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In theory, sure. The practical issue is that advisors often don't have as great an incentive to be highly engaged.

by taylorwc 12y ago

foobarqux 12y ago
What is the incentive of a formal board member and why can't it be replicated with an advisor?
- taylorwc 12y ago
  In the context of sama's post, the formal board member will have made a financial investment. That means that s/he has committed either his/her own money, or that of an LP; in a good board member, this creates alignment and engagement--since the board member wants the company to succeed for financial and reputational reasons.
  - foobarqux 12y ago
    Presumably the outside board members described by Sam Altman do not make a financial investment but, regardless, someone who has made an investment already has an incentive; they would be just an incentived with or without a board seat.
    - taylorwc 12y ago
      I'd encourage you to reread Sam's post. The whole premise is that the typical terms of a Series A investment no longer include a board seat by default for said investor. He does say that board members don't have to be investors, but that " it’s very important to get an advisor with a significant equity position that will play the role of a board member."
      - foobarqux 12y ago
        I did read the post, the argument is that startups aren't getting advice. I said that you don't necessarily need to give control (via board seats) to get advice. These advisors probably need some kind of incentive, likely significant equity, which makes investors a logical choice. They don't, however, need to have partial control over the company via board votes, unless the goal is something other than advice.
      - abalone 12y ago
        But advisors typically get equity. How much equity does a non-investor outside/independent board member typically get? If it's similar then I think the question still stands: how do outside board members materially differ from advisors apart from voting power?

In theory, sure. The practical issue is that advisors often don't have as great an incentive to be highly engaged.

foobarqux 12y ago

What is the incentive of a formal board member and why can't it be replicated with an advisor?

taylorwc 12y ago
In the context of sama's post, the formal board member will have made a financial investment. That means that s/he has committed either his/her own money, or that of an LP; in a good board member, this creates alignment and engagement--since the board member wants the company to succeed for financial and reputational reasons.
- foobarqux 12y ago
  Presumably the outside board members described by Sam Altman do not make a financial investment but, regardless, someone who has made an investment already has an incentive; they would be just an incentived with or without a board seat.
  - taylorwc 12y ago
    I'd encourage you to reread Sam's post. The whole premise is that the typical terms of a Series A investment no longer include a board seat by default for said investor. He does say that board members don't have to be investors, but that " it’s very important to get an advisor with a significant equity position that will play the role of a board member."
    - foobarqux 12y ago
      I did read the post, the argument is that startups aren't getting advice. I said that you don't necessarily need to give control (via board seats) to get advice. These advisors probably need some kind of incentive, likely significant equity, which makes investors a logical choice. They don't, however, need to have partial control over the company via board votes, unless the goal is something other than advice.
    - abalone 12y ago
      But advisors typically get equity. How much equity does a non-investor outside/independent board member typically get? If it's similar then I think the question still stands: how do outside board members materially differ from advisors apart from voting power?