Our best advice on selecting advisors

Launching a new company?

If you’re about to begin a new venture, before I get into who you should select as a CEO, board member, or advisor, let me first state a contrarian position – relying on startup boards and advisors to get your enterprise off the ground is overrated.

Initially, your chances for success are much greater when you surround yourself with a CEO and top-flight management team you’ve aligned economic incentives with to work 60+ hours a week with you in the foxhole. I’ve been shocked to see many boneheaded moves made by founders because “the board wanted me to do it.” Trust your instincts and lead your managers.

In fairness to your board members, you can’t expect someone with a high net worth and a busy schedule to be great at making judgment calls about your business if they only spend several hours a month thinking about it.

Remember that board members and advisors showing up for a one-hour Zoom call once a quarter when you and your hand-picked team are hitting the ground running every day won’t compensate for a lack of in-house talent. One way to spot floundering founders is pitch decks showing more board members and advisors than members of their management team.


Your advisors: bigger is rarely better

Having stated my position that relying on board members and other advisors early in your company’s launch is overrated and ineffective, let’s discuss how you should fill out your roster of directors and advisors when the time comes.

In short, I tell founders of startups to look for startup CEOs who have had successful exits.

Founders frequently assume that a VP at a Fortune 500 company would be a great advisor since “if they can do it at BigCo, surely they can figure out my little startup.” BigCo has much different challenges than a capital and talent-starved startup first penetrating the market while raising cash from investors and collecting from customers to make payroll.

Unlike the CEO or VP at BigCo, who had a slew of underlings to handle much of the dirty work, your team must be a generalist who can wear many hats and you want advisors who have done the same. The person who was “at Uber when it went from $1M in revenues to $1B” may have played a small, specialized role in that growth and success.


Do your board members and advisors have experience “beginning with the end in mind?”

Your board members and advisors must have experience raising money from outside investors. Pitching investors, keeping them informed, and making decisions with all investors in mind are keys to your success. Running a lifestyle business where you report to no one is one thing, but having outside investors who will hold you accountable is another.

The exit – selling your business – can be as challenging as the entrance – raising capital. Potential buyers will put you through the wringer, and board members and advisors who have experienced that arduous process can keep you clear-eyed and focused on balancing your business’s needs and meeting your suitors’ due diligence needs.

Surround yourself with a board, advisors, and mentors who have successfully sold their businesses. There are exits, and there are successful exits. When vetting advisors, ask what return on capital the investors received. Many entrepreneurs close businesses or bankrupt them and move on. There’s nothing wrong with that, but that’s a loose interpretation of an “exit” and clearly doesn’t indicate the track record of success you’re looking for.


Who not to pick as an advisor or board member


One cardinal rule when choosing board members and advisors – avoid ultra-high net worth individuals whose investments are not crucial to their net worth. They may be significant assets to your team and essential investors because they can help you raise capital, but they’re unlikely to roll up their sleeves and take the time necessary to understand your business and provide quality advice.

If you can’t find startup CEOs with successful exits to participate at the board level, other options are (in order of preference):

  • A leader with experience in startups and marketing executives with a strong track record of high growth on a limited budget. Sales traction is always the biggest challenge for any startup.
  • Someone with experience in your industry, ideally leading a small business to success.


Your plan B if successful CEOs have no interest

If you can’t find successful startup CEOs or other leaders with sales and marketing or industry experience, at a minimum, avoid these attributes in potential CEOs, board members, and advisors by asking these questions:

Attribute: limited time – “How many hours can you commit to every week, and are you willing to work nights and weekends?” (CEO)

Attribute: limited capital – “Would you consider making an investment in our business in the future as a show of support for the business to prospective investors?” (CEO, board member, advisor)

Attribute: limited experience – “How many boards have you been on? How have you been the most impactful on those boards? Can you provide a few founders references I can call?” (board member, advisor)

Attribute: vanity seeker – “Why do you want to join our board as a director or advisor?” (board member, advisor)

When you have the right people in place with the right amount of capital to work with, you’re in the position to start and finish strong. Let me know how I can help.

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