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By Auren Hoffman Going by the Board The advice, experience, and perspectives of seasoned directors and advisers are blessings smart startups should cultivate and cherish Two of the three companies I founded in the past eight years -- BridgePath, an enterprise software concern, and GetRelevant, which placed Internet advertising -- each had a board of directors and a board of advisers. By contrast, Kyber Systems, an Intranet consulting firm I started right out college, had neither a board of advisers nor a board of directors beyond the two founders. In the process of thinking through what boards were right for each company, and then recruiting and dealing with the members, I've learned a lot about the care and feeding of both types of entities and how the entrepreneur can make best use of each. This knowledge, I believe, is worth passing on to other aspiring and active company-builders, because directors and advisers are an entrepreneur's chief -- and sometimes only -- source of guidance and information from a "higher up." NEAR AND FAR. The first lesson is that the boards differ. An advisory board is most useful in providing strategic ideas or feedback on increasing revenue and building your business, with the members not involved in the details of your company. You go to them, as you would an old high school friend whom you don't see often, to catch up and pick their brains. In other words, for a view of your landscape from 20,000 feet. The members of your board of directors, by contrast, are more like your parents, the people you go to when you are up against it and you want guidance on a day-to-day basis about how to navigate choppy waters: a law suit, for example, or the sale of your company. These people give you the view of your business from 200 feet. Your directors comprise your company's governing body and have fiduciary responsibilities for which they can be held legally accountable. Your advisers, by contrast, are high-level strategists -- or mentors, if you prefer -- who parachute in and out. For small companies, directors are generally shareholders and thus have the incentive to spend their time on your company. Many companies might compensate their advisers with a small token of stock, but I've found that advisers are motivated, not by money, but by the ability to help mentor an entrepreneur. HIRE CALLING. Making best use of your boards is linked inextricably to the way you recruit the individuals who eventually agree to serve. With directors, many are simply the people who have invested in your company -- or those whom your investors have recommended (or demanded) be given a seat. Your advisers, on the other hand, are people you must recruit, and to do so effectively for top talent, you must give them a compelling reason to join. Some companies throw cash at advisers, but cash compensation is rarely necessary, and often not possible for a small business or startup. At BridgePath, whose software allowed staffing and recruiting firms to work collaboratively, we were able to offer only modest stock options and thus needed other hooks to secure our advisers. Since we were seeking mostly former "C-level" people, such as chief executive, financial or technology officers, in the recruiting industry, a major lure was their ability to network on a regular basis with peers. Other enticements included a low time commitment -- we promised each no more than two hours a quarter, one a conference call with the group, the other a one-on-one conversation with a member of our executive team, usually me. Thus, the opportunity to counsel enthusiastic young entrepreneurs in an atmosphere of low liability was also an attraction. BEST PERSPECTIVES. With the right people on both boards, you must next make sure that you tap their full potential. Let's start with your "big picture" people: your advisers. These are the people you turn to, not during times of crisis -- that would be too late -- but rather for a forward-looking perspective when building your company. At BridgePath, I learned to approach advisers for high-level advice about ideas I had for products. Most often, these were bad ideas, and my advisers shot down a lot of them, which was good for the company. Conversely, my advisers were able to affirm the rare good idea, and even better, to add to or refine it. A lot of the best advice had to do with strategy -- for example, warning us against sending out a product mailing during a time of the month that was particularly busy for prospects. Nuggets like that -- information we wouldn't have been otherwise aware of -- were especially useful.
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