The role of a startup advisor, or for that matter, any business advisor, is often misunderstood — even by those would-be advisors themselves.
I regularly write startup advice on product, growth, tech, company, and leadership. The posts work when they address a topic that the entrepreneur is dealing with right now. When that doesn’t happen, or when the entrepreneur needs to dive a little deeper, they might reach out with a question. Occasionally, they’ll offer coffee or beer or lunch for a meeting.
But once in a while, they want an ongoing advisor relationship. And about half the time, they have no idea what that means or how to get started. I’m not even talking about just the first-timers — I’m also talking about successful serial entrepreneurs.
Preferably, your advisors are people who have been through building the kind of company you want to build, several times, with both successes and failures.
In this post, I’ll give you an idea of what a startup advisor is and isn’t. I’m not going to quote to you from my startup advisor handbook because there isn’t one. This is just what I’ve learned advising startups over the last 10 years.
What makes a good advisor?
I’ll say the following as a lifelong entrepreneur: If you’re going to take a serious run at building a startup — and it doesn’t matter what kind of startup or industry or your level of experience — you need advisors. They’re not employees, they’re not mentors, they’re not investors, they’re not consultants, and they’re not coaches.
The main ingredient of a good advisor is not education or background or even level of success — it’s straight-up experience. Preferably, your advisors are people who have been through building the kind of company you want to build—several times—with both successes and failures. They’ve been hands-on and the better ones remain hands-on even as they advise you.
Advising is what a lot of us older entrepreneurs do once we get a ton of experience under our belts. I’ve been advising for about 10 years out of a 20-year career, and it definitely blew up once I sold a couple companies. I advise three or four companies at any given time, some formally, some informally.
Advice vs. advisor (or informal vs. formal)
Last year, I wrote 100 advice posts that were read over a million times. I also answered a couple questions a week that came in via my website. I took a couple calls with friends of friends, and I had the occasional coffee with other friends who needed some questions answered.
While all of that involves advice, none of it is formal or informal advising.
Informal advising is mostly with people I already know, who are doing something out of their comfort zone that happens to be well within my comfort zone. We meet every so often and catch up on their business. I don’t review documents, I don’t make introductions, I don’t keep notes, I don’t follow up. At all.
So it’s not even like a business thing. You can call it a favor, but it’s more like being a good friend.
Formal advising is exactly what it sounds like. As a formal startup advisor, I give my time and commitment to do my best to help that startup with their product, growth, tech, company, and leadership.
Advisor vs. mentor
I can be both an advisor and a mentor, and I’m very adamant about drawing a difference between the two. In fact, there have been startups where I’ve switched from one to the other.
As an advisor, I’m working with someone who represents the entire company, usually the CEO (but not always). The important thing is that there are pieces of the team to whom we can assign actions.
Usually, my advice is centered on product, tech, and growth, because that’s the bulk of my background. When we talk about company and leadership, we’re talking about moving the pieces (company) and how to move those pieces responsibly (leadership).
I’m always compensated for being an advisor, either with equity or cash or, usually, both. More on that later.
As a mentor, my focus is still on the company but completely through the lens of the person I’m mentoring. Again, this is usually the CEO or a co-founder, but it doesn’t have to be. For example, I’ve mentored a project manager into a VP of Product and I’m sure she’ll be a CEO at some point.
In mentoring, the focus is on the person as a person, sometimes not even as a businessperson, but as an individual and a leader.
I’m never compensated for mentoring, but recently I’m seeing a rise in demand for coaching, which is kind of paid mentoring. I’m not against that—I’ve just never done it.