While having a board of advisors makes intuitive sense, its usefulness is very hit or miss. To begin with, entrepreneurs often seek brand name individuals who, by definition, have very busy schedules. While having a deep pool of experience, often it is tied to larger corporate issues. These advisors also don’t have much of a stake in the business and have trouble finding the time to participate or aid the company. This is not to say that this is always the case, but has been 90+% of our direct experience.
Successful advisory boards have members with deep domain expertise and networks. They participate and help because the CEO has built a personal relationship with them. They have been pre-screened based upon their ability to commit time and effort to the company.
I am a much bigger fan of customer advisory groups. These groups comprise of the company’s primary or potential customers. They are diverse and represent a cross section of customers (versus all of the large ones or all of the insurance industry members). They provide specific feedback around product features, ease of use, competitive advantages and disadvantages and overall satisfaction. These are useful for incremental product improvements, but are not necessarily great avenues for future product generations. Customers often think linearly while successful new products are often seminally different. That said, these groups can help take your straw out of the Coolaid cup and give you a realistic view of the world.
In both cases, the company can maximize value by setting up specific (quarterly often) periodic meetings. These meetings have clear agendas and are working sessions around specific issues or challenges. Avoid using these meeting to primarily update them and share the love. While it is important to establish context, these people are normally action oriented and will feel most engaged when targeted as specific problems.
One last and important item…you will get little credit in fundraising for a board of rock star advisors. Investors know how easy it is to get people to agree to join a board of advisors and we also know how unproductive they can be because of the demands on their time. Moreover, we are not backing advisors. We are backing management to run the business day to day and to make the hard decisions. If you have a weak management team, a list of brand name advisors will not help you. Get a rock star management team and your world will be significantly better…