An advisory board finding service could be a good idea.
The design of it would be similar to the services that do “find a board member” … lots of people run them (e.g. ProNED) … heaven knows why someone would want to be on someone else’s board.

As to whether an Anthill dating service would be a good idea … it would probably be a better idea if you interested an entrepreneur in building, owning and running it, with Anthill taking a stake in it. The right person (team) ought to be able to have this thing built and earning revenue within 2 months.

These things require total focus and passion … not a sideline to something else you’re already doing very well.

[No ... I'm not offering to build it, I'm up to my armpits in my own system, with total focus and passion].

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William Bubenicek Reply:
November 25th, 2009 at 8:08 am

Hi CitySlicker

We have been working on this exact site for the past few months. http://www.boardmybiz.com

feel free to contact me if you want to discuss

Bill

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I like the idea. Having been through the mill of a start up and made many of the common mistakes I have accumulated some useful insights, experiences and a helpful network. I would love to be able to use that to help other budding start ups with interesting and exciting technologies.

Having some sort of advisory board finding/matching service to facilitate matching willing advisers with innovative entrepreneurs would be fantastic. At the moment this sort of matching happens in a haphazard ad hoc fashion through personal networks. Broadening the pool and systematizing things can only be a good thing.

You could even add a crowd sourcing element to it with Ebay like “seller” (adviser) and “buyer” (entrepreneur) ratings so that the cream would rise to the top.

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Sorry to rain on the parade, but to answer the first question…No.
The reasons are fairly well explained by Cindy’s post, this echos my experience and I think her advice is sound.
It also helps to ask the question what would motivate anyone of calibre to want to sit on an Advisory Board. One of the biggest risks for prospective AB members is damage to their personal brand & reputation.
In terms of “free” you will most likely achieve near this (it’s only reasonable to pick up expenses at a minimum) without lowering the standards of the AB when members truly have a vested interest in the success of the operation.
So, seek out “smart money” who may have taken/been given a small stake and who will want to offer the benefits of their expertise without necessarily taking on a Directorship for whatever reasons (of which there are many legitimate ones).

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After having mentored several early stage ventures, I would make the following observations:

1) The Mentor Paradox
The mentor who is most likley to be able to help, won’t have sufficient time to be any more than a hinderance.

2) More opinions create less decisions
The more advisors and early stage venture has, the less likely it is to make headway in the face of an avalanche of options.

Whilst quality advice is required in establishing new ventures, I would suggest the mechanism for obtaining it is the issue than the communication device.

Neither cash, nor equity are available in sufficent quantitites to attract the best advisors. Perhaps a new model is needed?

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City Slicker Reply:
October 26th, 2009 at 8:42 am

Networking and “friend” discovery works for us. As Tim Lea says in his Oct 23 post, there is just so much to know. In the case of our (almost 4-year old) internet business, we didn’t know about CBD leasing, fitout, PBX, staffing and so on. We spent too long trying to work this out, and occasionally we were able to leverage our network.

Taking one case in particular, we needed a friend with expertise in HR. Through a particular (alumni) network, we came across a chap who had an HR company. Because of the social/network relationship, he was enterprising enough to put time into us for free. He hosted interviews, gave us sample contracts etc, and went far beyond that, with references to really key executives in many other areas. We began to insist that we pay him a consulting rate, and we’re really pleased that he agreed – because his contribution to our company is something we value, and we want to make that a sustainable relationship for him (in a commercial sense). The way it works now, my CEO can just pick up the phone and ask for top level advice … we also follow him up to ensure that he bills us for every minute.

No, it’s not an advisory board (depending on how you define that), but it does get us the outcome we need, and Tim Lea says he needs.

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It was myself that posed the original request and perhaps by me giving an insight into the drivers of my request might help the thought process further.

Personally I am very well connected within the finance space – but primarily debt finance and have many contacts with experience beyond my own. But because our overall plan is ambitious and has the potential to drive a paradigm shift in the way SME’s raise finance, I know that I am entering a new area of business development for me personally. Even though I have an MBA and have entrepreneurial experience to date I am asking closely targeted investors to stump up cash, and I know they want a de-risked position – as far as that can ever be achieved – and to me the advisory board provides support for the business and a framework of pragmatic support for the investors.

Whilst my network is generally good I have limited “mentor” contacts, which is also slightly hindered as I have been in the Aussie market for only 7 years or so (originally from the UK).

So to have access to a database of grey hair and mentors would be fantastic for me and for others – and sure I understand there is no such thing as a free lunch. I equally know there are people who want to act as advisers and mentors and I am sure there are deals that can be struck – whether equity based or fee based models…….it is access to people that potentially WANT to advise and mentor which is the hard part.

As a guide I have opened dialogue with womenonboards.org.au which has been first class, and was guided to the AICD web-site (thanks to those that guided me there).

I think there is a gap in the market to co-ordinate – as to how commercially viable it would be as a standalone business I would question but certainly as part of an existing administrative infrastructure it would probably have commercial merit.

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City Slicker Reply:
October 26th, 2009 at 9:38 am

Hi Tim: see my post above (26 Oct). Try networking and creating a “little black book” of people you can call (and be prepared to pay for good advice).

You asked whether you should pay people in equity or cash (fee). The advice from successful entrepreneurs is that equity is easy to give away and very hard to buy back. Assume your business will soon be worth, say, $10m. Now ask yourself whether that 10% of your equity you gave away was really worth $1m. Worse, how do you get it back?

In the first 2 years of our business I often used to replay Startup.com (video) about a Y2K dot.com startup founded by a bunch of friends and business colleagues. One of these business colleagues decided not to quit his job at Goldman Sachs to join the company, but he wanted USD(Y2K)700,000 for his few months’ worth of work on the startup’s business plan.

In one of startup books, someone quoted a VC as saying “you can divorce your wife, but you can’t divorce us”.

Bottom line: don’t undervalue your equity, don’t give it away. Pay for advice at commercial rates in cash. It’s also tax deductible that way too!

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City Slicker Reply:
October 27th, 2009 at 2:46 pm

Found the full quote for you (http://www.alliancetechventures.com/dynamic/quotes.php5): “There are only four ways for a venture investor to exit a deal: IPO, M&A, redemption, or bankruptcy. You can divorce your wife, but you can’t divorce us! –J. Kelly”

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As past Anthill articles/posts/discussions have confirmed … the great divide in the mindsets and objectives of Entrepreneurs and traditional ‘investors’, is not getting any slimmer, so I believe this initiative would be to try and find a better platform for bringing the two elements together.

I think its a good idea, but believe the issues raised by Cindy Reese and John Power need to be addressed. Possibly the Entrepreneurs and SME’s using the ‘dating service’ could be required to define some firm parameters for the incoming Board members, giving the prospective Board members a clear understanding of the intended role before they made contact.

The ‘posters’ would need to define at least some indication of their venture and their “Board member profile’ to attract the right people and the prospective Board members would know clearly what is expected in return for their involvement.

Having anyone ‘on Board’ whose interests are not truly aligned with those of the venture’s principal, is not going to work, including traditional VCs, Angels (VCs in disguise) and ‘experts’ who are purely seeking retainers or fees for mandatory attendance at Board meetings.

It should exclude anyone who is not prepared to take a vested interest in the business that is meaningful for ‘them’. They need to become a true ‘partner’ and , be readily available for input and assistance. Preferably someone who brings with him or her a network of people or services that can assist the business.

Maybe, under such guidelines the dating service could work well ?

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Hi City Slicker – thanks again for the observations – its a very valid observation re equity giveaway. But like most things in life there are catch-22′s – to help secure the equity an advisory board is a necessity, and in most start-ups cash is usually rationed very carefully – so equity is an easy giveaway….but ultimately as you quite rightly observe an expensive one….I guess it is a question of evaluating not only the future costs of giving away equity but also the opportunity cost of time ……in any online business model first to the money often wins the game…..and when you have a plan you believe in but you lack the rocket fuel to make it work sometimes you have to compromise….I hope I won’t have to but I may have to accept that commercial pragmatism sometimes causes us to have to make calls we might not like to make….

Rgds

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