly didn’t really understand the problem they were trying to solve. In the end, it was not really helpful to the company and it certainly wasn’t satisfying for me.
Unfortunately, I think this is the model for most Advisory boards these days. It’s just the collection of people who said yes.
For the last few years, however, I’ve spent the majority of my time as a Mentor and I’ve now come to believe that a single great Mentor can do more to help a company than a dozen Advisors.
So how is a Mentor so different than an Advisor? Simply put, as a mentor I’m willing to make a big investment in you and your company. But I’m not investing my money. I’m giving you something even more precious to me than that. I’m investing my time.
It’s a deep relationship. I get to know you. I know your team. I understand your category and your products. I try to know enough to help you work through the subtleties of a problem rather than just applying a formulaic solution. It’s lonely as a CEO, and it can be an incredibly valuable to have at least one other person who is close enough to the problem to understand it, smart enough to help solve it, and detached enough to be impartial.
The relationship is singular. As CEO, you may have many Advisors, but it would be very unusual for you to have more than a single Mentor. In exchange, I make a serious commitment to you and your company: both in the amount of time I spend with you each week as well as the length of time I’ll stay engaged.
I’ll be proactive and kick your ass whenever I see it needs kicking. (The Advisor will kick your ass too, but usually only when you ask him to).
And not insignificantly, as a Mentor I’m aligned with you – not your investors. If I do receive a stock grant, it’s common not preferred; it vests, accelerates and (ideally) pays out on the same terms as the founders. During fund raising, acquisition talks, or any of the other coming-of-age milestones of a young company, you’ll know for sure that I’m on your side of the table.
Bottom line: my job is to help you be a better CEO, not to watch out for my own interests.
So, despite my cynicism, is there still a role for an Advisor in your life? Certainly. But to know when and how to use one, you have to recognize that there are really two types of problems confronting an entrepreneur:
- The one-shot “I need a specialist” kind of problem. Think of it as calling a plumber to fix a leak.
- The long-term “wow this shit is tricky” kind of problem. Think of it as hiring an architect to help you build your dream home.
An Advisor is more like the plumber. Quick in. Quick out. Really knows his stuff and how to apply it.
The Mentor is more like the architect. Willing to invest the time and effort to know what you’re looking for and how to achieve it – even if you’re not quite sure about those things yourself.
It’s probably worth adding that the type of advice you need will greatly vary based on what stage you’re in. The experienced CEO in a more mature company probably has things strategically on an even keel. She’s more likely to want to surround herself with tactical resources (read: Advisors).
The new CEO has a different problem. He’s not trying to figure out how to put out the fire – he’s trying to figure out which of the one hundred fires he’s got burning are the important ones. He needs strategic counsel (read: Mentor).
And what about forming an Advisory Board? Well, as my father used to say, “If you’re going to ignore my advice and do it anyway, at least let me show you how to do it right”.
Remember the first Godfather movie? There’s a scene where the local undertaker beseeches Don Corleone to avenge a wrong done to his daughter. The Don agrees to help, but adds, “Some day, and that day may never come, I will call upon you to do a service for me. But until that day, consider this justice a gift on my daughter’s wedding day”.
That’s how an Advisory Board should work. Some day, and that day may never come, you’ll call upon your Advisors to do a service for you. But until then, just consider that small stock honorarium a gift. You don’t need to do regular calls. You don’t need to meet once a quarter. In fact, the less you demand of them, the easier it is for them to continue “working” with you. Communicate regularly to them as a group so they know what you’re up to and then wait for a particular problem that requires their expertise. They’ll be there for you when you need them.
So now you’ve got your Mentor and you’ve got your Advisors but don’t stop there. There are at least two other ways to bring in the expertise you’re looking for. By way of example, I wear four different hats for the companies I’m helping.
Advisor – OK, I admit it. I am an Advisor to two companies. (Despite my grumbling, I have agreed to be an Advisor in these two cases because I like the CEOs and when they do toss me problems, they are juicy interesting ones).
Investor – I treat my relationships with my portfolio companies as Advisor-Lite; ping me if you need something, we’ll do lunch once in a while, but for the most part you’re on your own. That said, most angel investors were entrepreneurs themselves and can be a great group to ping for hiring, introductions, vendor sourcing, referencing etc.
Mentor – I’m currently mentoring two companies and this is the sweet spot of my post-Netflix career. I’m currently spending three to four hours every week meeting with each team of founders, and I honestly can say I think about their problems as if they were my own. I would do this exclusively if I had the bandwidth.
Board Member – I’m currently a director for three companies, and in this role I fall somewhere between Advisor and Mentor. Although I do invest in getting to know the company’s management, category, products, and issues, my input tends to be more strategic than tactical, and more watching out for the stockholders than watching out for the CEO. Ultimately, as a board member, I’m my CEO’s boss – which can’t help but color the relationship between us.
Obviously, the line between theses categories is blurry. I can point to some Advisors who maintain a level of contact with their companies that go way beyond mentoring. And there are some mentors who have figured out how to add value with only sporadic as-needed contact. Add in all the various flavors of board members and investors and you’ve got an almost endless variety of counselors to choose from.
For my part, when I launched Netflix, I was nearly 40 years old, already had a handful of other startups under my belt, and was able to surround myself with a team of grizzled veterans.
But you? Well you’ve got people like me.