Advisory Boards Can Be an Integral Part of Your Management Team
by Michael Matesic
You know all the clichés. You have to crawl before you can walk, walk before you can run. Why reinvent the wheel? There's a million of them. But clichés take root and endure because they contain an element of truth.
When it comes to launching and shepherding a young company through the rocky shoals of initial technology development, wooing investors, and proving that a concept is indeed commercially viable, the truth behind every cliché about taking good advice becomes undeniable and irrefutable.
“I strongly believe in surrounding yourself with people who have been through it before,” agreed Shanna Tellerman, president of SimOps Studios, a local startup specializing in creating 3-D interactive games and emergency response training software. “Having people you can honestly talk with about business problems, asking them what they would do, is so valuable.
“Running a young company, it can feel like the weight of the world is on your shoulders, but it doesn't have to feel that way,” Tellerman continued. “With an advisory board, you can open up in a way that's different from how you need to communicate with a board of directors or even your own employees.”
“As our company is a mobile technology company that grew out of a media company, with video and interactive production capabilities, an advisory board is needed to fill in some areas of expertise we don't have internally,” said Christa Ross, who heads up area startup MoGoes. “We're going to form a group of advisors that, especially on the technical side, can provide experience and contacts we need to grow.”
In the case of both SimOps Studios and MoGoes, the very fact that these companies have such great potential makes the need for a well-constructed advisory board all the more critical. The idea is to avoid missteps that could dilute or divert the long-term potential of these promising startups. A major part of assembling an advisory board comes back to the wisdom of another old cliché – the “win-win” proposition.
“Lots of people are willing to give you advice, but if they don't have any skin in the game it's more like they're willing to do you a favor when they have the time to get around to it,” Ross explained. “We're looking for advisors with the time to invest in looking at our technology and giving us specific answers.
“A company in our situation of bootstrapping ourselves to the next level doesn't have the finances to hire talent for these tasks, so we will provide our advisors with equity,” Ross said. “We're asking for their hours or for a specific result in exchange for a piece of the company. It's a reciprocal arrangement, with both sides getting something of value. That way we can enforce deadlines and keep our focus on getting results.”
Acknowledging gaps in experience and knowledge within a young company's talent pool becomes a must in forming advisory boards, as well – since selecting members should tie directly to filling those missing pieces.
“As we're transitioned from niche player in the emergency response market to the broader consumer 3-D online/gaming/interactive product market, we're facing a lot more competition and a much different level of competition,” said Tellerman at SimOps Studios. “We knew we needed to be connected to Silicon Valley and we needed to better understand the venture capital world. We had informal advisors before, but our new formal board of advisors plays a bigger role. We cite them in investor presentations, we've had RFPs brought in from members of the advisory board, they help with strategy sessions. It's great vetting ideas with a group that's done it already.”
Idea Foundry has helped both SimOps Studios and MoGoes identify and evaluate potential advisory board members, keeping an eye out for individuals who can add valuable perspective and knowledge, dedicate the time required, and serve as the springboard to additional funding and deals.
“There seem to be two ways of thinking about advisory boards – one is to look for people who can fill in areas of responsibility and help achieve specific results, and the other is to find people who can lend their name to a program for validation among investors – the halo effect” said Ross. “We want advisors who can do both. This company is my love, this is my thing, and I want people who will help me achieve results.”
Start Me Up appears monthly in the print edition of TEQ Magazine.