They say once you’ve had frostbite, you never forget the cold. A founder who has suffered a bad board, or board member, never forgets that, either.
I took my company public at age 33 with a board of four: me, someone I trusted and two people who taught me the meaning of the word acrimony. I have been obsessed ever since with helping my founders pick the right board members and avoid my mistakes.
Here’s what that looks like for me.
Someone I trust
Trust is an absolute. The journey from startup to public is easily a decade. Things will go wrong. Things will get hard. And sometimes hard decisions will need to get made. If you don’t trust the people around the table, how can you trust their input?
Trust is particularly critical in a worst-case scenario. Not all founders survive as CEOs. If you don’t survive, but you trust and respect those who made the call, knew they believed it was required for the good of the company, you wouldn’t be happy, but you’ll eventually get over it. If not, you’ll carry that chip on your shoulder, perhaps for the rest of your life.
I could point to some still-angry outed-founders of successful companies, but I’m sure you know of some yourself. If they are still angry, do you believe they trusted, and respected, the people who pushed them out?
Someone I respect
Respect. A simple term for a complex set of realities, each of which could be its own enumerated point. For me it’s about people who are:
Smart and wise.
IQ is the hardware you’re born with; wisdom is the software your run on it.
Not just one or the other. IQ is the hardware you’re born with; wisdom is the software you run on it. Humans earn their software with time and experience.
One classic mistake founders make: You don’t need people running the same software you are. If you are packing your board with copies of yourself you may as well buy a mirror and a tape recorder. Look for people with experience you don’t have. That may be a more advanced version of the code you’re running, but it’s likely better to have people with experiences you are entirely void of, or very weak in.
Intelligence and wisdom become less useful when you become convinced all you know is known and static. Things change, and while past is often preamble, one must be willing to see a new version of present and future.
My most significant pain on my own board came from people with prior-world metaphors trying constantly to apply them to my new-world business — and insisting they were right. My greatest value came from the person who was always open to what a new world could look like, and was the most open to being wrong. Creativity can be the other side of the brain from what many engineering-centric founders bring to the table, so it’s good to have a bit of it on your board.
Willing to help.
Often promised, seldom delivered. While this is likely worse among seed investors, I have seen it at companies of all rounds. Much of it comes from how the investor defines themselves; hands-off can be another way of saying lazy and disengaged.
I respect people who roll up their sleeves when needed and do the work when it can have an impact. I recently helped one of my founders win a last-minute slot in a major European pitch competition, but he wasn’t able to attend and didn’t have anyone to send. Rather than lose the slot, I cancelled a week of meetings, flew to the conference and made the pitch for him. We won, BTW. Telling you we won is bragging; the rest is just explaining what should be par, but I have learned is birdie.
Someone who puts the entrepreneur and company first
One interesting dichotomy I have noticed in venture is the dual fiduciary responsibilities board members may have: to the company and to their firm. This is a delicate and appropriate balance, but not everyone manages it well. Everyone wins biggest when the company wins biggest, and those who are driven by that mission tend to be the most focused on making the best decisions.
This doesn’t mean the entrepreneur always wins, or can do whatever they want. Sometimes what’s best is tough love. The role is more parental than fraternal; not typically saying yes or no, but helping make the best possible decisions. Sometimes this means letting an entrepreneur, having heard input against an idea, go forward with that idea because they are committed to it, believe it’s right and may have a vision the board lacks. Sometimes it is about preventing a mistake.
Experience is valuable, opinion is questionable.
A founder I was advising once told me of a meaningful pivot he was “considering,” even though his business was going exceptionally well. To me the idea was clearly a company killer. To help the founder see the danger, I spent an hour telling stories of mistakes I had made. When that didn’t work, I told him the decision would kill the company. He thanked me for the advice and did it anyway.
I can remember few things as painful in my decade as an investor as watching my founder drive off a cliff without being able to grab the wheel. That decision did kill the company. I wasn’t on his board, but the board should have prevented that mistake.
Someone who gives good advice
This function is generally the sum of the previously covered attributes. People committed to a business, who aren’t in the business every day, often see trees within the forest the daily woodsmen do not.
I’ve had a few epiphanies with meaningful impact on a founder’s business; from seeing the importance of a new trend far enough ahead to embrace it, to having an experience I can share that helps them make, or not make, a decision. I love when another board member comes up with an idea that’s out of the blue and truly an aha moment. Many come from the patterns we all recognize over time, but some come from the ether.
Avoiding bad advice is equally important. A founder once told me of an investor he took on for “brand” reasons that he’d learned their advice wasn’t just not useful, it was harmful. “Every time I listen to their advice, I regret it,” he said.
As a seed investor, I encouraged founders to consider their investors’ advice and opinions, and then make their own decision. But they need to consider where the advice stems from. Experience is valuable, opinion is questionable. Founders may know more about the ship they are sailing than any of the crew, but there’s no reason to hit the same rocks as the last sailor.
Someone with self-confidence and credibility within their firm
I recall one founder who liked his board member personally, but considered them dangerous as an investor. They were more concerned with how they looked to other board members, and within their firm than in making the hard calls.
I had a board member on one of my own boards that cost us enormous wasted time over a period of months in going through a formal process for something we could have done internally — and the only reason I could glean was a need to make sure no one in his firm questioned him later. These are both issues of self-confidence.
If your board member is self-confident, but can’t get his firm’s support behind critical decisions, this is a problem of standing within their firm, or of my final point…
Someone with the staying power
This really isn’t the person, but the firm they are from. Do they have the financial resources to go the distance.
Any active top-tier firm should fulfill this need, but things change. I recall a company that was doing well, needed one more round to raise, but had one board member from a firm that had not been able to raise their last fund and had limited reserves. Take that reality, mix it with an inadequate dose of five, and you have a lot of drag on your funding round.
The entrepreneurial journey is long, and much of it is hard. Seven to 10 years is to be expected. That’s a long time to spend with a human being who doesn’t meet the above criteria but came from just the “right” firm. I made that mistake once, and know from experience — a firm’s name may grow or it may fade, but you’ll be working with the person for a long time, in good times and bad. So yes, choose from amongst quality firms, but from amongst them, pick the best man or woman for the journey.