How to Build a Great Board
WRITTEN BY: UPSIDE PARTNERSHIP
Having an effective board is crucial for successful company building. We’ve compiled the best advice from various investors, drawing on their experience with both good and bad boards.
Elad Gil’s overview on what boards do is a helpful big-picture reminder for founders. Ultimately, the board of an early stage company is responsible for the following things.
What Does a Board Do?
Select the CEO of the company.
Block or push for major events in the company’s life.
Provide great strategic advice or become a pain in the butt, meddling overhead.
Help with recruiting senior executives or key hires.
Teach you about the nuts and bolts of the business or processes as you scale.
We also recommend reading Steve Blank’s post, Don’t Give Away Your Board Seats, which dives into the function of a board, an advisory board, and outside members, as well as timing for the progression of a board. He includes the following summary as a general takeaway:
Your board of directors is your boss.
Your advisory board is your friend.
Not all investors get board seats, it’s your choice.
Date advisors, marry board members.
Now, let’s switch into board-building mode. Fred Wilson of Union Square Ventures has identified twelve components that go into the making of a healthy board. These are not hard and fast rules, and apply to companies in different ways depending on the stage of the business. We’ve included his list below, but see his original post for full context and insight.
For a Healthy Board
Have at least one founder on the board.
Keep the number of VCs on the board to two or three.
Local board members are better.
Have at least one and ideally two industry insiders on the board who are independent of the founders and the VCs.
Do the meetings first thing in the morning when people are fresh.
Bring the senior management to board meetings.
Try to do a dinner the night before at least four times a year with all the directors attending.
Always send the agenda and board materials at least one day in advance of the meeting and expect / demand that the members read it before coming to the meeting.
Do not spend the meeting going through the materials slide by slide. People can read, expect that they will.
Do spend the meeting reviewing where the business is, where it needs to go, and what strategic decisions need to be made to get there.
Remember that the board works for the Company as much as the management works for the board. Expect board members to do what you need from them and manage them to make sure they do.
Keep your board to seven members or less.
Selecting Board Members
Brad Feld of Foundry Group uses the following checklist to assess if someone will make a strong board member:
They are prepared and keep commitments.
They speak their minds.
The build independent relationships.
They are resource rich.
They are strategically engaged but operationally distant.
See his full original post here for more color around this checklist. He also outlines a helpful interviewing & vetting process for board members in the same post.
When it comes to board observers, Manu Kumar of K9 Ventures has penned a warning. Read his full take on the role here.
Originally Published:
December 5, 2011, How to Choose a Board Member, Elad Gil- Elad Blog
November 13, 2016, How to Build a Good Board, Fred Wilson- AVC
February 2, 2o12, What Makes An Awesome Board Member?, Brad Feld- FeldThoughts
February 10, 2o14, Watch Out For the Board Observer Request, Manu Kumar- K9 Ventures