Dan Martell - Building An Advisory Board For Your Business

00:00:00.720 How did my eyes look?

00:00:03.440 Beautiful.

00:00:03.960 Yeah, shirt is straight.

00:00:06.240 Yeah, shirt is straight.

00:00:07.360 Dapper.

00:00:08.080 Looking great.

00:00:08.640 All right, collars popped.

00:00:10.240 Collars.

00:00:10.880 All right.

00:00:11.920 iPhone watch is dead.

00:00:22.880 How to build an advisory board for your business.

00:00:25.600 Now, I get asked this question all the time.

00:00:27.960 So here's the deal.

00:00:29.120 If you've ever felt frustrated because it's your first time,

00:00:31.860 you've never built a company before and you really don't know

00:00:33.660 what you should be working on or when you share your idea,

00:00:36.260 people aren't taking you seriously or you don't feel like

00:00:39.660 you have the network to actually be successful in building out

00:00:43.240 your business, what I love about a great advisory board is it

00:00:47.040 allows you to get the answers quick.

00:00:48.680 Like as soon as you have a challenge, you can have the

00:00:50.440 person there ready to answer the questions.

00:00:52.320 It allows other people to see the credibility.

00:00:55.220 If you can convince really great people that they know of to

00:00:57.880 join your team, instant credibility.

00:01:00.140 My favorite part is a built-in network, right, of people.

00:01:05.020 Because if you're trying to hire, you know, lead people,

00:01:07.520 C-level people on your team, having those advisors,

00:01:10.760 part of that is really gonna change the game for you.

00:01:12.520 You know, I've been fortunate enough,

00:01:14.460 I teach a framework called the Dream 100,

00:01:16.300 and part of that is really focusing on the people

00:01:19.160 that are gonna be part of your business, right?

00:01:20.900 If you think that you can climb Mount Everest

00:01:23.280 in your board shorts and sandals with no support, 1.00

00:01:26.680 You're crazy, go get your head checked, 0.99

00:01:28.180 it's not gonna happen. 1.00

00:01:29.220 So an advisory board is just one aspect of this.

00:01:32.120 But, you know, when I was building my company Clarity,

00:01:36.080 that was one of the first things I was,

00:01:37.800 I decided to focus on to build the business,

00:01:40.060 is get a board of advisors,

00:01:41.660 people that have been there before,

00:01:43.020 areas that I felt like I didn't have as much,

00:01:45.060 I wasn't as strong as.

00:01:46.640 I mean, that to me is like,

00:01:47.900 advisors are people that have strengths

00:01:49.600 in areas you're weak at.

00:01:50.700 So, you know, one of my advisors was a guy named Carl Jacob.

00:01:53.740 He actually had built a company back in the late 90s

00:01:56.680 just like Clarity.fm, an expert network for entrepreneurs

00:01:59.920 to get advice over the phone.

00:02:01.860 I had Heaton Shaw, who's one of the top

00:02:03.680 SaaS experts in the world.

00:02:05.120 He built a company called Kissmetrics.

00:02:06.900 He's incredible, definitely follow his blog.

00:02:09.060 Andrew Chen, another guy, he now runs Growth at Uber.

00:02:13.220 He's written over 700 essays on startups and technology.

00:02:17.440 And Mr. Eric Rees, yes, the creator of The Lean Startup.

00:02:21.440 I was super blessed to have these four people

00:02:23.300 as formal advisors.

00:02:24.640 What I wanna share with you guys in this video is how to

00:02:27.580 think about the different aspects of building that team.

00:02:31.640 How do you think about paying them?

00:02:32.880 How do you think about keeping them in touch?

00:02:34.480 Those are the different areas and then what's the value in

00:02:36.780 putting an advisory board together?

00:02:38.680 That's the first, that's what I'm gonna end on.

00:02:40.920 Now, curate is the first C.

00:02:42.700 I want you to write these down.

00:02:44.120 Curate, leave a comment below.

00:02:45.760 Let me know if you have questions.

00:02:47.200 But you wanna curate a great advisory board.

00:02:49.040 So how do you do that?

00:02:50.260 Here's my favorite technique, okay?

00:02:52.060 I'm gonna share one.

00:02:52.860 If you leave a comment below, I might share more.

00:02:54.800 One is go on LinkedIn, search previously worked at

00:02:58.740 and a company that you know the role,

00:03:01.940 so if I was hired, if I needed expertise in sales,

00:03:04.780 I would say, well, who's got the best sales team

00:03:06.480 in the software space?

00:03:07.440 Well, salesforce.com would be a good option.

00:03:10.020 I would search on LinkedIn, previously worked at,

00:03:13.220 salesforce.com, role or title would be VP of sales

00:03:17.020 or director of sales, and it would give me the list

00:03:19.960 of the people that used to do that role at Salesforce.

00:03:22.020 How incredible is that?

00:03:23.300 I've had many entrepreneurs do this

00:03:24.780 and find incredible advisors to join the board

00:03:27.180 because they're not working at that company anymore.

00:03:30.420 They're probably more than willing to take a call

00:03:32.180 to give you advice,

00:03:33.000 and if you build that relation over time,

00:03:34.980 then you can get them involved in your company.

00:03:37.340 Now, the second C for building an advisory board

00:03:39.920 is compensation.

00:03:41.280 How much should you pay them?

00:03:42.420 Now, I have a big problem.

00:03:43.640 If you've ever talked to somebody that said,

00:03:45.660 hey, man, I love what you're doing.

00:03:46.640 I'd love to help you out,

00:03:48.100 but my network is pretty valuable to me,

00:03:50.920 and if I were to help you out, I'd want, you know,

00:03:53.820 probably five to 10% of your company.

00:03:56.020 If somebody says that, send them to this video

00:03:58.820 so I can tell them to screw off because I am not here

00:04:01.620 to have people take advantage of entrepreneurs.

00:04:04.020 There is no level of networks and introductions

00:04:07.520 and et cetera, et cetera, et cetera that's worth

00:04:10.020 that much of your company.

00:04:10.920 It's actually very irresponsible for you as an entrepreneur

00:04:13.320 to ever have somebody for an introduction

00:04:16.220 or even a couple new customers to take that much

00:04:19.220 of equity in your business, so don't, A, stop that.

00:04:23.220 Compensation comes down to this.

00:04:25.620 First level, advisory shares.

00:04:27.620 Usually 0.1%, two, at the most, two percent, okay?

00:04:32.920 Which is very high.

00:04:34.720 I would, you know, I think 0.1, half a percent, a percent,

00:04:39.020 but I mean, these are people that you just feel

00:04:40.820 are gonna be there for, you're gonna pick up the phone,

00:04:42.620 you have their cell number.

00:04:43.920 It's not a two-month thing.

00:04:45.820 It's somebody that's gonna be part of the business

00:04:47.820 for like the next five years, right?

00:04:50.080 And you gotta throttle and if you have three or four

00:04:52.060 or five of these advisors, then you might have to give up

00:04:54.760 total, you know, two to 10% of your business,

00:04:58.100 but they're gonna bring a lot of value

00:04:59.500 and I'm gonna share that at the end of the video.

00:05:00.940 So that's compensation.

00:05:01.960 Next level, if you have a board and you wanna formalize that,

00:05:05.380 you're looking at like 30,000, two, two million dollars.

00:05:08.700 I have a friend, his dad gets paid two million a year

00:05:11.740 to be on a board of a Fortune 500 public traded company.

00:05:15.320 So, that's the range.

00:05:17.280 I think my favorite compensation level is free.

00:05:21.300 And it happens all the time.

00:05:22.560 I mean, people mentor, people give advice.

00:05:24.800 And if you're a good person that's trying to change the

00:05:26.440 world and you're on a mission, people will follow you on that.

00:05:29.460 So I would say that you could spend more time in understanding

00:05:32.540 the impact you want to have in a positive way.

00:05:35.540 And that might help alleviate the need to just straight up pay 0.97

00:05:38.280 somebody to give you advice.

00:05:39.880 But those are the key areas for compensation.

00:05:42.380 The third area is communicate.

00:05:44.080 How often should you communicate to a board of advisors?

00:05:46.680 Here's the deal.

00:05:47.620 Once a year you wanna send them a strategy deck.

00:05:49.820 The strategy deck is no different than a pitch deck.

00:05:52.080 It's really saying, here's the business today.

00:05:54.320 Here's what we're gonna accomplish over the next 12 months.

00:05:56.260 Here's the high level aspects.

00:05:58.020 And in the email to the advisors,

00:06:01.040 you ask them to do some work.

00:06:02.500 You say, hey, I'm looking for an introduction

00:06:03.960 to somebody with this kind of skill.

00:06:05.440 I need you, because I know you have experience

00:06:07.580 in this industry, to get on a call with my team

00:06:09.900 to support them.

00:06:10.780 I mean, it was one thing I've always done,

00:06:12.080 even as an investor, was make sure

00:06:13.800 that I helped the growth team of the companies I've invested

00:06:16.400 in execute their plan.

00:06:17.880 So you need to put them to work, okay?

00:06:20.440 So that's the communication.

00:06:21.580 Monthly, minimum, once a year in person.

00:06:26.080 I think that's really important.

00:06:27.440 And then the monthly is via email.

00:06:29.680 It's just a quick update, the good, the bad, and the ugly.

00:06:32.220 Just, here's the trick, man.

00:06:33.420 Always start, okay, with the bad news and on the good.

00:06:37.560 Sounds simple, a lot of people don't do it.

00:06:39.860 Some people just avoid the bad news altogether.

00:06:41.760 So make sure you put that in the email.

00:06:43.300 Now, here's the four benefits

00:06:46.040 of having an incredible advisory board.

00:06:47.980 Number one is credibility.

00:06:49.340 You instantly get credibility on your slide deck,

00:06:52.540 when you're talking to a potential new employee,

00:06:54.080 you can mention these advisors' names

00:06:56.680 and they're recognizable, right?

00:06:58.480 Number two is connections, built-in network.

00:07:00.980 You have people that are ready to go

00:07:02.360 that they can make introductions to.

00:07:03.960 They can help you hire other people.

00:07:05.560 They can make calls to get reference checks done.

00:07:08.220 So you get a built-in network, connections.

00:07:10.920 Three is conversations,

00:07:12.120 having those tough conversations with advisors

00:07:14.620 that have been there before,

00:07:15.900 they're gonna give you guidance

00:07:16.900 that are gonna help you get through those tough times.

00:07:18.960 That's invaluable, so that's a big one, connections.

00:07:21.660 And then four, I think where this all comes together

00:07:24.880 is confidence.

00:07:25.800 When you have those people on your team ready to go,

00:07:30.380 you as an entrepreneur can show up in a way

00:07:32.960 that you just illuminate confidence.

00:07:35.520 You exude confidence for your team,

00:07:38.600 for your potential investors, for your new customers.

00:07:40.680 It's an incredible thing,

00:07:41.820 So be sure to find an incredible board of advisors,

00:07:45.380 you know, curate them, compensate them and be sure to

00:07:48.620 communicate with them in a way that keeps them in the loop.

00:07:51.540 As per usual, I want to challenge you to live a bigger

00:07:53.500 life and a bigger business and I'll see you next Monday.

00:07:56.640 If you like this video, be sure to subscribe to my channel.

00:07:59.140 I would also encourage you to join my newsletter where I share

00:08:02.500 invites to exclusive events and other free training videos.

00:08:05.920 And if you're ready to get going, I've got a couple more

00:08:07.540 videos queued up for you.

00:08:09.340 I'll see you next week.

00:08:11.820 You

Dan Martell - January 30, 2017

Building An Advisory Board For Your Business

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