Dan Martell - How to Hire Million-Dollar Business Advisors

00:00:00.000 Hey there, Dan Martell here,

00:00:01.180 serial entrepreneur, investor, and creator of SaaS Academy.

00:00:03.740 In this episode, I'm gonna share with you

00:00:05.380 how to find, attract, identify the best advisors

00:00:09.860 for your business to help you grow and compensate them

00:00:12.640 without giving away your whole business.

00:00:15.340 And be sure to stay at the end

00:00:16.220 where I'm gonna share with you an exclusive resource

00:00:17.900 called the Dream 100 that talks about

00:00:20.460 not only the advisors, but the peers, advisors, and mentors

00:00:23.680 that you need to build a dream team of folks around you

00:00:27.600 to help you scale and succeed in your business.

00:00:42.760 So I've been building companies now for over 20 years,

00:00:46.140 and my first two companies were complete failures.

00:00:49.060 Literally struggle, didn't grow, just me,

00:00:52.020 kind of solopreneur, had a few partners,

00:00:53.840 didn't make it work.

00:00:54.980 And eventually Sphere was the first company

00:00:57.040 where I finally, I started reading business books

00:00:58.880 and I got a mentor and a business coach

00:01:00.540 and I started to understand the value of advice

00:01:04.100 and then fast forward to exiting that company,

00:01:07.660 becoming a multimillionaire at 27, moving to San Francisco.

00:01:11.340 I wanted to see if any of my crazy ideas

00:01:12.860 would hold water with some of the best in the world

00:01:15.200 and I started Flowtown and then exit that and then Clarity

00:01:18.820 and for both of those companies,

00:01:21.020 I had formal advisors, equity advisors.

00:01:23.860 Travis Kalanick from Uber was a formal advisor.

00:01:26.540 Eric Reese from Lean Startup,

00:01:28.860 Heaton Shaw from Kissmetrics

00:01:30.360 and many other products too,

00:01:33.280 Sean Ellis, the guy who coined the word growth hacker.

00:01:36.760 So I've gone through hiring, recruiting,

00:01:39.200 and building advisors for my own businesses.

00:01:42.440 But recently I had a friend, John, reach out to me

00:01:44.420 because he was frustrated with his lack of growth.

00:01:48.840 He got to about a million in revenue,

00:01:50.880 just himself and kind of one other person part-time,

00:01:54.500 which is great,

00:01:55.600 but he just felt like there was something more

00:01:57.380 and he felt like what, I'm missing something.

00:02:00.840 So he went out and he started talking to some friends

00:02:02.600 and he had a few people approach him to be advisors

00:02:05.840 and the scenario seemed very expensive to him

00:02:10.080 where they wanted a big piece of equity,

00:02:11.680 they wanted to be consulted or compensated for it

00:02:14.800 and he just didn't understand how to think through it

00:02:17.340 and we had a conversation,

00:02:18.360 I walked him through exactly what I'm gonna share

00:02:19.800 with you in this video.

00:02:20.580 It's really sparked this conversation

00:02:24.380 because I wanted to make sure that he understood

00:02:26.680 that not only understanding who he should bring on,

00:02:29.960 but how to compensate them

00:02:31.500 and how to recruit them and make it work.

00:02:33.180 So that's what we're gonna cover in this episode.

00:02:35.700 Let's get into it.

00:02:36.640 Number one, close the gaps.

00:02:38.620 So the way I think about business

00:02:39.820 is you have an inherent skillset and abilities and strengths

00:02:44.740 that allow you to do what you do,

00:02:46.480 but there's probably parts of the business,

00:02:48.200 maybe it's HR, maybe it's financial, maybe it's legal,

00:02:50.580 where you definitely feel like imposter syndrome

00:02:54.340 going on in the world,

00:02:55.340 where it's like, I don't even know.

00:02:56.840 I can't believe they're asking me

00:02:58.480 to negotiate event contracts

00:03:00.440 or negotiate biz dev deals, et cetera,

00:03:02.800 because you've never done it before.

00:03:04.480 So I call those kind of buckets experience buckets.

00:03:08.040 There's areas in your thinking

00:03:10.400 where you just don't have any formal education

00:03:12.320 or experience to be able to make proper decisions.

00:03:15.460 That is how we first start identifying

00:03:17.980 the right people to bring into our business.

00:03:20.980 We wanna make sure that we look at the gaps in our knowledge

00:03:24.340 and say, okay, I need an advisor for this,

00:03:26.840 I need an advisor for this,

00:03:27.680 and I need an advisor for this.

00:03:29.620 And then finding out people that you could help you support

00:03:33.980 and kind of overcome that gap

00:03:35.020 is as easy as asking for referrals.

00:03:37.300 What I like to do is I like to,

00:03:39.140 look, you can always hire consultants.

00:03:40.600 There's a bunch of consultants out there,

00:03:43.120 management consultants and marketing consultants

00:03:45.100 and HR consultants,

00:03:46.080 but some of them have never been approached

00:03:48.780 to do advisory work, right?

00:03:50.640 Where they're not having to deliver any work product,

00:03:53.820 they're just there to advise.

00:03:56.140 And it's actually a totally different experience.

00:03:57.960 Like a lawyer sometimes acts as an advisor,

00:04:00.040 so that's a funny one.

00:04:01.320 I've never gotten in a lawyer as an advisor

00:04:04.740 because I'll just essentially have to pay them by the hour

00:04:07.940 to do whatever, do a phone call.

00:04:10.000 But think of the experience buckets

00:04:12.360 that you're lacking to close the gap

00:04:14.440 and just try to just ask for advice

00:04:16.960 and see if they would be open

00:04:18.460 to that advisory conversation.

00:04:20.460 Number two, pay to perform.

00:04:22.500 So this is a big one.

00:04:23.640 A lot of advisors just want,

00:04:25.320 hey, give me equity.

00:04:26.240 Give me 10% of your business

00:04:27.340 and I'll make a bunch of introductions

00:04:28.520 and you'll be rich and it'll be awesome.

00:04:31.840 Slow the roll.

00:04:33.140 Like to me, anybody that wants to pay for introductions,

00:04:37.140 that's a big no-no, like zero.

00:04:39.340 I don't do it.

00:04:39.720 I just don't do it.

00:04:40.460 I will pay you for an introduction.

00:04:42.620 I'm not gonna give you equity.

00:04:43.820 I've made this mistake.

00:04:45.540 Everything I share with you,

00:04:46.880 I've made all those mistakes myself.

00:04:49.620 Luckily, ideally once, sometimes twice.

00:04:52.260 But to me, there's kind of three ways

00:04:55.820 to compensate an advisor, right?

00:04:58.420 Number one is equity, okay?

00:04:59.740 And the normal range of a formal advisor,

00:05:02.200 especially in the tech SaaS world,

00:05:04.000 is kind of 0.1% to 2%.

00:05:07.080 2% is extremely rich, but for somebody that is,

00:05:12.080 you know, like an athlete in your category

00:05:14.960 that's gonna open up doors, 0.77

00:05:16.880 it's gonna bring credibility,

00:05:18.180 all these things that a good advisor should do.

00:05:20.460 Because really, to me, an advisor is something

00:05:21.960 I can leverage their name to open up doors

00:05:23.940 and all these things.

00:05:25.300 2% might be what's going.

00:05:26.820 But when you get into the 5%, 10%, et cetera,

00:05:29.340 I think that that's just a little aggressive

00:05:31.800 and expectations are definitely gonna get out of whack.

00:05:34.720 But that's number one, is just negotiate equity.

00:05:38.740 Usually it's a two-year vesting,

00:05:41.060 meaning that they might get none of it

00:05:45.060 for the first six months,

00:05:46.320 make sure that they're working out

00:05:47.460 and then you get a six month cliff

00:05:49.880 and then monthly vest after that.

00:05:51.420 You can structure it with your legal team approach,

00:05:54.080 but two year vest is kind of the norm for an advisor

00:05:56.580 and you wanna try to front load

00:05:57.900 some of the value and advice upfront.

00:06:00.680 Then there's just pay or consulting, right?

00:06:03.640 So either I'm gonna pay them a success fee

00:06:05.280 based on an activity like referring people

00:06:07.520 or getting some deals closed,

00:06:08.720 or I'm gonna pay them maybe a retainer

00:06:12.740 or a monthly stipend to be available to me,

00:06:15.780 especially if you're going through

00:06:16.780 a lot of acquisitions, et cetera.

00:06:18.080 And I don't do a lot of advising.

00:06:21.040 I do some advising, advisory roles,

00:06:23.640 because some companies are not looking to hire a coach.

00:06:26.780 I'm first and foremost a coach

00:06:28.400 to high-performing SaaS, B2B SaaS founder,

00:06:30.520 software as a service, that's what I do.

00:06:32.540 But for certain scenarios where they're bootstrapped

00:06:34.740 and they're not looking for a coach,

00:06:35.920 but they just want me to help them,

00:06:37.280 you know support some acquisitions or some some financial uh fundraising etc those are those are

00:06:43.560 the opportunities that i'm open to but they're people i've known for a really long time it's not

00:06:47.720 that you've known me if you've been watching this or listening to this um these are people that are

00:06:51.380 in my network but pay to consult is is another way of doing it and and pay them as just their

00:06:56.460 hourly rate or maybe it's a couple thousand bucks a month as a retainer and then the third way form

00:07:01.420 of currency really for advisors is social currency. People underestimate like the value. I'm an

00:07:10.080 investor in a company called Pila and they're biodegradable or biopolymer phone case and many

00:07:15.680 other different products today. I wear glasses, et cetera. And I sit on the board, but they also

00:07:19.800 have a board of advisors and these advisors aren't compensated. They meet probably every four to six

00:07:27.460 weeks on zoom in a group and they bring their top challenges and ask for introductions and

00:07:33.040 I think what happens is people feel honored and there's social currency there there's you know

00:07:38.540 being part of a really exciting you know Jay-Z is an investor in that company and you know there's

00:07:43.940 just like you know the social currency can go both ways one thing I know for many of my advisors

00:07:50.340 that even when I when when they're before they're even formal advisors is I mention them publicly I

00:07:56.100 I just wanna thank this person.

00:07:57.760 It's been an incredible impact on my life.

00:07:59.880 Every time I've had these kind of challenges,

00:08:01.420 I turn to them and they just are able

00:08:02.980 to cut through all the noise and just solve my problem.

00:08:04.760 I just think that like social currency

00:08:07.200 is not well understood for somebody starting off

00:08:09.680 because maybe you're like,

00:08:10.520 well, I don't really have a lot to add or value.

00:08:13.280 Honestly, if you get advice, you do stuff with the advice

00:08:17.320 and you circle back and told them what you did

00:08:18.780 and what you learned,

00:08:19.860 that's incredibly valuable for a lot of people

00:08:22.000 because there's not a lot of places in their lives

00:08:24.120 where they might have that interaction

00:08:26.240 and it feels really good.

00:08:27.800 Anybody that's ever given somebody else advice

00:08:29.360 and they go and take action,

00:08:31.040 they come back in two or three weeks and they say,

00:08:32.600 hey, I just want you to know I heard this, I did this,

00:08:36.220 and here's been the impact,

00:08:37.120 just wanted to thank you for that.

00:08:38.300 That's enough to have them engaged in your business

00:08:40.640 in a very informal way and I call that social currency.

00:08:44.340 Number three, communicate context.

00:08:47.420 It's still to this day, blows my mind.

00:08:51.260 How many entrepreneurs I've invested in,

00:08:53.580 I've given my money to, and they don't send me updates.

00:08:56.880 They don't give me any context.

00:08:57.920 I don't know where their business is at.

00:08:59.540 I was involved in an advisory role recently,

00:09:03.140 and they said, well, what's the best way

00:09:05.260 to communicate with you?

00:09:06.220 I said, look, you've got my cell.

00:09:08.340 You can hit me up on,

00:09:09.380 and I gave them a few other channels that I use.

00:09:11.560 But at the end of the day, send monthly updates.

00:09:14.840 Send an email update, and I'm gonna link to a resource

00:09:18.180 that you guys can, it's like a template

00:09:20.500 that I put together a while ago.

00:09:21.760 but just allowing your advisory board

00:09:26.160 to understand the context of where the business

00:09:27.760 because maybe you only meet every two months.

00:09:29.340 A lot happens in an early stage company

00:09:31.320 in the early days, a lot of change, a lot of stuff

00:09:33.200 and like I've always felt weird

00:09:35.780 if somebody sees something about a company

00:09:38.000 that they know I'm involved in,

00:09:39.120 they're like, hey, congrats on fundraising

00:09:41.400 or that new partnership

00:09:43.040 and I'm like, oh yeah, yeah, no, thank you, thank you

00:09:45.320 and I'm like, oh, what the heck's going on?

00:09:46.760 Like I didn't even know about that

00:09:48.060 and that's the norm.

00:09:50.340 So like, this is, you have an opportunity

00:09:52.700 to stand out in the market

00:09:54.300 if you do at least every month

00:09:56.160 a quick email update to your advisors.

00:09:59.520 And then ideally, quarterly,

00:10:02.460 you can either do it one-on-one.

00:10:03.940 I'm a big fan of like my formal advisors,

00:10:06.540 quarterly, schedule a meeting, could be 45 minutes,

00:10:08.960 send them your board deck ahead of time,

00:10:10.520 your strategic doc,

00:10:11.400 because hopefully you're doing strategic planning

00:10:12.860 every quarter.

00:10:14.180 And then say, here are the three things

00:10:15.440 I wanna review with you.

00:10:16.460 You get on there, make it really efficient use

00:10:18.420 of their time.

00:10:18.940 For the most part, it's gonna be referrals

00:10:21.020 or reviewing something, doing an audit of your work.

00:10:24.460 And that's a really good use of the time.

00:10:26.140 Or you could do it as a group,

00:10:27.900 less preferred personally, I think, one-on-one.

00:10:30.780 But if you wanna do quarterly minimum as a group

00:10:33.240 with your advisory board,

00:10:34.840 because there's value in each advisor

00:10:36.940 getting to know themselves.

00:10:39.340 Like you can bring value to your advisors

00:10:42.240 by bringing them together.

00:10:43.640 So if you physically have them in your hometown,

00:10:46.880 bringing them out to dinner,

00:10:48.380 paying for that dinner, thanking them,

00:10:50.160 allowing them to connect is incredibly valuable

00:10:52.900 and appreciated.

00:10:54.540 And to me, that is how we communicate context

00:10:57.840 so they never feel out of the loop.

00:10:59.580 Because that's when somebody's gonna say like,

00:11:01.480 hey, you know what?

00:11:03.180 Expectations are misaligned

00:11:04.160 because I don't even know what's going on in your business.

00:11:06.640 You haven't sent an update in three or four months.

00:11:08.380 And I've unfortunately had to make those calls

00:11:11.040 and let people know that.

00:11:12.480 And it's just not the way I do business.

00:11:14.200 Don't be that founder.

00:11:15.780 if you have the privilege of having an advisor

00:11:18.220 who has expertise and insights

00:11:20.120 and has been ideally there before

00:11:21.720 and they're gonna support you,

00:11:23.300 communicate that context.

00:11:25.220 So quick three strategies to find the right advisor,

00:11:28.440 compensate them and keep them informed.

00:11:30.480 Number one, we wanna close the gap.

00:11:32.160 Number two, we wanna pay to perform.

00:11:34.340 And number three, we wanna communicate context.

00:11:37.520 So as I mentioned at the beginning of this episode,

00:11:39.400 I wanna share with you an exclusive training

00:11:41.980 called the Dream 100.

00:11:44.240 You can click the link below to get your copy,

00:11:45.960 but it's how I think of whenever I start a new business,

00:11:48.960 I take a spreadsheet out and I make this list

00:11:51.740 of the 10 mentors, people that have been there before,

00:11:54.880 the 30 advisors using the experience buckets

00:11:57.280 I talked to you about, you know, in it,

00:11:59.300 especially if it's a new industry,

00:12:00.660 a new business model that I've never executed against.

00:12:03.200 And then the 60 peers that I need to connect

00:12:06.140 and communicate and click the link below

00:12:07.500 where I walk you through how to identify them,

00:12:09.880 recruit them, the timeline,

00:12:11.280 you should be reaching out to them.

00:12:12.160 Don't worry, you have a lot of time.

00:12:13.820 but that is my gift to you and if you like this video,

00:12:17.700 be sure to subscribe to my channel,

00:12:19.360 smash the notification bell icon and say notify in real time

00:12:24.120 when I publish, I publish every week, sometimes more

00:12:26.560 and be sure to leave a comment if you have any questions,

00:12:29.000 comments on this strategy.

00:12:30.120 I am committed to responding to the first 10.

00:12:33.040 That is something I will do.

00:12:35.360 A lot of fun meeting you guys down there in the comments

00:12:37.720 so be sure to do that and as per usual,

00:12:39.880 I wanna challenge you to live a bigger life

00:12:41.840 and a bigger business, and I'll see you next Monday.

00:12:44.600 Let's continue to do it.

Dan Martell - October 12, 2020

How to Hire Million-Dollar Business Advisors

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