The Board of Advisors

Marty Cagan argues that after filtering out bad ideas, the next key tool for making hard investment choices is a Board of Advisors. Unlike a board of directors, which is shaped by investor duties and CEO oversight, an advisory board is made of experienced outsiders who have no threat to executives and are motivated purely to help the company succeed. Cagan describes how these boards are composed to complement management gaps, how they typically meet quarterly, and how advisors are compensated with equity. He notes the value for startups seeking credibility and for large companies fighting inward-looking, defensive tendencies. The piece encourages leaders without such a board to try convening a few trusted experts to discuss real problems openly.

01Key takeaways

• Build an advisory board after you have fixed your biggest planning filter, to supply outside judgment on hard investment choices.
• Recruit advisors to fill gaps in your executive team, such as product, marketing, technology, domain, or finance expertise.
• Use advisory meetings to tackle the hardest problems openly, not to rehearse polished updates as in board meetings.
• Compensate advisors mainly with modest equity so they care about long-term success without controlling decisions.
• Let advisors coach and work directly with team members, since they do not run the company day to day.
• To test the idea, invite a few respected experts to discuss your real strategic challenges and assess the results.

02Key sections

Purpose of an advisory board

An advisory board complements senior management with industry experts who care about the company's future but are too costly or unavailable to hire full-time.

Composition and balance

Boards typically include deep product, marketing, technical, and domain expertise, filling whatever gaps exist in the executive team, such as finance.

How it differs from the board of directors

Directors mainly represent shareholders and hire or fire the CEO, which leads to polished presentations, whereas advisors can openly debate the hardest problems without any implicit threat.

Logistics and ongoing involvement

Advisors usually meet for about a day each quarter and stay in regular contact with company staff, receiving equity but less than directors since they contribute time rather than money.

Benefits for startups and large companies

Startups gain capabilities and investor appeal, while large companies get outside perspective that counters insularity and defensiveness.

03From the post

“A partnership dedicated to teaching best practices to product teams and product leaders”

Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.