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Secrets of Attracting Rock Star AdvisorsSecrets of Attracting Rock StarAdvisorsPLANNING, CONDUCTING, AND GETTING RESULTSA. Why You Need AdvisorsIf you're looking for funding and/or to successfully grow your business, a little known secret is to find andleverage mentors and advisors.So, who or what are advisors? Advisors are successful people that you respect and that agree to helpyour company. Advisors are generally successful and/or retired executives, business owners, serviceproviders, professors, or others that could help your business.Advisors generally will not cost you any money (you don't pay them), although I do recommend givingthem stock options to incentivize them to contribute as much as possible.Getting advisors is not a requirement for raising money, but they have multiple benefits as follows:1. Practice: if you can't successfully pitch an advisor to invest time in your business, then you're notgoing to successfully pitch anyone to invest money in your business. So, practice your pitch onprospective advisors first, and use that practice to perfect it.2. Connections to capital and more: as successful individuals, advisors often have the ability toinvest directly in your company; and/or they tend to have large, high quality networks ofindividuals they can introduce you to. Likewise the right mentors and advisors can connect you withkey strategic partners, employees and customers.3. Credibility: having quality advisors gives your company instant credibility in the eyes of investors,partners, customers, etc. For example, if you operate a hockey stick company, having WayneGretzky as an advisor would certainly give you great credibility (and connections). But evenhaving much smaller names than Wayne Gretzky as advisors can build enormous credibility.4. Operational success: In an interview I did with Dr. Basil Peters (a wonderfully successfulentrepreneur, angel investor and VC), Dr. Peters said that mentors and advisors are anentrepreneur's "single most controllable success factor." Having Advisors with whom you can discusskey business matters as you grow your venture will help ensure you make the right decisions,particularly if they have encountered and dealt with the same challenges already in their careers.I have seen these four benefits first-hand for my own companies and for companies that we've helpedbuild their own boards of advisors. Feel free to go to growthink.com and see our Board of Advisors (onour Team page).Page 1
Secrets of Attracting Rock Star AdvisorsB. How to Build Your Board of AdvisorsTo begin, you don’t necessarily need to build a Board of advisors. Having just one mentor or advisor iscertainly better than none. But, we have found that having several in a board dynamic allows you to getbetter ongoing feedback and advice.Also, a larger board will give you access to more connections, experiences and expertise.So, how do you build your Board of Advisors?The steps are fairly simple:1. Create a list of people you would like to be on your Board2. Contact and meet with them3. Secure the best Advisors you meet withLet’s discuss each in turn.1. Create a list of people you would like to be on your BoardIn creating your list of potential board members, start by understanding your key goals. If they are:Credibility: then a local or industry celebrity may work best; or someone with a lofty title or aprofessor.Connections to capital: then a financial type or someone who has raised capital or has worked asa banker or investor might be best.Connections to customers, strategic partners, distributors, etc.: then someone who has worked in theindustry many years would be a good fit.Expertise in growing a successful business: then someone who has reached goals that you wouldlike to reach (e.g., grew a 10 million business; successfully sold their business, etc.) might be theideal person.Overall, your list of prospective Advisors will include successful people that can help. These individualsmight be retired/current executives, business owners, consultants/professional service advisors, professors,etc.Page 2
Secrets of Attracting Rock Star AdvisorsExercise #1: Write down your list of prospective Advisors and the potential value that each might offeryour company.Prospective Advisor’s NamePotential Value They Offer2. Contact and Meet with Prospective Board MembersThe hardest part of building your Board is to get the first member (since all prospective membersnaturally ask, “Who else is on the Board?”).So, ideally you can ask someone you know and respect to join your Board first.Now, when seeking Board members that you don’t already know, I recommend two approaches:The first approach is to leverage existing Board members (if you have one or two that already signedon). In this case, simply ask your existing Board members to refer their top contacts to you as prospectiveboard members.The second approach is the “cold” approach whereby neither you nor your existing Board members knowthe prospective board member. In this, case, I recommend a two step process.That is, rather than asking the prospect to become a board member right away, I initially ask just for ageneral meeting to discuss my business. By doing this, you can meet the prospect (with less resistance thanif they think you are going to pitch them something), and only present the Board opportunity if the two ofyou hit it off.Page 3
Secrets of Attracting Rock Star AdvisorsBelow is a template you can use to get this initial meeting (either via phone or email). (Wheneverpossible, still get a referral, so you can start it with “Bob Jones suggested I contact you.”)Dear [Name],I am the founder (or other title) of XYZ Company.Based on your success as [fill in what they have done], I was hoping to sit downwith you for a few minutes to ask you some questions about my company and getyour thoughts.Could you meet for a few minutes on [insert date]? We could meet at [place]where I’d be happy to buy you a cup of coffee while we speak if it’s moreconvenient.Please let me know if this time/place works for you.Regards,[Your Name]meeting.Use this template -- it works!In the Appendix are other templates that we at Growthink have used in developing our own Board ofAdvisors and Boards for our clients.3. Secure the best Advisors you meet withOnce you meet a prospective Advisor that you like and think can add value, secure them.To secure them, if there is no equity involved, there is no need for a formal agreement. Simple a verbalor email “yes” is fine.If you decide to give them equity (I like giving a small amount of options that vest annually if theycontinue to serve on the Board), you will need to draft a formal options agreement for them to sign.Page 4
Secrets of Attracting Rock Star AdvisorsC. How to Leverage Your Board of AdvisorsThe final step is to hold formal and informal meetings with your Board members to leverage them -- toget them to make introductions, help solve operational challenges, etc.Below are some keys to getting the most out of your Board meetings and beyond:Before the meeting:Send out the meeting agenda at least 3 days in advance of the meeting. In the agenda, includethe key challenges you’d like to resolve during the meeting so Board members can start thinkingabout solutions, and go through their Rolodexes before the meeting.During the meeting:You (the founder/CEO, etc.) should start the meeting with a brief (15 -30 minutes) overview of thebusiness and the key issues. Specifically, you should discuss: The current status of the business Any major updates since the last Board meeting What is working well in the business What is not working well that must be fixed What potential (but not immediate) threats are concerning you Any other critical areas requiring feedbackThe second part of the meeting should be discussions of the specific issues (e.g., what’s not workingwell) that must be fixed. You should have the relevant manager (e.g., CFO, Director of Marketing,Head of Sales) lead/present the discussion so they can provide more information. Plus, since theywill ultimately be responsible for executing on the chosen strategies, they should be involved incrafting them. This part of the meeting is typically three to four 20-minute sessionsIn the third next part of the meeting, you should summarize these discussions with the Board andagree on the action items to be taken. This should take approximately 30 minutes.The fourth part of the meeting should be conducted with just the Board members and neither younor any company employees present. The Board should discuss your performance and the actionplan candidly, without any fear of hurting your feelings (so they can give you brutally objectivefeedback). This will take approximately 20 minutes.The final part of the meeting should be you re-entering the meeting to get your Board’s feedbackfrom their discussion. This should last approximately 10 minutes.Note that in total (assuming four 20-minute sessions in part two), the meeting is scheduled for 170minutes, or just under 3 hours.After the meeting:Page 5
Secrets of Attracting Rock Star AdvisorsSend your Board a summary of the key action items that were determined during the meeting,and a list of unresolved issues if any.Other keys to effectively managing and leveraging your Board:Don’t be afraid to email or call Board members in between meetings to solicit advice.Meet approximately 8 times per year. That’s every 6 weeks or so. Avoid August and Decembersince you’ll rarely get the full group due to other travel plans.Create collaborative documents (e.g., Google Docs) that both you and Board members can workon. For example, create one that asks Board members to add names of people you need (e.g.,investors, customers, partners, etc.).Email your Board at least monthly to give them updates and urge them to contribute more (e.g.,more introductions, etc.). And use the emails to publicly thank the Board members who arecontributing (which will get them and others to contribute more).The ideal time for a Board meeting is 2-5PM. That way there’s no food getting in the way of workto be accomplished.Page 6
Secrets of Attracting Rock Star AdvisorsD. Appendix1. Initial Email or Call Templates to invite people to join Board of Advisors:Individuals that you know:Dear XXX,Hope you are well. We met briefly at Growthink's November event, but by way ofintroduction again I am an engagement partner here at Growthink. I am writing toyou on behalf of Growthink’s co-Founders Jay Turo and David Lavinsky.The reason I am writing you today is because Growthink is currently in the process ofadding new members to our Strategic Board of Advisors in the various industry andpractice areas in which we focus, (i.e., angel investing and finance, clean tech,business/consumer services, technology, consumer products & retail, digital media &entertainment, emerging markets/global business, health care, manufacturing andreal estate).Given your ongoing support of our firm and the very high regard that Jay, Dave andothers here at the company hold of you, we would like to cordially and respectfullyinvite you to join this Board.Benefits to you of accepting would include, among others: Contributing to Growthink's mission of helping entrepreneurs succeedworldwide;Networking;Personal and Professional Branding and Visibility;Equity in Growthink; and,Potential earnings from referring clients.Very importantly, because this is a Board of Advisors and not a formal board, therewould be no potential liability or any fiduciary responsibility for your participation.I would love to find time on your calendar where you, Jay Turo and I could have ashort conversation to explore further. How is XX on XX for a call? Please advise if thistime works, or feel free to suggest an alternative.Thank you in advance for your consideration and on behalf of everyone at Growthinkwe look forward to getting to know you better and working with you, while having alot of fun with you as a member of our Strategic Board in 2011 and beyond!Page 7
Secrets of Attracting Rock Star AdvisorsIndividuals that our Client’s Management team knows:Dear XXX,Hope you are well. I am writing to you on behalf of [XX] at [Company Name]. Myfirm, Growthink, is working with [Company Name] to add new members to itsStrategic Board of Advisors.Given your leadership in the [FILL IN] industry and the very high regard that [XX] at[Company Name] hold of you, we would like to cordially and respectfully invite youto join this Board.Benefits to you of accepting would include, among others, the opportunity to meet,connect, and build relationships with some of the leading thinkers and doers in thedirect marketing industry, personal and professional branding and visibility, andcontributing to [Company Name]'s mission of better living and innovation.Very importantly, because this is a board of advisors and not a formal board, therewould be neither potential liability nor any fiduciary responsibility for yourparticipation.I would love to find time on your calendar where we could have a short conversationto explore further. How is [xx] PT on [xx], for a call? Please advise if this time works,or feel free to suggest an alternative.Thank you in advance for your consideration and on behalf of [XX] and the[Company Name] team we look forward to getting to know you better and workingwith you.Page 8
Secrets of Attracting Rock Star Advisors2. Follow-up Emails after Calls/Emails:Dear XXX,It was wonderful to speak with you last [Day] and on behalf of everyone at Growthink, wevery much appreciate your consideration of our advisory board invitation.As discussed, we are in the process of assembling our board of strategic advisors in thevarious industry and practice areas in which we focus and we would be honored and thrilledif you accepted our invitation to join it!Benefits to you of accepting our invitation would include: Contributing to Growthink's mission of helping entrepreneurs succeed worldwide. Wehave found that those that are attracted to Growthink are above all else passionateabout entrepreneurship.For us, entrepreneurs (and intrapreneurs - entrepreneurs within larger organizations) areambitious leaders – courageously pursuing growth opportunities and assuming accountabilityfor the inherent risks and outcomes. They are hard at work worldwide at startups, at smalland medium sized businesses, at non-profit and governmental organizations and at Fortune2,000 companies.Growthink provides these entrepreneurs with both strategic and tactical advice.Strategically, we help them answer “what” needs to be done, and tactically we help themanswer the “how,” “by whom” and “by when.” We then work alongside them to get it done.This is good and important work, and as a member of our board of advisors you wouldmake a meaningful contribution to help us do it better, and do more of it!Networking. We will hold quarterly, in-person events in conjunction with Board of Advisorsmeetings. Invited attendees will include the strategic board members as well as Growthinkclients, employees and investors. While accepting our invitation to join our strategic boarddoes not mandate you to attend these events, they are a GREAT opportunity to connect withother like-minded thinkers and leaders who are passionate about entrepreneurship,innovation and business - building.And as those that have attended some of them in the past will attest, they are great fun, too!Also note that if you are not able to attend our quarterly board events in person,teleconference and video conference participation options will be available.Personal Branding and Visibility. As you may know, Growthink's work and expertise has beenrecognized in The Wall Street Journal, The New York Times, BusinessWeek and EntrepreneurMagazine, among others. We also have a very high profile on the Internet and on socialnetworking sites including LinkedIn, Facebook and Twitter. While we are modest about it wedo believe that having your professional biography featured on our website as a memberof our strategic board of advisors will reflect well on you both personally andprofessionally.Page 9
Secrets of Attracting Rock Star Advisors(Continued)Equity options in Growthink. Growthink has a very ambitious growth plan and we believe ourcompany is on path for a great rise in revenues, profits and value in the years to come. Asconsideration for your participation on our strategic board, you will receive option grants topurchase XXX shares of Growthink common stock at an exercise price of XX/share, vestingover a X-year period. Note that we have been advised by counsel that this is the lowestoption price that will not trigger a tax consequence for you nor Growthink.No Liability or Fiduciary Responsibility. Because this is an advisory board and NOT a formalboard, there is no fiduciary responsibility nor potential liability to you for participation. Alsonote that you are free at any time for any reason to discontinue your participation on ouradvisory board.Next StepsIf all of the above sounds great, simply respond to this email with “I accept” and we willforward to you the welcome packet that includes our very simple board of advisorsagreement, Growthink equity options paperwork and instructions regarding including yourbiography on the advisors section of the Growthink website.Of course, if you have any questions / need for clarification on any of the above, pleasedon’t hesitate to call / email me.Thank you again for your consideration, and I look forward to getting to know you betterand working with you in [Year] and beyond!Page 10
Secrets of Attracting Rock Star Advisors3. Welcome Packet email with attachments sent after 2nd call and followed up with a 3rd call:XXX,First of all, on behalf of everyone here at Growthink please let me welcome you toGrowthink's strategic board of advisors. We are very excited about the potential forGrowthink and our advisory board members and promise that it will be a fun, enrichingand mutually beneficial experience.In terms of next steps, below are the key action items:1. Please find attached three documents for your review and execution:a. A standard letter that outlines the basic terms and conditions of your involvementin the board. Please review, and if acceptable, please sign and either fax backto [Fax #] (or scan and email).b. An Incentive Stock Option Agreement, which outlines the terms of your Growthinkstock options. Please also review, and if acceptable, sign and fax back to [Fax#] (or scan and email).c. For your reference, Growthink's Stock Option and Grant Plan.2. Please forward to us a current professional biography and picture for inclusion in theadvisors section of our website. If you don't have a biography readily handy, pleasejust send us a picture and / or a resume / CV (or point us to your LinkedIn profile)and we will draft a short biography for your review and approval.3. Please note that our first advisory board meeting is scheduled for XXX atGrowthink's offices in Los Angeles. After the meeting, there will be a wider "openhouse" with the Growthink team and with some select clients and partners. We wouldvery, very much like to have you attend in person, but if you are unable,teleconference and video conference participation options will be available. We willsend out a more formal invite via email before the end of the month, but please savethe date.And that is it - we appreciate your efficient attention to action items 1-2 above, and ona personal note I am looking forward to working with you and getting to know you in thisnew context in the months to come.Page 11
Secrets of Attracting Rock Star Advisors4. Sample Board of Advisors Agreement[NOTE: as mentioned at the beginning of this report, this is not legal advice as Growthink is not a lawfirm, nor do we purport to be a law firm, nor offer legal services. It is our recommendation to use this asa guide and have your legal counsel modify this agreement as appropriate.]NameAddressDear [Name],On behalf of Growthink, Inc., a Delaware corporation (the “Company”), I am pleased to offeryou a position on Growthink’s Board of Strategic Advisors (“Board of Advisors” or “AdvisoryBoard”)Subject to the approval of the Company’s Board of Directors, you will be granted a nonqualified option to purchase XXX shares of Company common stock under the Company’s StockPlan at an exercise price equal to the fair market value of that stock on your option grant date,as determined in good faith by the Company’s Board of Directors. Subject to your acceptanceof this agreement, your option will vest over a period of XXX months in X equal installments,subject to your continued involvement on the Advisory Board. Your option will be subject to theterms and conditions of the Company’s Stock Plan and standard form of stock option agreement,which you will be required to sign as a condition of receiving the option.As an Advisor, you will be invited to attend Advisory Board meetings, either in person or on thephone, which will be arranged on an as needed basis (no more than four per year). In addition,your name and bio will appear on our website and materials in the Advisor section.Your service as an Advisor will be subject to the Company’s Board of Advisors Terms andConditions attached hereto as Exhibit A, to which you agree by your signature below (the“Terms”).On behalf of all of the Company’s management, we are excited about you serving as anAdvisor the Company and look forward to your input and guidance.Sincerely,James TuroCEOGrowthink, Inc.,I agree to and accept the Board of Advisor position and agree to be bound by the Terms.Signature:Printed Name:Date:Page 12
Secrets of Attracting Rock Star AdvisorsEXHIBIT A - BOARD OF ADVISORS TERMS AND CONDITIONS1. Expenses.The Company shall reimburse Advisor in accordance with the Company’s policies for reasonable traveland related expenses incurred in the course of performing services hereunder, provided, however, thatappropriate documentation of such expenses must be provided in accordance with such policies andexpenses in excess of 100 shall be approved in advance by the Company. Advisor shall not otherwisebe paid for the collaboration, advice and assistance provided to the Company in connection with serviceon the Board of Advisors (the “Services”).2. Termination.Advisor’s service on the Board of Advisors may be terminated by either party for any reason uponwritten notice to the other party.3. Independent Contractor.Advisor’s relationship with the Company will be that of an independent contractor and not that of anemployee. Advisor will have no authority to enter into contracts that bind the Company or createobligations on the part of the Company without the prior written authorization of the Company.4. Miscellaneous.Any term of these Terms and Conditions may be amended or waived only with the written consent of theparties. The Advisor Agreement and these Terms and Conditions constitute the sole agreement of theparties and supersede all oral negotiations and prior writings with respect to the subject matter hereof.The validity, interpretation, construction and performance of this Agreement shall be governed by thelaws of the State of California, without giving effect to the principles of conflict of laws.Page 13
Hope you are well. We met briefly at Growthink's November event, but by way of at Growthink. I am writing to you on behalf of Growthink's co-Founders Jay Turo and David Lavinsky. The reason I am writing you today is because Growthink is currently in the process of adding new members to our Strategic Board of Advisors in the various industry and
