2010 2 25 Advisors And Boards

Advisors and BoardsFebruary 25, 2010

Mark CoopersmithManaging Director - The Argonauts Group

Lecturer and Mentor - UC Berkeley, Haas School of Businessmcoopersmith@argonautsgroup.com

© 2010 Mark Coopersmith

The Argonauts Group advises business leaders and investors in the transformation and growth of their companies. We work as advisors, deal makers and interim leadership to clarify strategy and direction, set milestones, obtain resources and capital, and drive change and growth. We have had positive outcomes at companies such as Sony, Intel, Pepsi, NYSE, Nokia, Morgan Stanley, Levi’s, Best Buy and Safeway, along with numerous earlier stage and middle-market companies.

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Mark CoopersmithThe Argonauts Group: Founder and Managing DirectorUC Berkeley, Haas School of Business: Adjunct Professor of Entrepreneurship and

InnovationPreviously:• Newell Rubbermaid - GM & Group VP of Global Technology Brands Group • Sony – Co-founder and EVP of global consumer products, e-commerce & media division• WebOrder – founding CEO of e-commerce/SaaS leader; acq by Netopia acq by Motorola• Ernst & Young - Strategy and M&A consultant • Addis Group - President of Strategy at this specialty brand consultancy• Multiple board roles in technology, media, professional services• UC Berkeley – MBA, BA Political Economies of Industrial Societies

© 2010 Mark Coopersmith

A Few Definitions

• Board of Directors• Board of Advisors – many flavors

• Advisor– general, industry, functional

• Mentor• Consultant

© 2010 Mark Coopersmith

Focus of this presentation: early/growth stage ventures

© 2010 Mark Coopersmith

So you want to bring on an advisor or board of advisors… Why?

• What are your objectives with advisors?• How/why will they help beyond your

company’s current capabilities?• What stage of growth is your business?• What key challenges do you expect to face in

the next 1 – 2 years?– what are your most compelling and immediate

problems?

© 2010 Mark Coopersmith

Who are your stakeholders?

• Define stakeholders• How aligned are you and stakeholders?• What do they need/want? • How can advisors impact these items?

© 2010 Mark Coopersmith

What do early stage CEO’s often seek from advisors?

• Advice and sounding board• Expertise• Contacts and network• Validation/social proof• Funding – including will they invest?

• Customers• Partners

© 2010 Mark Coopersmith

What does a good advisor look like?

• Depends on your objectives and your needs• Provides:– Wisdom and experience– Insights on issues from people to biz models to obstacles– Different perspectives and points of view – Relationships

• Can steer with questions as well as answers– a gentle-but-firm touch

• Work ethic and preparation• Focused on results and success

© 2010 Mark Coopersmith

What about you/culture?

• How do you work best?• Do you want questions or answers?• How are you at accepting advice? • Are you willing to open up your company?

© 2010 Mark Coopersmith

What structures works best?

• Informal advisory relationships• Formal Advisory Board meetings– why?– who owns?– diversity– how often?

• Mentors• Consultants

© 2010 Mark Coopersmith

What types of advisors?• Strategy (often BoD) – ask questions– demand accountability

• Industry or Functional– answer questions– provide insights

• Consultants – project specific

• Mentor– wisdom, personal, chemistry, guidance

© 2010 Mark Coopersmith

What Do Advisors Look For?(Or - How do you recruit the best?)

• Much like building a great team• Compelling leader and team• Plus a compelling vision/opportunity• Interesting issues• Good fit of values and culture• The right other advisors (company you keep)• Compensation• Non-compensation elements

© 2010 Mark Coopersmith

How do you find the best?• Clearly define your needs, esp near term• Always be looking• Ask lots of questions, and listen for good

answers• Leverage your network – core team– customers and partners– paid advisors - lawyers, accountants, bankers

• Audition – e.g. Y Combinator

© 2010 Mark Coopersmith

How do I improve my odds when I recruit an advisor?

• Test drive one another• Check references • Leverage your other advisors• Use people you know and trust• Limit term and/or match term to issues

© 2010 Mark Coopersmith

How to get the most from advisors once they are retained?

• Be clear on your expectations• Communicate regularly and honestly– responsibility is with CEO to initiate

• Ask specific questions so they can respond• Understand rules re: engaging with other staff

© 2010 Mark Coopersmith

What level of results should you expect?

• The “rule of halves”– At least half will perform as expected• Up to half may not

– Of those that do perform well, only half will be really useful • The other half will be well intentioned and hard

working, but their usefulness may be limited (focus shifts, knowledge not in right area, etc.)

© 2010 Mark Coopersmith

How should I use the advice I receive?

• Apply the lessons of the advice, not always the literal advice.– Henry Ford…

• Understand the patterns and the relevance of advice to your issues– you are the CEO– sometimes you want to break the mold• Esp if advice is based on conventional wisdom

© 2010 Mark Coopersmith

Will an advisor…

• ..help me obtain funding?• …get me into major accounts or partners?• …open up their personal network?• …provide me with immediate credibility?– can I use their name?

…it depends

© 2010 Mark Coopersmith

How long a term should I plan on?

• Depends on needs and issues– also stage of growth of company

• Is there a particular project or goal?– E.g. FDA approval

• Increasingly seeing one year terms for early stage businesses

• Mentor relationships often last longer

© 2010 Mark Coopersmith

How should I compensate advisors?

• Primarily stock or options– Passive/average: 0.1 – 0.25%/yr– Super advisor: 1-2% +/yr• Typically only one or two, often on BoD

• Typically not objectives-based– no conflicts

• Consultants and coaches more cash-based

© 2010 Mark Coopersmith

What should I document?

• Expectations– time, meetings, responsibilities, structure,

publicity

• Compensation• Confidentiality and inventions• Non-recruit

© 2010 Mark Coopersmith

Thank you