Expansion-Stage Growth Hack: Building an Advisor Network
April 25, 2018
Leading a company to the point of expansion is an exciting and rewarding accomplishment, but for early and expansion stage CEOs, it also creates a very specific challenge around how – exactly – to get to the next level. How do you move forward successfully when you don’t yet have (and maybe can’t afford) seasoned leaders who have already seen and driven growth at scale?
It’s a big question. One answer: build an advisor network.
An advisor network is a group of individuals, each of whom shares particular skills or experience with your team in order to help your organization succeed. Typically, advisors are hand picked by the CEO to fill specific knowledge or competency gaps and are compensated with small amounts of company stock. Unlike the more formal board of directors, your advisor network fills a more in-the-trenches role, working directly with functional leads on specific projects toward defined objectives. More than actually executing on tasks, advisors provide advice and serve as thought partners to the functional leaders they work with while also serving as coaches and mentors. Lastly, advisors give CEOs calibration points to evaluate how current functional heads might scale with the business.
When I talk to early-stage CEOs, I always recommend they take advantage of three things:
- The full potential of the right investment partner
- The door-opening power of their CEO title
- The business-building power of a strong advisor network
Today, I’m going to share a little bit about how to put your advisor network together and how to use advisors in the right way.
The CEO’s Dilemma
Companies that are in a growth curve are typically very product oriented in that they may still be working through some details, but they have a pretty strong sense of their product and their product market fit. What they aren’t sure of is where to go next.
There are a lot of unanswered questions at this stage (crossing a lot of functional territory including go-to-market strategy, sales and marketing, customer support, HR, and other internal/infrastructure considerations), but usually the team is gearing up to add more complexity. Sometimes, this means adding features to the product itself; other times it might mean exploring how to move into new customer segments or how to think differently about features versus platforms.
Whatever the specific case may be, it’s time to level up, which puts a whole new set of demands on your team. You have to figure out if the smart move is to build out all the functions and disciplines you need, or if you should find another way (the advisor network) to tap into the existing knowledge and expertise of people who have already travelled a similar road.
Your Advisor Network: Finding and Reaching the Right People
The beauty of an advisor network is that it allows you to get specialized support from experienced executives who have already lived through the phase of growth you’re just entering without compromising your ability to be agile and cost effective (or hiring too big too early). But, how do you find the advisors who are right for your company and your situation?
First, you need to know who you are looking for. When it comes to advisors, you want to identify people who have specific expertise within particular functional areas and/or experience dealing with certain kinds of situations and scenarios. It is important to think through the areas you plan to invest in next and have the advisor work with you on what the focus areas and key questions are. Once you have those pinpointed, you can have the advisor work directly with functional heads.
Once you know the questions you have, you can look for the people who can answer them. Tapping into your existing network is the best place to start. Firms like OpenView can provide access to extremely valuable introductions, as can other individuals in your investor and general networks. You can also use platforms like LinkedIn to seek matches to the advisor profile you’ve defined. And sometimes, you just have to take the leap of faith and reach out. A lot of early-stage CEOs feel like they can’t bother someone at a high profile company, but the truth is that you can ping practically anyone, and nine times out of ten they will take your call because you’re the CEO.
It’s helpful (especially when cold calling) to have a clear topic or question in mind when you reach out. Let them know that you’ve done your research about their expertise and craft your inquiry around how you’d like to tap their specific knowledge.
You probably won’t have to address compensation in that first conversation, but it’s helpful to know that advisors typically trade a few hours of their time each month for a small piece of your company’s stock (usually anywhere from a tenth to a quarter point or more). Again though, compensation will depend on the profile of and demand for the advisor and your company’s stage. The theory is that by giving out 1% of your stock to a few highly valuable people who will help you accelerate your company’s growth, the remaining 99% of your stock will be worth more.
The Right Way to Put Your Advisors to Work
There are three keys to getting the most out of your advisor network:
1. Avoid operating them like a traditional board.
I’ve seen plenty of smart CEOs fall into the trap of getting their four or five advisors together every quarter (just like the normal board), giving the state of the business presentation (maybe with some pretty PowerPoint decks), and inviting commentary from the advisors on whatever high-level topics are on that quarter’s agenda. This doesn’t work.
You sought the help of each advisor because he or she had some really specific expertise or experience that you need. Even though, as super smart people, your advisors might be able to add some value by engaging in dialogue about generic issues facing your company, that kind of interaction doesn’t give them an opportunity to move the ball forward in a tangible way.
2. Tie each advisor to the appropriate functional leader within your organization.
Instead of applying them to generic challenges, use advisors in an operational capacity by committing their hours to specific areas inside your business. By pairing each expert advisor with his or her functional counterpart within your company, you make it possible for them to have a direct impact. You’re not asking your advisors to actually implement anything, but you are giving them the chance to partner closely with a specific department head or director and tackle that individual’s specific challenges.
Give your advisors and functional leaders the time and space to listen, learn, and share their stories. You are, in essence, putting the requisite knowledge directly into the operator’s hands. Let them uncover the best ways to put that knowledge to good use.
3. Assign your advisors very specific projects.
Have your advisor/functional leader pairs focus on very specific initiatives. By narrowing the target, you will help them hit the bullseye and make measurable and meaningful contributions to company growth. For instance, an advisor may work with your director of marketing to assess and optimize your lead gen process by answering very definitive and precise questions about the channels you’re using, the message you’re putting out in the market, and the frequency of your reengagement.
In addition to these three best practices, keep in mind that every department in your company can benefit from the insight and guidance of a functionally focused advisor. From HR to product development, sales to customer success, everyone on your team can learn something. Most product led companies will first seek advisor support in non-product areas since their leadership teams are typically already very product focused.
Whichever functional areas you tackle first, make sure to present the advisor in the right light. This helps to reduce any potential conflict and establish a good rapport right from the start. Your internal leaders should understand that the advisor isn’t coming on board to judge them or make decisions for them. The advisor is there to listen and serve as a resource – a collaborative partner who will provide advice and insight, essentially for free (since they aren’t part of the department headcount). Bottom line: your team should be really excited about the opportunity to work with the advisors (and vice versa).
The Lifespan of the Advisor Relationship
While you will hopefully develop great relationships with your advisors, if all goes well you will ultimately outgrow them. The length of each partnership depends on the profile of the individual advisor and the stage and pace of your company’s growth, but the typical lifespan of an advisor/company relationship is about two to four years.
It takes that long for both you and your advisor to get what you want out of the collaboration. For your part, you want to see a return on the investment of your time to get each advisor up to speed on your company, your team, your market, your particular product, and what you’re trying to drive. Advisors are, likewise, interested in seeing the impact of the time that they invest. Not only do they want to be able to create tangible growth and help you overcome challenges, they also want to see their stock value grow.
The right advisor could just be an email or LinkedIn message away so take the time to reach out. You’ll be pleasantly surprised from the ROI just one touchpoint can bring.