2010 2 25 Advisors And BoardsPresentation Transcript
Advisors and Boards February 25, 2010 Mark Coopersmith Managing Director - The Argonauts Group Lecturer and Mentor - UC Berkeley, Haas School of Business firstname.lastname@example.org
The Argonauts Group advises business leaders and investors in the transformation and growth of their companies. We work as advisors, deal makers and interim leadership to clarify strategy and direction, set milestones, obtain resources and capital, and drive change and growth. We have had positive outcomes at companies such as Sony, Intel, Pepsi, NYSE, Nokia, Morgan Stanley, Levi’s, Best Buy and Safeway, along with numerous earlier stage and middle-market companies .
The Argonauts Group: Founder and Managing Director
UC Berkeley, Haas School of Business: Adjunct Professor of Entrepreneurship and Innovation
Newell Rubbermaid - GM & Group VP of Global Technology Brands Group
Sony – Co-founder and EVP of global consumer products, e-commerce & media division
WebOrder – founding CEO of e-commerce/SaaS leader; acq by Netopia acq by Motorola
Ernst & Young - Strategy and M&A consultant
Addis Group - President of Strategy at this specialty brand consultancy
Multiple board roles in technology, media, professional services
UC Berkeley – MBA, BA Political Economies of Industrial Societies
A Few Definitions
Board of Directors
Board of Advisors
general, industry, functional
Focus of this presentation: early/growth stage ventures
So you want to bring on an advisor or board of advisors… Why?
What are your objectives with advisors?
How/why will they help beyond your company’s current capabilities?
What stage of growth is your business?
What key challenges do you expect to face in the next 1 – 2 years?
what are your most compelling and immediate problems?
Who are your stakeholders?
How aligned are you and stakeholders?
What do they need/want?
How can advisors impact these items?
What do early stage CEO’s often seek from advisors?
Advice and sounding board
Contacts and network
including will they invest?
What does a good advisor look like?
Depends on your objectives and your needs
Wisdom and experience
Insights on issues from people to biz models to obstacles
Different perspectives and points of view
Can steer with questions as well as answers
a gentle-but-firm touch
Work ethic and preparation
Focused on results and success
What about you/culture?
How do you work best?
Do you want questions or answers?
How are you at accepting advice?
Are you willing to open up your company?
What structures works best?
Informal advisory relationships
Formal Advisory Board meetings
What types of advisors?
Strategy (often BoD)
Industry or Functional
wisdom, personal, chemistry, guidance
What Do Advisors Look For? (Or - How do you recruit the best?)
Much like building a great team
Compelling leader and team
Plus a compelling vision/opportunity
Good fit of values and culture
The right other advisors (company you keep)
How do you find the best?
Clearly define your needs, esp near term
Always be looking
Ask lots of questions, and listen for good answers
Leverage your network
customers and partners
paid advisors - lawyers, accountants, bankers
Audition – e.g. Y Combinator
How do I improve my odds when I recruit an advisor?
Test drive one another
Leverage your other advisors
Use people you know and trust
Limit term and/or match term to issues
How to get the most from advisors once they are retained?
Be clear on your expectations
Communicate regularly and honestly
responsibility is with CEO to initiate
Ask specific questions so they can respond
Understand rules re: engaging with other staff
What level of results should you expect?
The “rule of halves”
At least half will perform as expected
Up to half may not
Of those that do perform well, only half will be really useful
The other half will be well intentioned and hard working, but their usefulness may be limited (focus shifts, knowledge not in right area, etc.)
How should I use the advice I receive?
Apply the lessons of the advice, not always the literal advice.
Understand the patterns and the relevance of advice to your issues
you are the CEO
sometimes you want to break the mold
Esp if advice is based on conventional wisdom
Will an advisor…
..help me obtain funding?
… get me into major accounts or partners?
… open up their personal network?
… provide me with immediate credibility?
can I use their name?
… it depends
How long a term should I plan on?
Depends on needs and issues
also stage of growth of company
Is there a particular project or goal?
E.g. FDA approval
Increasingly seeing one year terms for early stage businesses
Mentor relationships often last longer
How should I compensate advisors?
Primarily stock or options
Passive/average: 0.1 – 0.25%/yr
Super advisor: 1-2% +/yr
Typically only one or two, often on BoD
Typically not objectives-based
Consultants and coaches more cash-based
What should I document?
time, meetings, responsibilities, structure, publicity