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On Courting Startup Advisers
July 09, 2013 at 7:39 AM
By Lori Collins
Most entrepreneurs are well aware of the benefits of courting and engaging strong business and technical advisers. Then why is it that founders often fail to attract the best talent for their outside team? Often short-sightedness and lack of willingness to give up any control or ownership get in your way. Holding on too tightly may lead a founder to own something small, when your company has the potential to be much more.
What are the critical mistakes?
- Believing advisers should be passionate enough to give unselfishly. Founders can be like missionaries, with zeal and a sense of sacrifice that leads you to believe everyone around you should share your passion. Commitment is important, but founders need to understand that interest and involvement from an adviser can be valuable even if it has its limits.
- Not understanding the advisers’ motivations. Advisers are interested in your business, and want to help, but they likely have some motivation for getting involved. Perhaps they are looking for a good long term investment, enjoy getting to know fellow advisers, want to add to their expertise in your industry, or want to share their knowledge. All of these motivations are acceptable, and the sooner you understand how to meet these needs, the more likely you are to attract and retain engaged advisers.
- Being stingy on equity. Ideally a committed adviser is provided a formal agreement and token stock options. With as little as a quarter point of equity, the adviser is not hoping to get rich. But, an equity or option grant demonstrates that the founder values the adviser’s time and is willing to make a small sacrifice to engage the adviser’s talent, experience and advice. Would you rather have 100% of a company with a small valuation, or attract four talented advisers and have 99% of something huge?
- Relying on friends. While good friends or family members may be supportive, they are likely not objective and may have less relevant expertise than your business deserves. Resist the temptation to take the easy way out.
- Not sharing news – good or bad. Often founders fail to communicate because they want to protect their image, or they just get busy. But, learning news through a third party does not build trust. If results or competitive inroads are unfavorable, be the first to let your advisers know. Likewise, share good news quickly, and take the opportunity to celebrate together.
Advisers can open doors, build your credibility, provide a wise sounding board, and help you steer clear of landmines. Recruit and nurture advisers as a valuable asset, and reap the rewards.
About Lori Collins
Lori has always loved starting new things, and cut her teeth building new businesses at great companies like American Express, Fidelity Investments, Bank of America, and LendingTree. Just recently she served as President of Abundant Power Solutions, an emerging energy financing venture in Charlotte. She was an early adviser to Clean Power Finance in San Francisco, and a Board member then CEO for SmartHippo, a startup in Montreal positioned as the “TripAdvisor for financial services” that provided consumer ratings and reviews on lenders.
As a member of the original Executive Team at LendingTree, she helped grow the company from $7 million to $476 million in revenue over seven years and participated in the sale of LendingTree (NASDAQ: TREE) to IACI (NASDAQ: IACI) in 2003 for $750 million. It was a wonderful ride in many respects – an amazing values-based culture (“winning despite obstacles”), a focused mission to be the dominant online loan exchange, and awesome all-day Halloween parties.
At Bank of America, she led the mutual fund marketing team that grew assets from $28 to $68 billion. At Fidelity Investments, she helped launch their mutual fund marketplace and led the team to drive assets from zero to more than $9 billion in three years. At American Express in New York, she helped envision and launch American Express Gift Cheques as well as various travel insurance products. She’s a Tarheel alumni and also admits to being a Wildcat, although she didn’t have much time for sports in grad school at Northwestern.
What the Arts Have to Do with It
Inspiration comes from many places, and for Lori, it’s the arts. Lucky to be in the inaugural class of the Innovation Institute at the McColl Center for Visual Arts, she and her classmates learned the discipline of creative thinking from artists, sculptors and craftsmen. Now she has the great pleasure of working with Dwight Rhoden, a world class choreographer and founder/owner of Complexions Contemporary Ballet in New York, to create a new work for the NC Dance Theatre’s Innovative Works annual performance. She’s learning the creative process from Dwight by commissioning his work, and savoring the rare treasure of “angel investing”.
Lori currently serves as a strategic adviser and coach for emerging ventures, particularly in the areas of marketing, business development and strategic growth. She’s a coach for SEED20 innovators and is helping launch the Social Innovation Fellowship, an accelerator in Charlotte, NC for social entrepreneurs.