As ETS founders you should already be aware of the challenges in hiring. In particular, in this article we focus on the Eye Opening Veteran Founders from our last post. Bringing on advisors has the same issues, but often magnified. So let’s break down this process in terms of the challenges in hiring:
Sourcing
Selection
Offer negotiation
For your regular day to day hires, you’ve built processes around each of these steps of the hiring process. But none of the steps in this hiring process will match your usual hiring processes so you will be starting from scratch.
Advisors are sourced from a very limited pool of individuals, different from your typical pool for hires. A second, big, difference is that you will have to be the recruiter and headhunter in this process. You cannot outsource it. A few filters you need to apply when looking for ETS founders is:
They have built an Emerging Technology Services (ETS) startup
They built it within the last few years, so the market knowledge is up to date
They have time to be an advisor
They have experience giving advice to others and have a framework to engage efficiently with you
They did play a holistic role, as occasionally you may find founders who only worked on specific parts/geographies/business units and did not get a holistic exposure
These filters are hard to apply on any public database so you will need to apply the first two filters, reach out to a lot of people, and see if 3-5 are applicable. Tactically, all of the above these days can be done via LinkedIn and by reaching out to your personal network for referrals. Once you have a connection, you have to do some ‘dating’ to do selection, which we describe below.
An alternative approach is Vixul (or similar) Community. Vixul is 100% focused on ETS. By taking a company to an exit we already have a valuable network and credibility in the emerging tech services space. This has enabled us to recruit 20+ veteran founders today who can help you. They have all passed the above criteria and accelerate your sourcing process.
The hardest jobs to select for are the ones where you are trying to push past the capabilities of the organization because you do not know what you are looking for. Being an advisor is one such job. However, one thing useful about founders both as the provider and the recipient of advice is that their skill is in breadth - not in depth. And so it is easier to judge them using higher-level metrics like the success of their companies. The onus, therefore, moves to the chemistry with the individual.
A few aspects to look at:
Wisdom vs targeted actionable advice. Some advisors will part with wisdom, often trying to share with you their point of view and perspective. Others give you actionable advice and steps to take. There is no right answer because the former can help you become wiser and enable you to see things from a new perspective. This is very valuable in the long term for your own growth. The latter can typically provide very actionable tips and move the needle much faster.
Differentiating value discipline. Advisors have different mindsets. Some will be all about profits of the business. Others will prioritize and value innovation and delivery performance more. Intimacy with customers and employees is another focus area some may prioritize. Your job is to pick advisors with a diverse focus, and those that will disagree with you as well so it does not become an echo chamber. A good, scalable ETS business needs to be balanced.
Strengths. Some advisors are engineers, others are sellers, and some are operations managers at heart. Each of these perspectives adds its value and you have to understand what works best for you. For that matter what works best for you may change with time.
A key solution to the above is also to not restrict yourself to one advisor but have a few advisors as it gives you a more balanced perspective – long term vs short term, sales vs engineering, etc.
At Vixul, recognizing these aspects is why we decided that instead of providing an advisory service, we build a Brain Trust for each cohort. The brain trust is a group of Veteran Founders that are all ready to support startups in a cohort. While every startup has a dedicated Brain Trust representative, they meet all of the Brain Trust and have access to any one of them.
Once you have selected one or a few advisors that you want to work with, you have to go through an offer and negotiation process. As with every offer, there are two parts: the scope of work and the compensation. In the case of veteran founders, who are typically there to advise you on many topics, the scope is best left broad.
It may be more suited to share some time commitment expectations and leave it at that. Compensation is more tricky since the advisor is likely in a strong financial position already and you typically cannot motivate them with cash. It is better to offer some form of partnership, perhaps an equity or phantom stock plan, or a success bonus. This aligns your interests with theirs, and makes them feel like a stronger part of your vision – and motivates them to help you more than a paycheck will. It also conserves you cash today.
Putting such a relationship down on paper however is complex. It can pile up legal fees and can trigger legal back and forth. Recently, Founders Institute has provided a standardized agreement called FAST to ease this process. We highly recommend that every founder should be aware of FAST and read up on it. It is a great starting point. However, it is worth noting that FAST is primarily targeted at product/SaaS startups. There are some very specific issues that ETS startups face, which makes it directly inapplicable.
For example, services companies are often structured legally in a more complex setup. It is common for even small services companies to have entities and employees registered in multiple countries. Since investors are involved, the founders are often unsure how and when an exit may occur, or if they want to grow this company into a self-sufficient lifestyle business. In such situations, the structure becomes inapplicable since FAST is basically focused on an exit. This is often why such relationships don’t even get formalized in the ETS space, but that is a bad idea.
An alternative is to leverage Vixul, an ecosystem designed from the ground up for ETS founders, to get access to advisors. We provide the founders a structured framework to work with a group of advisors that are all incentivized and motivated to help. If you are an ETS founder currently looking to scale your business, and feel you can use some advice, contact us. As ETS veteran founders, we feel your pain and will be happy to help out. Once you have the right advisor in place, our next post talks about how to make sure you are making the best use of everyone's time.