SURGE Blog about surrounding your company with an informal board of advisors to help you breakout and scale.
- 1. The Power of an Informal Board of AdvisorsbyKirk CoburnFounder & Managing Director, SURGE Ventures(For Copy with Audio, Please Email Me)
2. About Kirk CoburnFounder & Managing Director, SURGE VenturesSURGE is leading seed stage venture fund and mentor-drivenaccelerator for Energy Technology EntrepreneursFounder of 3 Successful companies Prior to SURGEFounder and CEO of Chief Outsiders (acq. 2010), namedthe #6 Fastest Growing Company in Houston and wasnoted as one of Incs 5000 fastest growing companies inthe US in 2014. Prior to Chief Outsiders, Coburn launched The PGA TOURNetwork on Sirius XM (acq. by SIRI). He remained CEO forfour years from launch to successful acquisition.Spent 8 years at Dell during the 1990s in senior rolesincluding strategy, procurement, marketing, and finance.Loves the Outside!kirk@SURGEVentures.comRead my BLOG @ SURGEVentures.com 3. Agenda* The Business Case for a Board of Advisors* Case Study: HappyLawn of America* What Kind of Board Is For You* Strategic Board Best Practices* Peer Board Best Practices 4. DO YOU NEED A BOARD OF ADVISORS?Four Questions:* What are the three or four biggest challenges in yourbusiness right now? (What keeps you up at night?)* How do you handle stress?* How has your business changed over the last three tofive years?* Where do you get your best counsel and advice, interms of driving your business forward? 5. WHY YOU NEED A BOARD OF ADVISORS?Comments from fellow Entrepreneurs & CEOs:I felt I had reached my current natural limits on learning how to be aCEO, was not getting enoughMy advisory board is responsible for driving 85% growth in revenue thefirst year and 35% the year following.Running a business is simply easier if you have some help andadvice from a group of trusted individuals dedicated to seeing yousucceed.I determined that I wouldnt have made my 3 biggest mistakes inmy company if I had myself accountable to a group of experiencedbusinessmen who I respected. 6. WHY YOU NEED A BOARD OF ADVISORS?YOU are in good handsothers that have proventhe model 7. Case Study: Happy Lawn of AmericaSituation: Barrett Ersek had a US$2.2million dollar lawn care company thatseemed to be stuck he could not grow his company at a rate more than 5-10% per year.Problem: Barrett could not see past the industrys key bottleneck, the cost ofthe long & complicated sales processSolution: Barrett created an informal board of advisors. Out this came anassignment, Think about your biggest bottleneck, solve it, and if possiblethink of a way to improve the process or product in a way that would give us10 times the advantage over our competitors. Solve that and you will win inyour business. His advisors helped him find an X factor.Result: Barrett had developed a proprietary patented selling process thatallowed the company to grow rapidly from no sales in 2004 to US$10millionby year-end 2007. Today, operations cover Northern Virginia all the way up toNorthern New Jersey, USA. 8. FORMAL OR INFORMAL?The recent Sarbanes-Oxley Act imposed on publiccompanies has soured private firms onhaving a formal Board of Directors. The biggest loser in Sox: the small and mediumbusinesses that create over 90% of jobs in the U.S. Tom Meredith, key Dell Architect, former Motorola CFODont give your advisors the fiduciary responsibility of aformal board. It does not align with your main objective:helping you grow! 9. 2 TYPES OF INFORMAL BOARDSStrategic Boards Peer Based BoardsDefinitionStrategic Boards are what most wouldconsider to be a Board of Advisors. Thisboard should consist of strategic influencersthat can individually help your businesssucceed where you are weak.This is a board made up of peers. AtSURGE, this consists of fellow founders ofother Energy IT companies that meettogether to resolve and learn from oneanother.PurposeThis Board exists to advise your company onstrategic matters similar to a PresidentsCabinet. This board should be made up ofkey business leaders that can serve as asource of credibility and value to help thecompany grow and navigate business issues.Peer Boards are put together to help theentrepreneur succeed and growprofessionally and personally. This is theplace that an entrepreneur can go todiscuss the deepest issues that employees,strategic boards, investors andstakeholders cannot.Pros andConsPROSHelps companies getnew customers,serve as credibility,raise capital, consulton operations andfinance, form betterpartnerships withstakeholdersCONSNot a great place foran entrepreneur tolet his or her guarddown on personalfailures/concerns.Must be on A gamewhen managingPROSHelps entrepreneurmanage the Xfactor: findingground breakingstrategies. Place ofsafety forentrepreneur tolearn without fearCONSThe entrepreneur isnot trulyaccountable to thepeer based boardand cannot rely onboard to helpexecute 10. COMPENSATIONSTRATEGIC BOARD:* 0.25% to 1% of your equity per person* Pay a Daily Fee plus Expenses* In some cases, pay an extra Retainer for extra workadded during board meetings* As your business becomes more successful, time torenegotiate compensation with each advisorindependentlyPEER BOARD: Join SURGE and gain access to manyother founders as part of the SURGE alumni network. 11. STRATEGIC BOARD: HOW DO I CREATE ONEHow do you attract an Advisor?* JUST ASK and KEEP ASKING* Make sure you test drive them for 90 days and ensurealignment in strategy, style, and most importantly, corevalues (just like employees otherwise you will suffer fromCulture Debt as described by HubSpot Co-founderDharmesh Shah)How many should be on the Strategic Board?* Find where you are weak, and get someone to be on theboard than can offer strength* The actual size is important. Read Venture Hacks articleentitled Create a board that reflects the ownership of thecompany 12. STRATEGIC BOARD: WHO SHOULD I ASK?WHERE ARE YOU WEAK?* Energy and Utility Deep Domain Expertise* Finance* Strategy* Leadership* Marketing* Client Services & Business DevelopmentI felt I had reached my current natural limits on learning how to be a CEO,was not getting enough consistent and targeted professional developmentfrom groups like my CEO roundtables, and felt I didnt have time for full-timeschool. How can I keep on learning in real time on real issues that Im facing?She went for two members first one to bolster her skills in finance, strategicrelationships and senior teams and one to support her continuing efforts inservice quality. Besides crediting them with her growth in revenues, theyvehelped her transition the entire leadership team into new roles, managed amajor trade market infringement scenario, and helped her work out theirbusiness plan for the next 4 years. 13. STRATEGIC BOARD: ONE FAVOR AT A TIMEMaximize everyones time, pick one specific action itemfor each board member to pursue on their own(Examples from Verne Harnish, the Growth Guy)* John Cone helped Verne nail down the GE, Dell, and Southwest Airlinesbenchmarking events.* Boyd Clarke, CEO of the Tom Peters Mgt Consulting Co, advises him onmarketing.* Bill Gladstone, one of the top author agents in the country, is working withVerne on a potential second book deal* Ted Leonsis, Vice Chairman of AOL and investor in Gazelles, was key tosecuring a relationship with Fortune Small Business magazine* Arthur Lipper, former owner of Venture Magazine, is helping Verne get somebusiness in Singapore 14. PEER BOARD: HOW DO I CREATE ONEHow do you attract a PEER Advisor?* Join SURGE* Find the best organization that fits your personality andbusiness need and JOIN. Leading Peer Based Boardorganizations include:- EO: Entrepreneur Organization (www.eonetwork.org)- YPO: Young Presidents Organization- Vistage- CEO RoundtableHow many should be on the Peer Board?* Between 6 & 10* Less than 6 members there isnt sufficientexperience in the room to ensure each member benefitsfrom the Forum. Over 10 becomes too crowded 15. PEER BOARD: SIZE CONSIDERATIONSAdvisory Size Pros ConsWhen there is asmall number ofmembers The intimacy level can growstronger more quickly becausethere are less personalitiesinvolved. It takes less time to go aroundthe table during exercises. It can be easier to achieveconsensus with a smaller group. When one person is absent,the value of the Forummeeting is more significantlyimpaired. There are less experiencesand knowledge to be sharedaround the table.When there is a largenumber of members When one person is absent, thevalue of the Forum meeting isnot significantly impaired. There are more experiencesand knowledge to be sharedaround the table. It takes more time to goaround the table duringexercises. It can be more difficult toachieve consensus with alarger group. 16. PEER BOARD: KEY TENANTSBest Practices from over 7,000+ entrepreneursgenerating over $101 billion in revenue, employingover 924,000 people* Safe Environment of Confidentiality* Non-Solicitation* Protocol of Gestalt, Experience Sharing 17. PEER BOARD: THE LIFE CYCLELevel:CasualConnectionCommitmentThe 5%ContentSafe subjects theywould discuss withcasual acquaintancesReal life dilemmas theywould only discuss witha few trusted confidantsThings they may nothave ever discussed orthought aboutEnvironmentLow trust; few risks,low commitment, noemotional investmentAcceptance, openness,trust and respectMembers share theirvulnerabilities openlyFeelingsMild anxiety,optimism, excitement,and potential distrustCaring, comfort,confidence with groupHighly emotional,strong acceptance &commitmentSamplePresentationTopicsNew product line,office relocation, H/Rbenefits, new workoutregimen, hiring newsales peoplePartner problems,strategic planning,family issues, healthproblems, life balanceOverwhelmingbusiness loss orchallenge, fear offailure, impendingdivorce, depression,etc.