For entrepreneurs, the art of bringing a divided board together
There was the board member who tried to vote me out. There were the ones who insisted “this will never work.” There was even the one who joked (I think) about having me hit by a bus to get rid of me.
For growing startups, a board of advisors can be your best ally … or your worst enemy. It took me a long time to figure out that the difference between the two can, in fact, be razor thin. It’s possible to turn a hostile board into a supportive one and a rival into a champion. But it comes down to something as radical as it is obvious: trust, transparency and open communication.
But let me back up. All corporations require boards. If you’re a small company, the founders are often the only shareholders and determine board composition. When outside investment is brought in, however, things change. VCs usually get a seat as part of the terms of their investment, so they can keep an eye on things.
The truth is that putting together the right board is complex and losing control is far from unusual: a study by Harvard Business School showed that by the time ventures were four years old, just 40 per cent of founder CEOs were still around. My brushes with near-extinction made me hyper aware of the functions of a good board – and how, as a company founder, you need to play a particularly proactive role. For entrepreneurs struggling to assemble and unify their own advisory teams, here are three key considerations, which I’ve learned the hard way:
Boards are like families: you may not get to choose the members … but you have to make it work.
Technically, boards have a fiduciary responsibility to make sure management is doing whatever it takes to maximize shareholder value. In reality, some board members are so focused on their individual interests as investors that they can’t see the big picture. You may not get to choose these people as CEO, but you have to find a way to bring them together.
When I first discovered that board members were talking behind my back, it shocked me. Eventually, though, I realized that I was also at fault for not being open to deeper conversations. For me, the key to working through these conflicts ended up being radically open communication. This isn’t always easy, of course. But the CEO can set the tone. If you share your problems openly, showing vulnerability and asking for counsel directly, board members should reciprocate. Posturing and bravado gives way to a real flow of insight. And board members who refuse to get with the program often find themselves find the best online casinos on the outs.
Don’t get seduced by resumes: for board members you can choose, look past pedigree.
It’s important that prospective board members understand your business from a technical standpoint. But ultimately it pays to focus as much on their values as on their resumes. Do they believe in the type of company you’re trying to build, or are they paying you lip service? Will they support that vision down the road, or are they just in it for a short-term payout? At BuildDirect, what I’m looking for are board members who are willing to ask tough questions, but who do so without ego or ulterior motive.
It’s also important to make sure prospective board members have actually “seen the movie before”—that they have experience with the kind of rapid-growth company, or dynamic industry, that you’re dealing with. With this kind of experience comes the insight to understand what’s actually needed to take things to the next level. In my case, it was a former board member who had the perspective to know what world-class talent looked like for a company like ours—and the honesty to tell me that somebody I was considering for a job at BuildDirect just didn’t fit the bill.
Boards are living organisms: allow for change, evolution and tension.
Productive tension is key to an effective board. To that end, I try to assemble a diversity of people: both in the demographic sense (young-old; male-female; etc.) and the philosophical one. While core values should be aligned, you want a variety of experience represented so that you avoid groupthink and engage in tough conversations. An effective board shouldn’t always be a comfortable place and challenge, along with teamwork, is key to its success. At the same time, while experience is important, so too is having a fresh perspective. Many countries, such as the U.K., are now experimenting with the idea of mandatory term limits—anywhere from 8 to 12 years—to make sure new blood is part of the board mix. A stale board can fail to see obvious problems or overlook novel solutions, which is why I try to bring in new members regularly.
Building a high-functioning board is one of the more important things you can do in growing your company. But for many CEOs, it’s almost an afterthought. That’s a shame because the right board can help a fast-growing startup see some of the curves and potholes along the road ahead. It can guide your company and, at the same time, help you level up as a leader and as an entrepreneur. The wrong board, by contrast, can end your journey a lot sooner than you think: by crashing your company or by throwing you to the curb. Choose carefully.
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