Advisory boards can have tremendous power. But many companies don’t know how to use them.
The most common error is viewing your advisory board as a status symbol. Optimizing for optics causes companies to have more advisors than they really need, and to not think carefully about what expertise their advisors provide. Looking impressive may win you attention, but without value to back it up, your company’s long-term health will suffer.
The incorrect mindset is quantity over quality—impressiveness over utility.
The correct mindset, especially for startups, is hyper-focused, hyper-efficient value.
The best advisory boards render high-value insights and introductions. I’ve got a number of advisors, each with a very specific function—sales, mass-market consumer hard goods operations, corporate finance, branding, marketing, ESG. Each was selected with a very specific purpose in mind, and each provides tangible value within their realm.
Here’s how companies (especially startups) can make the most of their advisory boards:
1. Rather than assembling a full advisory board, start by engaging specific advisors. Startups often default to assembling full advisory boards before they really need them. They follow the conventional path without assessing whether it really suits them.
I have advisors, but I’ve never assembled a council or called an all-hands meeting. We’re just not big enough for those steps to be useful. Instead, I reach out to specific advisors when I have questions/goals in their areas of expertise. It’s much more time-efficient for me and for them than getting everyone together to talk about issues that only pertain to one or two of them.
Additionally, don’t get more advisors than you need. There’s practically no situation where a Series A startup needs a 20-person advisory board. Having a small, well-calibrated list of advisors shows that a founder has focus. In my experience as an angel investor, a focused founder is infinitely more attractive than a scattered founder.
2. Give advisors real incentives (probably stock options grants). The ideal scenario is having specific advisors with specific areas of expertise that offer tangible value to your business. When you find them, you want to reflect that tangible value with tangible incentives.
I’ve found that stock options grants are the best all-around incentive. Options invest your advisors in the long-term performance of the business and prompt them to find ways to fuel it.
3. Think in terms of 6-month to 2-year problems. You should absolutely have a five-plus-year vision for your company. But that doesn’t mean you should engage people now who can address issues you’ll be facing in five years.
Almost all startups pivot several times before catching that exponential product-market fit. As such, your maximum realistic horizon will be two years, with much more pressing concerns arising in the six-month range. Engage advisors who can help with real issues at this stage of the journey, not imaginary issues beyond the horizon.
When serving on advisory boards, some principles to keep in mind:
1. Gauge your stage in life. I’ve seen certain entrepreneurs try to serve on as many boards as they can. But I know from experience that running your own company doesn’t give you a lot of free time to dive into another company’s strategy. So, more than helping those companies, what these entrepreneurs are really doing is burnishing their own reputations.
For entrepreneurs, serving on too many advisory boards pulls you away from your own company and can come across as a resumé play. I’ve seen the many-boards approach work, but only for people at later stages of their careers with both time and money in abundance.
2. Less is more; focus on quality. Regardless of whether you have the bandwidth to serve on one board or ten boards, you should only take opportunities where a) You’re interested in the work, and b) You can deliver real value. Taking something just because it’s available may give you a short-term burst of excitement. But the truth of how you feel about the company and about your role will come out eventually.
There are very few inherent guidelines when it comes to advisory boards. As a result, they’re often misused by people who don’t have their own meaningful set of guidelines. Quality always trumps quantity; value always trumps appearance; focus always trumps excess.