Editor’s note: Each week, Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at firstname.lastname@example.org.
Q: We are looking at putting together a customer advisory panel of industry leaders to build relationships, keep a pulse on top-of-mind needs for our target clients, and establish credibility. I’d love your perspective on the purpose that advisory boards serve, and how they evolve as a company grows.–-Founder of a startup in the insurance industry
I’m going to be straight with you here: This is one of these things that feels good to the CEO, but this may not be that high-impact in terms of really growing your company. And although these types of industry advisory boards are popular and beneficial for large companies, I’m not sure that it translates well for smaller companies.
Formalizing such an effort is a big decision, because advisers’ participation will likely cost you some form of compensation (small stock-option grant or cash). And setting this up–and managing meeting schedules and personalities–can take a bite out of another resource: your time. When you are small, you have to be careful about the amount of money and time you spend on anything.
Sure, having company advisers may sound important, but these experts don’t have nearly the same power or potential impact as having board members. Advisers are not with you very often. This is a part-time gig for them (at best), so their knowledge of your company and the impact they can make is limited. Additionally, people are enamored with and want advissrs with “big names” to help establish credibility, but I’ve never seen that drive sales. Furthermore, big names are busy and may not be available to you when you need them. And I’ve found that even if these folks are responsive, their advice isn’t always as deep as you’d like it to be. How could it be? They are not in the everyday fray and therefore not aware of the inner workings and nuances of your company.
While I have seen advisory boards be helpful at offering CEOs industry insight or opening some doors, I have not seen them be really game-changing for a company. Like many things in life, these boards can be much ado about nothing.
I suggest proceeding cautiously. Before formalizing a board, start with exclusive events for industry luminaries to build relationships and a brain trust while testing out in low stakes who might be the right people to include. Then, instead of building a “board,” start small and try working with one to two advisers with whom you have a one-on-one relationship. Set the role for a defined term, such as one year, and therefore you can revisit and refresh annually. The good news is that these relationships are in no way forever, so it’s easy enough to review and recalibrate.
Overall, I suggest taking a step back and pondering if this is something you really want to tackle. Is the benefit you’ll get worth what you have to spend? If you decide this is worth it, my advice to you is to start small and be judicious about your selections. I hope that it gives you the value you wish to get out of it.