Considering Hiring an Advisor or Fractional CTO/Product Leader? Here’s Your Guide
Many companies seek external help to navigate the winding path of scaling a platform, team, and company. Mentors can informally provide context and guidance, but what happens when your C-Suite needs more structured input?
Technical or product advisors can be a huge asset for companies looking for short, or long term trusted guidance as they problem-solve, scale, and thrive.
Talent Partners and Executive Recruiters can be critical in making key introductions to Advisors.
Why & When You Should Seek Out an Advisor
As an Executive Recruiter, I suggest advisors when a company has identified critical challenges in scaling their team or building a roadmap. Companies need external support, radical honesty, unique perspectives, and occasionally an expert to deliver on a hard line deliverable. When the challenges are laid out, it’s easier for recruiting partners to determine the kind of advisors who will be strategic and complement your team’s skill set.
Advisors are uniquely positioned for:
- Helping solve complex problems
- Supporting long or short-term strategic initiatives
- Ensuring successful completion of specific projects and deliverables
- Providing advice or addressing issues when don’t have a budget to hire an employee
Advisors can bring an outsider perspective on challenges. For example, advisors can:
- Provide perspective on different structures for organizing your team
- Help determine which key hires are needed based on your product or technical roadmap
- Assess the existing team or technical capabilities
- Compose a product or technical roadmap
- Evaluate and interview technical/product candidates
- Support executives in C-Suite hiring
Who Can Be an Advisor?
Anyone can call themselves an Advisor; however, the best advisors are experts with a strong point of view and years of proven experience. They should be a person who will provide brutally honest feedback to help move your business forward, rather than someone who will be agreeable.
As Priscila Bala (@Priscila.bala)of Octopus Ventures says, “Advisory member relationships can work particularly well if the candidates you are courting are well-connected leaders in their space, have ambitions to be on a public board and have not yet done so (such that they can leverage the startup advisory board experience in that context) and are excited about being at the forefront of their industry.”
Setting Up an Advisor Engagement
Before bringing an advisor on, decide how you will measure their success. Outlining qualitative impact or specific deliverables can help ensure everyone knows what is expected of them. Include your expectations for response times to emails, calls, or messages as well as how available you expect them to be. Creating a rubric or measurement for the advice or deliverables they are providing can help everyone understand how fruitful the engagement is over time.
You should also set expectations for the typical weekly or monthly time commitment (including a maximum number of hours for the advisor) and a total length for the engagement.
As part of this, decide how you will be communicating with the advisor. Will it be scheduled or as-needed? In-person or by email? Will this person be on-call? Ongoing, on-call time may be budgeted differently than a project based deliverable.
How Are Advisors Compensated?
Expert time is valuable. When you find someone whose opinions you trust and who gives the radically honest feedback you need, aligning incentives create an ideal environment for moving your business forward.
Here are a few ways I’ve seen advisor compensation structured:
Early angel investors are already incentivized. Therefore they may advise for no additional comp. Equity advisory roles are common in the early stages of a company, board advisors more common thereafter.
Variables for comp
- Number of hours they will be devoting
- Experience level
- Depth of Expertise
- Stage of the company (Public, Private, Venture-Backed)
Hourly or Monthly Rate
- Fixed Fee for said number of months
- Monthly retainer
- Time value $250 — $1,000 / hr
For Venture-Backed Startups
- Equity (Based on data collected from reputable Venture Capital firms)
- For Venture-Backed Startups, compensation may be in line with Director or VP level grants
- Averages ranged from a low of .18 bp to a high average of .63 bp
Vesting
- Typical One or Two-year vesting period with single-trigger acceleration upon a liquidity event.
For Private & Public Companies
- Occasional cash compensation
- Stock determined on a percentage basis
- Cash in the $40k — $140k range
For board member compensation, there’s a broader range of options. Finding the right balance is unique to each company. The Athena Alliance is a valuable resource for board compensation.
Where Can You find Advisors?
Think twice before asking a great mentor to become a fiduciary, since doing so may refocus them and restrict their ability to offer you mentorship in the same way as before.
Asking your trusted network is a great place to start. People who understand your business can begin offering leads to individuals in their network they can vouch for.
The relationship with an advisor is both business and personal; it’s an intimate relationship developed on trust and expertise. Like any other partnership, aligning on the vision for your company is the most important place to start. From there, you can figure out the details.
Many thanks to Daniel Doubrovkine, Coco Brown, Kelly Kinnard, Beth Scheer, Katie Hughes, Liz Tran, Bethany Crystal, and Jen Kodner for your wisdom!
