brent-headshot

Who do you go to for business advice? Outside of the people in your life who support you emotionally, who do you rely on for experienced advice about where your company is going?

I’m sitting down with Brent Reinke, co-founder of Vapur and attorney and advisor to entrepreneurs for over 25 years, and we’re talking about the importance of having an advisory board. It’s all for the benefit of your company!

Brent’s getting into how to look for advisors and setting up clear expectations. He’s also sharing how having the right advisors can save you from making mistakes, and make you look better to investors, even when you’re just starting out.

Even if you don’t think your business is right for a formal advisory council, this is an amazing episode about getting advice and the importance of having a strong network to keep your business healthy.

Bravery and Business Quote

“Finding advisors comes down to finding people that have a high-degree of passion because they’ve done it.”  Brent Reinke

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The Cliff Notes

  • Advisory board members can help new entrepreneurs to avoid mistakes and navigate pitfalls as they get started and develop.
  • You can have a formal or an informal group of advisors, depending on the needs of your company and how much of a network of support you already have.
  • Advisory boards and members may change as your company evolves and starts looking towards new goals.
  • Most early stage companies don’t need a formal set of advisors. They need to have people around and available, but this doesn’t need to be a traditional board format.
  • How you compensate advisors depends on what stage your company is at, what kind of financing it has and what requirements there are of the advisors.
  • Who you ask to be an advisor is very industry specific. Do some networking to find people in your field who have experience, and then look to industry professionals, lawyers, accountants, etc. for their expertise.
  • Set expectations with your advisors. How much time will you want them to set aside? When will you meet with them? What kind of advice are they expected to provide? How will they be compensated?
  • It’s not just knowledge and experience that advisors bring to the table, but also their own networks.
  • Leverage your advisors into better financing. You might not have the expertise investors are looking for, but your advisory board might.

“It’s critically important as you talk about this idea of board advisors to set proper expectations on both sides.” -Brent Reinke 

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Resources

Vapur: Vapur.us

Transcription (click to expand)

[INTERVIEW START]

Kristin Carpenter-Ogden: Brent Reinke, welcome to the Intrepid Entrepreneur Podcast.

Brent Reinke: Thank you very much. I appreciate the invite.

Kristin Carpenter-Ogden: Oh, I’m so excited to share you with my audience today. Everybody, Brent is the co-founder of Vapur, and he also has been helping entrepreneurs and startups for the past 25 years as an attorney. So I’m very excited to have you here today to tell my audience and talk with us about how to build advisory boards and what they would be for. And using an advisory board is a key kind of springboard to kind of get to the next level in your business. So thank you so much for joining us here today. But before we go there, can you tell us a little bit about how you got caught up in the crazy world of supporting entrepreneurs? Because it most certainly is not the easiest road. Never boring, I’m sure.

Brent Reinke: No, it isn’t. But at the same time, it’s really exciting. Well, it certainly started with being a business lawyer. I think I’ve always had kind of an entrepreneur bug. So that kind of led me to helping companies through that growth process as a business lawyer and taking them literally through setting them up, choosing an entity, all the way through the VC and PE process to eventually, hopefully a liquidation event. Meaning a mergers and acquisition or in some cases, an IPO. But it’s just exciting working with passionate individuals. That’s part of what you certainly have to be as an entrepreneur. I find it exciting and I get a kick out of it myself even as a business lawyer when I’m working with companies to helping through that process, and now bring my years of experience both as a business person but as a business lawyer in helping them navigate all the minefields that you’ve got to get through them.

Kristin Carpenter-Ogden: And there are so many. It’s true. The bobbing and weaving never ends.

Brent Reinke: Very true.

Kristin Carpenter-Ogden: Well, this is great. Before we dive into the advisory board topic of today, the focus that we’re going to go toward, I also just want to share with my audience the fun, wild, and awesome ride that Verde and Vapur have had over the past–I think it’s been 6 years.

Brent Reinke: Yeah. We started in–in fact, it was October of 2009 when we basically launched Vapur.

Kristin Carpenter-Ogden: That’s awesome. And I’m so proud to have been a part of the growth and all of the ups and downs and exciting moments which keep coming…

Brent Reinke: They do.

Kristin Carpenter-Ogden: So just trying to navigate the–you guys came from kind of a different industry, went into outdoor, but essentially, the brand is so fantastic and so elastic, and it just sort of took on a life of its own. And it seems to be able to get into any market just great. And it’s been fun to work with. You actually have hands-on experience with Vapur and the outdoor-active lifestyle industries. Do you have any other start-ups under your belt that maybe I don’t know about that happened before we knew each other?

Brent Reinke: Not as an actual co-founder or owner, but certainly a lot where I have participated sometimes as just an advisory board member, but sometimes as counsel for a company. So a lot of it from that perspective, but Vapur was really the first time that I took on and kind of took that step off the ledge, so to speak, myself as an entrepreneur starting a company and going through the trials and tribulations as an actual co-founder. I’ve started some business organizations that are nonprofits that facilitate and help assist emerging growth companies. So I’ve done that, but Vapur was really the first one where it was kind of that leap of faith into entrepreneurship as a co-founder. I would just add as a side note that we couldn’t have picked a better group as far as a PR company than you and Verde to work with, and to take that right with us. And you guys have been incredibly helpful in that regard.

Kristin Carpenter-Ogden: Oh, that’s awesome to hear. Well, if anybody’s curious about that, it’s vapur.us. But don’t go there till after the episode today because I want you to come into the realm of advisory boards for entrepreneurial businesses. So Brent, I have started three companies. Intrepid is my third. While I’ve always had a network–and you’re part of that network now for Verde, and also Intrepid–I’ve never really had a formal advisory board. But it’s something that I’ve had mentioned to me several times to do, but I may have just made an assumption–you know what they say about that assumption–that I would have to pay board members salary and I was really more–not salary, but pay them something. And like I wanted to keep my employees growing, and pay them, and focus on that. I just never made the leap. I think it could’ve really served us, and I’m actually interested in doing it now–we’re 16 years in, though. But I’m 2 years in with Intrepid. I could do it. And I definitely love board work with other organizations that’s mostly nonprofits. But can you tell my audience kind of why we would maybe need advisory boards and how we might go about setting those up in a way that makes sense for our brands and–

Brent Reinke: Sure. Sure, yeah.

Kristin Carpenter-Ogden: I just feel like it’s an area that I can’t really offer any expertise on.

Brent Reinke: Well, I’d be happy to. First, we might want to take a quick step back as to the environment that you even currently work in, and then companies that are much younger. And Intrepid Entrepreneur is another one of those. We could be talking purely start-ups, but you know as well as anybody and any entrepreneur that’s been through the process of starting a company and growing a company know how challenging it is. I think it’s particularly challenging if you happen to be an entrepreneur or a founder of a company that has never done it before. My goal for helping companies whether it’d be as a business owner, as an advisory board person, is to help them guide through that process and help them–to educate them and to help them minimize mistakes along the way. That, really, for me is the key to what an advisory board can do.

Now, when I say advisory board, it sounds like–and you do have a fantastic network of people that you can reach out to [inaudible]. I’m not necessarily saying you have to early on develop a “formal advisory board.” But I think having even an informal advisory board–and I could explain that a little bit–can be extremely helpful to a company as it goes with the growth process. And those advisors, frankly, as you get to inflection points at moments in the stages of the growth, your company may change. They may be a group that lead you through the first round of financing or two, and then suddenly, you’re more established. Then now you’re looking at scalability and growth, and that may evolve into a different set of people that you need advice from.

But the key, again, to advisors is–particularly if you’re maybe a relatively inexperienced entrepreneur, and having gone through the process is to bring some experience to your company. You can identify–and hopefully you can a entrepreneur is [inaudible] is critically important to identify [inaudible] is a weakness that you have. I think, even from an investor perspective, they like when people can acknowledge areas that they’re not necessarily strong in. But then you surround yourself with people that are. So the advisors basically are there to help provide that experience. To provide that knowledge and that skillset that you may not have. Or your team, your executive team may not have as you grow the company. Because that provides a lot of value from a couple of perspectives. First, it provides the value that’s just the obvious one. It’s experienced.

To me, it’s critically important for any company to try to minimize mistakes that are made as you go through this process. We all know–I don’t know what it is now–50%, 60% of companies most of the time do not succeed. Start-ups.

Kristin Carpenter-Ogden: I think it’s 90%.

Brent Reinke: It might be more.

Kristin Carpenter-Ogden: It’s so depressing.

Brent Reinke: It is. That’s why I think this is a great topic because the whole point of an advisory board or advisors is to help decrease that percentage of failure. Because you have people that you’re surrounding yourself with that can point you in the right direction, help you minimize those mistakes that you’re going to be making. So as you talk about how you build an advisory board or how do you go down this path–I think depending on the stage of growth you’re in, most early-stage companies–I’m not suggesting you have to have a formal advisory board.

What I am suggesting, though, is you might want to create a group of advisors that is there and available to you when you need them or on a certain amount of time every month. Maybe it’s a certain amount of hours that they’re going to be available to you. Or it’s even more informal than that. But they’re there and you can reach out to them and you can tap their knowledge, their experience, and help you answer questions as you come to them or warn you about things that are maybe coming up that you can avoid and make your path as you go through that growth process a little easier. Because it really depends on what stage you’re at. You mentioned how you really never had a formal advisory board, but you have a group of awesome people in the industry you can reach out to. And in some ways that can become your advisory group or board.

Kristin Carpenter-Ogden: So aside from the goodness of their hearts, what’s in it for these people? That’s always what’s kind of stumped me.

Brent Reinke: Right. Well, it sometimes depends on the people that you’re reaching out to. Traditionally, if you’re reaching out to a group of individuals or just a few individuals and the agreement or expectation is is that they’d be available a certain amount of time every month to allow you to have lunch with them, call them, e-mail with them to get their input. The compensation piece when it’s an earlier stage company is typically stock options. That, of course, ties into a whole other discussion we can have later on about setting up equity and [inaudible] and how those are used. But that’s why a lot of my clients–I would say 90% of my clients–probably the same number if not more of the companies that I work with more as an advisor–a business advisor–have equity [inaudible] which allows them to grant stock options to not only employees, but also non-employees like boards of directors who like advisory board individuals. And frankly, sometimes even [inaudible]. So that’s the traditional compensation. If it’s a later stage company that maybe is already done rounds of financing. By that, I mean more institutional, not friends and families and fools, as we say.

Kristin Carpenter-Ogden: Oh, boy.

Brent Reinke: Yeah. Then there might be some component of a small amount of cash involved as far as a stipend. If you tend to try to treat it more formal like every month or every quarter, we’re going to have an actual advisory board meeting. And that could be in person or it could be over the phone or Skype or however you want to do it. Then you might get to acquire words of combination of equity and some cash component. But to be honest with you, I mean, there are a fair number of individuals out there that just have been successful themselves and  have been through the process and know how challenging it is to be successful as a company that starts itself and is in that growth process. And they want to make themselves available to give back to companies and help companies and other entrepreneurs to try to be a successful one. I hate the mindset “what goes around comes around.” And if that company starts doing well, then maybe at that point there’s an opportunity for them to be more of a some type of compensation component whether it’d be cash or more stock options. But just some basic stock options at the outset to just say, “Hey, we appreciate what you’re doing for us, Mr./Ms. Advisor. Here’s some stock options that we’re willing to grant to you.”

Kristin Carpenter-Ogden: That’s great. That’s great advice. So we’ll do another show, Brent and I, on getting your company set up to offer that. So the one thing I want to bring up before we move forward here–my network is from the industries that we serve, but I also have my brother. He’s actually a really sharp entrepreneur. He owns a lighting business down in Houston and he’s been crushing it for 15 years. This is his second really successful company. So we obviously were born with something. So he’s always been helpful. Now he knows the game in my industries, but for the first couple of years, he was literally just like, “Who are these people you’re working with?” We do business so differently–it’s not like it’s completely different, it’s more of a mindset, it’s why we’re in the industries we are and the relationship-based relationships we have–that was redundant. But you know what I’m trying to say. Everything is built on that. So an advisory board for passion-driven entrepreneur in the outdoor-active lifestyle markets is a very different approach than what you might do in tech or in healthcare.

Brent Reinke: It is. Correct. You kind of think about this– “Okay. Well, that concept sound really interesting to me. Get a group of really smart people to surround myself with to make me starter. But how to indentify those people?” And it really can be, to some degree, industry-specific. I guess my answer to that would be you oftentimes through the network–again, I’m a huge proponent of networking. So if you’re thinking about doing this, you find industry organizations that might be relevant to you–start attending a meeting. Start meeting people. But the other source oftentimes is frankly, professionals. Whether it’d be accountants, lawyers, maybe investment bankers, or others that have familiarity with the industry or may know people in the industry.

So a part of this, again, comes back to reaching out to people that you know. Explain to them what you’re doing, what industry you’re in, and seeing if they may be able to identify quality people that could assist because I’m big proponent that it’s invariably better to get a referral than to try to find somebody kind of [inaudible], so to speak. Because then you have some validity behind them because hopefully they’ve come to you through a trusted source. And there’s that vetting that’s gone on already so you can hopefully identify somebody that’s going to be really helpful to you. And I could have [inaudible] the path of dealing with somebody that frankly ends up not being particularly helpful. But–

Kristin Carpenter-Ogden: But you do have to be so careful who you ask for help from.

Brent Reinke: Yes. Very. I think it’s really critically important as you talk about this idea of board advisors is to also set proper expectations on both sides.

Kristin Carpenter-Ogden: This should be good because how many times have you heard just the angst and people drinking pitches of beer after a board meeting? People at board meetings have just this intonation of them being a horrific thing, but I think that’s like a corporate boardroom with a highly paid executive board and they bounce people in. It’s like a reality TV show. We’re not talking about that here. We’re talking about people who care, want entrepreneurs to succeed, and want to surround you because they believe in what you’re doing to get you to the next level.

Brent Reinke: Right. It comes down to finding people that hopefully have a high-degree of passion about what it is that you’re doing because they’ve done it. They’ve experienced it, they get almost equally excited as you are because they’re helping you to try to succeed and take your vision, your dream to the next level. But as you try to identify those people and try to come to some understanding of what that relationship is going to be, I do think it’s important that some expectations [inaudible] of– “Okay, Mr./Ms. Advisor, I’m interested in giving you some stock options, but in return what I was expecting was you to be available once a month for an informal advisory board meeting or quarterly or can you be available X number of hours a month as long as it’s not between 12 at night and five in the morning? I can try to call you and have a discussion or we can grab lunch.” I think if you start out a relationship that way, it ends up being a more positive relationship going forward.

Kristin Carpenter-Ogden: For sure. And if they have a positive experience as you’re growing and expanding, they may have people in their network who would be perfect to plug in, too.

Brent Reinke: Well, that’s absolutely–and I was going to touch upon that. That’s a great segue. It’s not just their knowledge and their experience, but it’s clearly–you’re tapping into their network. And it can be critically important for example if you’re going down that funding route and need some introduction as to potential sources of financing whether it’d be Angel Networks or Venture Capitalists or other sources of funding that can help grow your company. The other valued proposition that these advisory board people can bring to you is you’ve probably heard the [inaudible] Real Estate, it’s location, location, location. Well, the [inaudible], I can tell you from the Institutional Investment Community, and really, any sophisticated investor is management, management, management. Because I’m sure you’ve experienced it, too, Kristin, is I can’t tell you the number of companies I’ve seen that have really fascinating product ideas or services or even have launched them, but failed because of their ability to execute.

Kristin Carpenter-Ogden: I [inaudible] what you’re talking about at all. I mean, Miss Bright Shiny Object right here.

Brent Reinke: Yes, I know. [inaudible]. A lot of entrepreneurs have that because they’re the creative people. I know I find myself wondering every now and then, but that’s what makes you and makes us who we are as entrepreneurs. But what the advisory board can do is I have–I tell people that that’s how the investment community [inaudible] looks at a company. And they come back and look at me and go, “Brent, okay I get it, but I’ve never done this before. So how , am I supposed to demonstrate to these people that they can trust me, so to speak, with their money if they invest in a company beyond what I’ve shown them on a business plan power point and [inaudible] described to them?” And if the executive doesn’t have experience doing this before, the way you’re trying to bridge that gap between them and an investor and the lack of experience is you can leverage who you’ve surrounded yourself with. That’s often what I do with companies is I say, “Yeah, this team’s [inaudible]. They’ve got great passion. I think they have a great idea. I think if they bring their [inaudible] together, they can execute well. What they’re trying to do is surround themselves with smart people.” If you can show the potential investor that they’ve done that, that they’ve surrounded themselves with smart people, meaning advisors, then you can leverage that knowledge and the skill that they have and the experience they have and basically bring it in to the company to give the investor greater comfort that their money is going to be spent well, and that this team is going to execute well because they’ve taken that step to breach that gap between their inexperience and the experience of the advisors, and bring that into the fold.

Kristin Carpenter-Ogden: You know what’s interesting is I had to go through the whole pitch deck creation and delivery process this summer for the Camber Outdoors pitch fest at the show. I had a mentor, he was from basically the Venture Capital side, and he was fantastic, Ben Rifkin. But you’re basically describing what they coached us to do. At least two of the slides in our deck had to be about the team. Those of us who didn’t have a team–like I have a team of some virtual assistants who help me with my podcast. Then it’s Han Solo over here, right. Ben was like, “Well, who have your advisor’s been?” And it wasn’t formalized or anything, but essentially it was almost like putting the GORE-TEX label on a brand new outerwear company’s jacket. It brought a proof of concept. And that enables the investors to kind of get over the obstacle of like, “Am I going to be out in a rainstorm? Is this thing going to work? Oh yeah, it’s GORE-TEX, so.” It’s exactly the same. They’re like an ingredient brand to our companies.

Brent Reinke: Right, right. A lot of advisors–I’m this way–because I–kind of selective about what I get involved with. It’s both a time issue, but it’s also a reputation issue. When I get asked to be involved in a company, say as an advisor or even a Board of Director, I vet the company. It’s kind of like what an investor does when they’re looking to invest because I only have a limited amount of companies I want to commit to to do this type of thing with because if I’m going to do it, I want to make sure I have the time and effort and the attention span I need to really be helpful. So when you have situations where you bring on really credible advisors, that could be the person that the investors then go to after say, the CEO or one of the cofounders does the pitch deck, and calls them up and go, “Okay. Be really honest with me, what do you think about this company?”

Kristin Carpenter-Ogden: Dig details.

Brent Reinke: Yeah, it is. It’s exactly what it is. If that individual who has either industry experience or is not in the industry or just brings a lot of credibility to the situation can say, “This is my perspective on what they’ve got here.” That can get investors over the hump and saying, “Okay. We’re really interested.”

Kristin Carpenter-Ogden: It’s such great advice. I guess what I’d love for you to wrap up today is let’s say we have [inaudible] in like basement creating product entrepreneurs. So these are the type of folks that are super creative– “Okay, once I put this product to market, I will do the marketing.” And then when they’re done with that, they go back and go to their comfort zone and they create more stuff. You know what I mean?

Brent Reinke: Yes.

Kristin Carpenter-Ogden: If you’re coaching this person, what are the first steps here she should take? Maybe even before the first part of the year. It is such a great time of the year to do this in the 4th Quarter? To actually put together a small advisory board around the business goals and the growth goals for 2017?

Brent Reinke: Right. Well, I think part of it is first of all, as you’ve already pointed out, it’s figuring out what industry you’re in. Then figuring out–of the people I currently know, maybe reaching out to them going, “Hey, this is what I’m thinking about doing. Do you have suggestions on who might be able to assist in some of these areas to provide the experience and the knowledge that perhaps the company doesn’t currently have?” It all comes back to that network. Some people, it takes longer for them to understand how important the network is. But if you don’t have one yourself, you try to find people that do, and people you trust, and allow them to tap into their networks to then bring you potential suggestions and individuals.

But I think it also is really important to allow an advisory group or even just an individual if they’re really good at it is to force you through that thinking process even if you’re [inaudible] are on it. Just trying to think through your business plan for next year, your sales and marketing plan. Have you really thought about the things that could happen and how you’re going to get from Point A to Point C? Again, [inaudible] separate discussion of business plans when you’re looking to start a company, and the vetting process that you go through, and how I think it’s incredibly [inaudible] to force yourself through that process to really make sure before you take that leap of faith and start the company and head down the road that there’s a lengthy road that you’re going to be heading down and not the end of a cliff a half mile out.

Kristin Carpenter-Ogden: God. If there was only a way we could see that cliff coming so–

Brent Reinke: I know.

Kristin Carpenter-Ogden: If the advisory board can do that, that would be great. And don’t you wish there was a–here’s an idea for us because we don’t have enough going on already, Brent, but outdooradvisorygroup.com.

Brent Reinke: Yes. Yeah. You put the right interesting group together, I think. There’s so much value that a group like that could bring to a lot of people. I think it would be [inaudible] interesting [inaudible].

Kristin Carpenter-Ogden: And I’m going to put a challenge out there to my dear, dear audience. Here we are. It’s the third week in October. Between now and Christmas–and you’ll probably have plenty of holiday opportunities–make networking a priority every week between now and the end of the year. Meet somebody who can get you closer to your goals next year, who might end up being on an advisory board for your company. But make it a practice to network between now and the end of the year, and keep notes on who you meet, and as Brent said, do the follow up and become a good contact for them. You always want to ask, “How can I serve you?” It’s not always about what you need first. Same with social media, only it’s with really experienced, awesome business people. You have to serve them first.

Brent Reinke: Yeah. No, very important. I’ve always been a firm believer that–and through my career, it’s typically held that what goes around comes around. And if you can help people and companies and individuals that it seems to work out, then eventually you reap some benefit of that whether it’s monetary or otherwise. Something good typically comes back.

Kristin Carpenter-Ogden: I totally agree. Well, Brent, it’s been so great sharing you with my awesome audience at the Intrepid Entrepreneur in this podcast. I’d love to have you back to talk about preparing our businesses to [inaudible] advisory board on to or preparing it for growth. So I hope to have you back on within the next few months to do that. And I appreciate all of the wisdom that you shared on the podcast today, your partnership within Vapur. I’m just getting to know you and now your family–because I’ve met them at the show recently. It’s been super fun. I just really value you in my life so much. So thanks for joining.

Brent Reinke: Yeah. Well, likewise, Kristin. And thank you for the opportunity to come on.

Kristin Carpenter-Ogden: All right.

[INTERVIEW END]

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