June 18, 2013, 12:02 PM
GUEST MENTOR Sean Duffy, CEO and co-founder of Omada Health: No entrepreneur can — or should — go it alone. But beyond hiring some teammates in the trenches, you’ll also need a handful of people working with you from the sidelines. Your advisers and board of directors are there to provide the high-level input that is difficult to get when you’re in the weeds.
But don’t confuse the two. Understanding the differences between them — and therefore the criteria you must consider before bringing either type on — will be crucial to the ultimate success of your company.
On Advisers: Expertise, Influence, Analogy, and Emotion<
In the world of corporate law, the oft-used term “board of advisers” actually carries no legal weight. Technically speaking, advisers are simply supporters to whom you’ve given a little vesting equity so they don’t get sick of being milked for feedback and ideas. In general, sooner is better for bringing on advisers, but only if you’ve taken the time to map out the kind of advice you’ll need. How do you do that? At Omada Heath, we’ve learned that you really need a mix of four different — though complementary — types of advisers to really get things humming:
1. Expert advisers are there to fill in particular gaps in your knowledge. As an entrepreneur, it’s easy to assume you have skills you don’t. So ask a more experienced ex-colleague which blind spots they see in you that don’t necessarily warrant a full-time hire in the short-term. Almost every startup could use a top-notch brand adviser, for instance, well before they might be ready to bring in a marketing team.
2. Influencer advisers are there to give you an “in” where you might not otherwise have one — say, someone who’s connected with The Wall Street Journal or a host of respected tech bloggers. Often, however, you need an initial big name, an “anchor” adviser to encourage subsequent advisers (or investors) to get on board. It’s an extension of the rule you learned in high school — if “so-and-so” is doing it, it must be cool. Getting an influencer on board also proves that you’re scrappy and persuasive enough as a team to have won them over in the first place.
3. Analogous advisers come from a different field or industry but can provide a unique perspective to your challenge. An outsider’s perspective with an insider’s empathy for your challenge can be eye-opening.
4. Emotional advisers are often overlooked, but they shouldn’t be, because launching a business is a rollercoaster ride. Sometimes you’ll need someone who can pull you back upright when you start doubting yourself (which you will) or questioning your idea (which you should).
On Directors: Vision and Resolve
In contrast to a “board of advisers,” a “board of directors” carries a very strict legal definition, and with it a bigger weight than any adviser could ever have. Choosing your board is like hiring an employee you can never fire — but one who could theoretically fire you. So how can you find a board that strikes the right balance between pushing you and pulling for you? It comes down to two key — and related — qualities that any board member must bring to the table.
1. Vision: In addition to sensing the financial opportunity of your startup, your board needs to be aligned with how you see the market evolving and therefore where you want to take the company over time. A board that has strategic misalignment can quickly have an extremely negative affect. When we finally found our key investors, we shared a long-term vision, not just a short-term opportunity. The partnership felt both entirely natural and entirely right.
2. Resolve: If you expect your board to do its due diligence, it’s important you do yours when assembling it. Don’t be afraid to call their CEOs to find out how a particular board member reacted when times got tough. When investigating your own potential board members, ask around to try to get a sense for their standing and reputation within their firms. If things ever go pear-shaped (and they probably will), you’ll want someone who’s willing to go to bat for you.
How do you if you’ve got it right? Close your eyes, picture your advisers and directors, and take a second to reflect on how you feel. If you immediately get the sense that there is no business, market or team problem that you couldn’t sort through with them by your side, then you’re on the right track. If not, keep looking further down the sidelines.