Don't Ever Assume You Know It All. Find and Trust an Advisor. Here's How. Advisors can vet your idea, define your go-to-market strategy and draft a financial plan, among other valuable skills. So pay them some respect.
By Jeffrey Hayzlett Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
An advisor is someone who gives advice, typically from a position of expertise in your field. And he or she merits respect: Throughout our professional lives, most of us at some point need mentors and advisors who guide our steps and help us navigate the day-to-day complexities of a fast-paced business world.
Related: Getting the Most out of Your Technical Advisor
Take the field I'm currently advising in: cryptocurrencies. Not too long ago, the business world knew next to nothing about cryptocurrencies; the only way to invest in a startup in this segment was through venture capitalists and angel investors, potentially leading to your very own IPO.
But business has evolved and now people have jumped on the cryptocurrency-blockchain-ICO bandwagon. This year alone, there have been 151 initial coin offerings (ICOs) -- mostly in communications (22.8 percent), finance (17.2 percent) and trading and investing (14.5 percent). And we're not even a full four months in.
Despite the less rigorous process of an ICO (compared to that of an IPO), there are still "t's" to be crossed and "I's" to be dotted. As you get ready to start your own process, the first question you need to ask is: Who are my advisors going to be? This is not a step to be skipped, even if you think you know what you're doing.
Why? Because advisors (for the example given, of an ICO) can help you:
- Vet your idea
- Define your go-to-market strategy
- Structure your token sale
- Draft a financial plan
- Ensure legal compliance
- Introduce investors to pre-launch stage
- Create a viable road map post launch
Advisors also add credibility to your venture. However, make sure that your advisors don't outnumber your team members. That's a red flag for investors who are pretty up to date on who's who in the crypto world.
Related: Mentors vs. Advisors and Why You Should Get to Know Why They Differ
Here are two key questions to get you started on your hunt for the best advisor(s).
What to look for in an advisor
This stage will require the most legwork. Choosing the wrong advisor will erode trust within your team and, as I've mentioned before, trust is the most fragile relationship you'll ever have. It takes a lot of work to build it and just a second to lose it. Any business owner knows that you need to surround yourself with people who have a different set of skills than you do; and an advisor/entrepreneur relationship is no different.
So, first identify which areas you need help with. Are you a good communicator, but not great with numbers? Have a sharp marketing mind but your only legal experience comes from watching Law & Order?
Look for people who have "been there, done that"-- people with diverse experience and expertise. For example, a local Sioux Falls company, CoinLion, that I advise pro bono, has advisors who are an eclectic mix: seasoned corporate executives ranging from legal and government advisors, to a former police officer and circuit judge. They also include Wall Street analysts and engineers.
One thing to keep in mind is to get to know your advisors. Everyone should feel comfortable enough talking about anything related to the business, including financials.
Where to find advisors
The answer is obvious: Start with everyone you know. Bust out your old Rolodex, figuratively speaking; Google those people; check out their LinkedIn profiles. Do whatever it takes to properly vet anyone who might be jumping on board. Check out these individuals' recent experience and work history. Recently, my team did an interview with a book author for one of the C-suite TV shows in which the author reminded listeners that "your network is your net worth."
That's good advice. Here's more: After you've compiled your first list, compile another: Reach out to people in your personal network who might be a complement to your business. It's all about whom you know. Spread the word to family, friends, colleagues. They might suggest someone willing to impart knowledge, fueled by a personal network of contacts to provide valuable recommendations. Also, make sure that anyone you consider has a good reputation.
In terms of my own advisory experience, my criteria for working with an ICO is the same as that for any other business deal I might consider. And it's threefold: He or she should have the ability to make money, grow professionally and have fun doing it. If these three criteria are not met, I'm not going to do business with this person; I don't care how tempting an offer it may be.
Note: Not every crypto expert will be a good advisor. There will be those looking for some sort of compensation for their expertise or to enhance their own portfolio; these are people who probably won't care about your product. Steer clear!
What to do next
Now that you have your advisors in place, here are a few "dos and don'ts." As the (ICO) entrepreneur bringing on the advisor:
Do: Ask yourself: What is the purpose of my token? Do I really want to launch an ICO?
Do: Hold off on launching your ICO if you're not ready. If your venture doesn't have to be built using the blockchain platform, or you're unsure if that's the way you want to go, wait to be sure. You need a strong, compelling reason as to why you're using a decentralized platform, and you need to conduct more research because you might not fully understand the process.
Do: Write a concise, informative and thorough white paper. The document should cover every aspect of the venture: financials, technology, the ins and outs of how the product would work and ways in which the token will be used within the system.
Don't: Don't write a vague white paper with complicated terminology that doesn't do much to explain why people should invest. The bottom line is: If you can't clearly convey a message, investors will steer clear of you.
Do: Profile every single team member prominently. Each member needs to have a clean LinkedIn page as well as a Twitter page. Any investor worth his or her salt will do a thorough search of each team member, top to bottom.
Don't: Don't be shady about your team. If you list only a few members, investors will get suspicious about the lack of disclosure. These projects are complicated and require an entire team to pull off the feat, so why not showcase the entire team?
Do: Make sure everyone on your team is in sync with the communication strategy pre-, during and post-launch. Whatever your platform is (website, white paper, slack, social, etc.), your messaging needs to remain consistent. Also, respond to any inquiries in a timely manner. People asking questions are people expressing interest. Turn that interest into investors.
Don't: Change your communications strategy every time you get a different reaction from an investor or the public. Doing so jeopardizes your entire operation. People value consistency, and while you should address every concern, you don't need to change your core message. Make sure your executive team doesn't have a different message than your marketing and PR teams have.
Do: Keep in mind that the cryptocurrency world is global, not just a North American (or strictly a U.S.) thing. Therefore, translate your materials into other languages -- along with your website, white papers, collateral materials, etc. The most common languages crypto startups are using are: Russian, Korean, Japanese and Chinese, due to the high volume of users in those countries.
Do: Consider hiring a professional translator to capture the technical nuances of the language before you break out your own multi-lingual skills.
Related: How to Score an Advisor When Your Startup Has No Money
There are many factors that will determine the success of your ICO, but having a good group of advisors is as good a start as any. While there may be less regulation in the ICO world, that doesn't mean you get to slack off in putting together all of the skills needed to make you stand out from the crowd. Put in the work, reap the benefits.
