The Sham(e) of Advisory Boards

I’m rapidly coming to the conclusion that I hate advisory boards.    The more I see of them the more I am convinced that most at best serve no purpose at all and many are actually counterproductive to the entrepreneur, especially the early-stage entrepreneur.  I know, I know – all the experts say you should have one.  I agree with that, but only if you have a good one and it’s used correctly.  Let’s say we adopt the view that everyone should have a house.  That’s really only productive if

a) the house has an intact roof and is safe to live in,

b) you have the wherewithal to operate and maintain it, and

c) you understand that the point of a house is to live inside of it and not just camp out in the front yard.

This essay does not apply to corporate boards that are required by shareholder agreements and such.  They aren’t voluntary.  If you took someone’s capital, I hope for your sake that some brains came along with the bucks.

Those of you who know me well know that there are two things in business that I detest to the point of violent illness.  One is the phrase, “take it to the next level”.  I actually pity someone who uses that phrase so much that I have actually been tempted to offer the person who said the phrase $5.  I just assume that they couldn’t possibly have the mental capacity produce enough economic value to actually feed themselves, and I feel a moral obligation to help them at least get a value meal at Burger King or something.

The other thing I detest going through the motions.  In sports, they call it false hustle – like the guy who dives for a loose ball in a basketball game about 5 seconds after it’s clearly out of bounds.  Or Mike Vanderjagt actually saying on the radio that he is so frustrated by losses that he bangs his helmet. (He went from being a Pro Bowl kicker to out of the league in two seasons).  In fact, I’ve come to the conclusion that the worst word in business is “try”.  HA&W’s own Richard Kopelman showed me the light on this when he told me he hates how people say they will “try” to do something.  When someone tells me they’ll try to do something, no meaningful certainty has been added to my life.  Trying is going through the motions.  If an employee says to you, “I’ll try to write that code for you”, can you just check the box and move on?  You’d better not.  That employee deliberately left himself an escape route and chances are, he’s going to use it.  When the employee on the other hand says, “I can’t get the code written by Monday but can by Thursday”, that’s something you can work with.  As a manager, you can

a) determine why the code can’t be written by Monday and try to help the employee meet that goal by re-prioritizing tasks,

b) motivate the employee if you feel that the code should be written by Monday regardless, or

c) accept the fact the code will be written by Thursday if that suits your needs.

“Trying” is a passive-aggressive word for saying “no”.  “Trying” is an invitation to frustration and failure.

Most advisory boards are an exercise in collective “trying”.  You put a board together because you feel like you’re supposed to and then quickly discover that you’re really no better off, except now you have to risk upsetting the people you asked to be on the board in the first place by firing them (or you can do the passive-aggressive thing and just stop meeting and turn your board into a zombie board).

Stepping off the soap box for awhile, here’s how you need to think of a board.  The board’s goal should be to accomplish something, and that something is not, “because Harvard Business Review says I need a board so I want to check that box.”  Nor is it because some angel investor said in a panel discussion that he likes companies with boards.  For an entrepreneur, your board needs to do the following things.

  • Help you sell your product
  • Help you raise money for your company
  • Help you identify critical talent (including service providers, when needed) for your company

My problem is that I see very few boards that do any of these things.  Most advisory boards I see are primarily comprised of very nice people, many of whom are smart, and even have some real track record of accomplishment, but they aren’t helping the entrepreneur do any of these things.  Most advisory boards, at best, are glorified cheer-leading and kibitzing groups.  Consequently, most advisory boards are a waste of everyone’s time.  Critical time the entrepreneur needs to not waste on “trying” to do stuff.  As an entrepreneur, you don’t need a board to get free advice from people with no particular vested interest in your company.  There are many resources in Atlanta and probably in every major city for that sort of thing, including StartupLounge’s Office Hours.

So, as an entrepreneur, if you have a board, it’s time to take stock.

  • Has your board helped you make a sale or even put you in front of a legitimate customer?
  • Has your board introduced you to a legitimate source of financing?
  • Has your board connected you with critical talent at a price that you can afford?

If you have board members that haven’t done one of these things for you in the last six months, it’s time to thank them for their interest and support and open up their seat or seats to someone who can.

If your board hasn’t even met in the last 6 months, you already know intuitively what you’re reading right now.  You’re not bothering to convene the advisory board because it’s not helping you.  Dissolve that “board” and put one together that will help you.

Recall your last board meeting, if you ever bothered to have one.  Did you implement any of the advice you were given?  Has your company advanced its development in a meaningful measurable way?

Anticipating the arguments against this seemingly Machiavellian take on boards, let me go through them.

Q: Aren’t boards useful as a “sounding board” for entrepreneurs who are alone in their decision-making roles?

A: Possibly, but almost certainly less effective than peer groups and mentors

Q: Aren’t boards good to help entrepreneurs think through deep strategic issues?

A: Startups aren’t about strategy – they are about tactics and execution.

Q: Doesn’t having a board in place raise the credibility of the entrepreneur as a mature business person?

A: This is highly overrated.  If the market thinks the entrepreneur is shaky, they won’t think, “but it’s OK, there’s a group of volunteer non-equity holders that meets 4x a year and will keep the entrepreneur on the straight and narrow.”

Q: Doesn’t a board add perceived depth to a management team?

A: No, because they aren’t managers.  And board members nobody has heard of don’t add credibility to your company.

Q: Isn’t a mediocre board better than nothing?

A: No, no, NO!  Mediocre boards are a waste of time.  As an entrepreneur, you don’t have the time or resources to pursue value-neutral activities.  Each one has to add value.  While you’re being cheer-led like some hapless non-singer about to make an idiot of herself on American Idol on national television, you might be being deluded that you’re doing good things when you’re not.  And you’re being distracted from truly productive exercises, like selling, or writing code, or raising capital.  And mediocre boards can hurt you.  Board members talk and they’ll tell people that you run a do-nothing board (even when the members are largely to blame).

I hope I’ve laid out a case that, to put it mildly, advisory boards are overrated.  If you have a board that’s the exception, I’ll be your company is going gangbusters, and I’d love you to share your positive experiences by way of commenting on this post.

Now, I’ll briefly turn to the would-be and actual board members.  We need to help entrepreneurs by making sure we can help them in tangible ways before accepting a board position.  If you’re on a board or are considering accepting an advisory board position,

  • Are you able and willing to help the entrepreneur make a sale?
  • Are you able and willing to introduce the entrepreneur to a legitimate source of financing?
  • Are you able and willing to connect the entrepreneur with critical (and cheap) talent?

If we can’t say an aggressive “yes” to those things, we need to give up our seats or decline the invitation in the first place.  Let’s face it, flattery of being invited wears off pretty quickly.  If the company is unsuccessful, we don’t want to be associated with it.  The resume-building value is almost zero unless the company hits a home run.  And board meetings that are just cheer-leading and kibitzing sessions are tedious.  Do the honorable thing, help the entrepreneur see reality, and get out.  If you want to help, you can always be a mentor or an amicus initio (friend of the venture) that the entrepreneur can turn to for ad hoc advice and support.

Before I sign off, I want to say a word on advisory board compensation.  I think there are many potential members with real value to add who will serve for free, so you probably won’t need to compensate the board.  However, if there’s someone out there that you just know is a difference-maker, and you need to throw some options or even some bucks their way to get them on your board, then that’s an exception to the rule.  But be a really hard grader.  Most advisory board member candidates you’ll encounter will not bring enough value to justify compensation (myself included).

It’s not so much advisory boards that I’m opposed to, it’s just that most are a sham.  You don’t have time for shams.  Board members should be ashamed to serve on a useless board.  If you’re going to put together an advisory board, don’t settle just because you’re asking for volunteers.  Demand value.  Demand great members.  Don’t just be grateful for someone’s time.  Be grateful for someone’s helpDon’t just try.

And if you miss the cheer-leading, here’s a fix for you.  I give you, the New England Patriettes.

2 Comments

  1. Mike,

    Excellent commentary! Too many people have boards so they can get “stroked”. They should spend their money and time on a shrink or a massage if that’s the case. Boards should provide the critical insights, criticisms and analysis that is necessary to set benchmarks and critique the actions/plans of the business. You’re so right! Anything less is a waste of time, and actually does damage to the business.

  2. Joe Joy says:

    But there can be an accountability dimension that may be important for some entrepreneurs. It does not have to be done via an advisory board, maybe a 2-3 person coffee roundtable would do.
    A small and growing business owner has a million things to do but among them there are some key things that must progress that are more the important rather than the urgent. An accountability coffee group can meet and ask questions/check progress/challenge behavior (as in, “Mike, last month you said your number one priority was to hire a West Coast salesperson who knew the xxx industry, but you have not even interviewed anyone yet, what is getting in the way?”.) Sometimes making our commitments to plans to others and them having sufficient recall can help us stay on track and not get too distracted to forget the things that are falling off the table.
    But for this group to be helpful, they:
    – need to meet more often than a board does. The issues are indeed tactical and execution, therefor they tend to live and die in shorter time spans.
    – need to be people who care about the business initiative suceeding.
    – have a good enough relationship with the entrepreneur that they can put their arms around him or her and say “B.S.”

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