Good Advisor / Bad Advisor

One of the most common questions early stage founders ask me is how to work with advisors.

But most of the commentary about advisors just emphasizes that they can help by giving strategic advice. That’s definitely true but finding, vetting, and working with the right advisors has a lot more to it than that.

Let’s get into it 👇

Read time: 5 minutes

How to Find, Vet, and Work With Advisors

Why Would You Want Advisors, Anyway?

The most legitimate reason to not want advisors is that it’d be better for your startup if they invest a small check, rather than just collecting advisory shares.

While true, the early days of a startup are incredible hard for founders and risky for investors. Not everyone who wants to help the startup succeed is willing to put in a check right away, even if they believe in the mission and the founders.

Getting access to connections and learnings that would otherwise take intense trial and error can be like a cheat code for a startup.

With that said, definitely test the waters and see if they’re willing to put in even a small $10k check. It’ll be more meaningful when they make intros for you when you’re fundraising if they’ve invested.

How and Where to Meet Advisors

The best place to find advisors is within your own extended network. Your connections, or second-degree connections, can help here.

But I want to focus on the other case — where you don’t have connections — because even if you don’t have an extensive network, you have options for how to meet advisors.

1. Early customers → If you’re selling into large, established companies you may come across customers who fit the profile of a good advisor (see below).

2. Accelerators → Y Combinator and Hyper both do a great job of introducing you to potential advisors, as do many other accelerators.

3. Events → Investing time in building your network through IRL startup events can quickly expand your pool of potential advisors.

4. Communities → Digital communities focused on specific industries can be a great place to find advisors. For example, Lenny Rachitsky’s community would be a great place to find an advisor on product.

If all else fails, cold email can work. In my career, I’ve used it for everything from landing a job at Uber to getting investors interested in my startup.

Good Advisor / Bad Advisor

The right advisors for you and your startup are specific to you. Assess your cofounding team’s weaknesses and map that against the current and future needs of the specific business you’re starting.

For example, if you’re disrupting the insurance industry but don’t have anyone on the team with deep regulatory knowledge, you should probably find an advisor who does.

With that said, good advisors and bad advisors both have some common characteristics:

What to Offer Advisors

Potential advisors will ask for either:

• An equity stake

• A recurring cash “salary”

• Both

Each of those includes a wide range. It’s sort of the wild west, especially for first time founders.

The way to get around this is by creating a “standard” advisor offer for all advisors at your startup, and just being upfront with any potential advisors about that.

Advisors typically have a lot more experience negotiating these types of deals than founders do. It’s in the founder’s (and the startup’s!) best interest to keep things as simple and standard as possible.

I advise startups to offer a standard 0.10% - 0.20% to equity-based advisors, and have a firm stance on whether advisors are eligible for cash instead of or in addition to equity (or not at all). This is lower than Carta says the average pre-seed advisor gets, but firm pushback from good advisors is rare.

You may lose some potential advisors if you’re firm on this, and it’s up to you if you want to bend your standard deal. In my experience, founders tend to overestimate the impact that any one specific advisor will have (though the right advisor may be worth a lot more than this).

Here are some other standards I recommend:

• 2 year, monthly vesting

• No cliff (begin vesting immediately)

• Able to be terminated at any time with immediate effect and no accelerators

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