Business advisors aren't Pokemon – but they often do come with magical powers.
You don’t need to collect a full set of business advisors (tech, industry, product, customer, etc). But when you stay focused on the problems your company has, advisors can be a uniquely fast and cheap way to overcome them.
Situations where advisors can add huge value
If the founding team is non-technical and you can’t figure out whether you are being screwed by your developers or whether your potential new CTO is amazing, a tech advisor can help by joining you in interviews and reviewing commits.
If you aren’t taken seriously by customers and partners, a highly credible industry advisor will be able to open every door for you. Just adding their stamp of approval to your pitch can make a world of difference. This sort of industry advisor is usually quite senior, often retired, and is studded with industry awards.
If you can’t get enough introductions to fill your customer development or sales calendar, then you need either industry or customer advisors. In this case the seniority and credibility are less important than the ability to make a warm introduction with lots of people.
If you’ve never done a tech startup before, it’s helpful to have someone who has ticked the boxes (raised money, built something people hate, built something people loved, hired someone, fired someone, made money, lost money). Murky day-to-day questions come up throughout a startup and you’ll save a bunch of time being able to repeatedly go to someone who knows your full company history.
The rule of thumb here is that you are going to keep hitting the same problem over and over, and an advisor can fill in a major gap on the founding team. You’ll need to keep hiring tech guys. You’ll need to keep getting into sales meetings. I’m terrible at product design, so I have a design advisor who literally helps write code when it will make a big difference. But most companies wouldn’t need that sort of help because they’d have the skills in their founding team.
When you probably don’t need an advisor
If you keep doing stupid things, you don’t need an advisor at all. You just need a peer support group which meets weekly and calls each other on your respective BS. I’ve been doing this for two years now and it’s priceless. I have a facilitation guide and set of best practices to avoid wasting your time, if anyone wants it.
If you are entering a confusing new industry and need to understand it better, you just need to have some friendly conversations with industry experts, industry veterans, and a book. If you have an ongoing quagmire of an industry ahead of you, you should be able to get the knowledge from customer conversations.
In general, if you just need to get over a one-time hump, you can lean on friendly folks, do a little book learning, and move on. You probably don’t need to get the cap table involved in that.
And sometimes it’s super ambiguous
You can also use advisor stakes to close big deals. You can give an investor an additional advisory kick to improve the terms (for them) without changing the valuation (for other investors). You can also nudge a big potential client from thinking it’s really neat to forcing his company to use it. Is that a good or bad idea? Super ambiguous, depends on the situation (and yes, they generally should disclose to their boss that they are a minority shareholder–but only because they love it so much!)
Incredible bang for your buck
Adding an advisor into the business mix is a strategic decision like any other, and you should treat it the same — look at what is slowing you down, and then choose the quickest way to fix it. Sometimes the answer will be to do customer development or to add unit tests or to build a landing page. Sometimes the best solution will be to add an advisor.
Rob Fitzpatrick is a tech entrepreneur in London. He has successfully bankrupted three companies, is a YCombinator alum, and has built products used globally by brands like MTV & Sony. He writes at thestartuptoolkit.com and is founder of the 10k Bootstrap Challenge, Founder Centric and dex.io