There are big and important differences between Boards of Directors, Boards of Advisors and Mentors.
Board of Directors
A Board of Directors is a legal construct with a fiduciary responsibility to represent shareholders. If your board is doing its job, it is not to do what you want, it’s doing what shareholders want. Effective boards focus on maximizing shareholder value.
Great CEOs get paid so much because they have seduced the board into thinking they’re worth it and they are on the side of the board (and therefore the shareholders).
Board of Advisors
A Board of Advisors provides branding, introductions and influence. It is a signal. It enables the founders to truthfully claim, “My company is funded by (insert firm) and (insert relevant industry titan) is on my board.”
It is important to pick the right people and clarify what is in it for them. Often the board members are interested in connecting with each other and serving together affords them that opportunity.
Think about who has enough history with you or has enough to gain by being on the board of advisors.
Mentors are exactly that. Individuals that provide mentoring and guidance. Again, you have to consider, what is in it for them? Do they owe you a favor? Are they so proud to be involved in the project that serving as a mentor is an honor? A symbiotic relationship is critical.
Before you decide you need a board, determine what you need, what is in it for you and what is in it for them.For public companies, boards are legally required. For smaller, non-public companies, boards often do more harm than good.