When we were first getting started, I kept wondering about the value of advisors. Every company proudly displays their advisors somewhere in their about us (and so do we). But I couldn’t quite understand what, exactly, advisors brought to the table. Were they primarily intended as a signaling mechanism? For introductions? For domain experience? After a couple of years, I have a tentative answer.
One thing is for sure: the signaling aspect isn’t worth very much. Future investors will judge you on your metrics, opportunity and team, not who you’ve convinced to sign a piece a paper in exchange for some equity–regardless of their byline.
However, the introductions and domain experience that advisors bring to the table can be game-changing. And helpful introductions are really an outgrowth of genuine domain experience.
To give an example, Denis Grosz has been invaluable in helping us devise and execute an SEO strategy. It’s not that there isn’t a ton of SEO information already out there–there’s more than you could ever process. The issue is that it’s incredibly hard to evaluate what’s important to focus on and what’s not. And there’s also the fact that SEO is a zero-sum game. The people at the top of the SERPs have no interest in giving away their insights to their competitors. Having Denis as an advisor helps us surmount the inherent selection bias that exists whenever you get advice on topics like SEO: people who really know don’t share, and people who share don’t really know.
Recruiting advisors who have relevant domain experience and giving them a vested interest in your future is the best way to get long-term, valuable and actionable advice. Equity is an incredible way to align incentives.