In the early days of a start-up forming an advisory board can be a great way to formalize and regularize the feedback you receive from experts.
I think an ideal advisory board contains big names with no time (whose name, by association, offers credibility in the sales or fundraising process) and no names with plenty of time to give you specific advice.
Among the no names who actually give you advice, I think an ideal mix in the early days emphasizes customer-centric folks — people with deep knowledge of the market you’re selling to. Perhaps even potential customers themselves!
The opposite of customer-centric advisors is “random business experts.” These are folks who are smart and experienced but don’t have specific experience in the niche your company is going after. They don’t have relevant experience in the exact market you’re playing in.
On day 1 of a start-up, perhaps 80% of the advisory board should consist of customer-centric folks, and 20% “general” experts.
As a company matures so does its understanding of the mind of its customers. And newer, different issues arise, and the composition of the company’s supporters and advisors evolves accordingly.
That’s why you see many publicly traded companies’ boards of directors filled with general business experts and executives from different industries. But you never see start-up boards filled with random big-shot attorneys or CEOs of companies in unrelated industries.
Bottom Line: The most effective start-up advisory boards seem to consist of big names with no time, and no names with plenty of time, and the no names have deep, specific experience in the specific customer niche of the start-up.
What incentive should people have to be on your advisory board?
The "feel good" value. Philanthropic drive. Perhaps equity and other comp.