Recruitment for your board of directors is a hugely important step in the startup journey—one that really shouldn’t be taken lightly.
Sure, your startup will likely already have an advisory board by the time you start hiring for your board of directors, but an advisory board doesn’t have liability. A board of directors, on the other hand, has fiduciary responsibility to the shareholders, who’re entrusting the running of your company to the board’s supervision. Board members are paid, too. They approve your budgets, participate in planning, and are subject to lawsuits. Most importantly, however, they’re charged with holding you accountable, a task which implicitly entails helping you be the most effective version of yourself possible.
All of which is to say: it pays to recruit and select your board of directors strategically.
Now, generally, founders hire for their board of directors around the time when they’re ready to face their market. In my experience––having founded and sold several companies, each of which employed an effective board––it’s smart to start with people you know well. You want people whose work ethic and style you’re familiar with, and who have a reputation you can verify. Hiring cold, on the other hand, is challenging and risky. You’re better off bringing on people you feel confident you can trust.
But from there, what traits, beliefs, and strengths should you look for in your board of directors? For new founders, especially, this can feel like something of a mystery. Here are the types of folks I’d advise searching for.
1) People who can give great advice.
As CEO, you should think of your board not only as an asset for your company, but an asset for you. Board members should be there to advise and mentor you. They should lend an essential second, third, and fourth perspective in your decision-making processes.
As such, you’ll want to find board members who’re willing, able, and excited to act in this capacity for you. Folks who want to work with you, and who themselves have the kind of wisdom, experience, and knowledge required of advisory support and education.
2) People with credibility to your outside constituencies.
People with proven credibility are able to lend you a sense of legitimacy, both in the eyes of potential customers as well as in the eyes of investors, the press, and your peers.
Investors, in particular, often look to your board to get a sense of whether your company is bankable. For some in venture capital, this is the first thing they look at.
Your board of directors is a means of proving you’re a person worth investing in.
3) People who are going to call you on your bullshit.
Simply put, you need people on your board who’ll give you honest feedback. You need people who, in other words, will tell you when you’re wrong. They must not be YES people who prefer not confronting a CEO.
Your board is responsible for holding you accountable. They have a fiduciary responsibility to do this, and have been entrusted to this end by you and the company’s shareholders. More importantly, though, is that board members who are willing to be honest with you are an asset. When I started my most recent venture, Funeralocity, I specifically sought out board members who wouldn’t have a problem looking me in the face and telling me, “You’re wrong.”
Humans are fallible. CEOs make bad decisions. And more broadly, brilliance is hardly ever borne without friction. The faster we correct course, the more likely it is that we will succeed. Great ideas are like diamonds—extracting them requires hard work.
You need people who are willing to do that hard, dirty work with you. You want a board with a backbone.
4) People who bring different things to the table.
You don’t want four financial experts, for example. Rather, you should seek to assemble an eclectic mix of board members, folks who comprise a dynamic, well-balanced team whose collective experience spans an array of fields.
You need diversity in terms of both talent and perspective. The last board I put together, I tapped the chairman of the board of Whole Foods, the head of cancer research at Baylor University, and the COO of a hospital. Each person brought to the table something important and unique. Together, they helped make up for my blind spots and made the company stronger as a whole. Operationally and strategically this was critical.
5) People who together have good chemistry.
Finally, even if you have the most dynamic and talented board imaginable––with people of admirable reputations from a variety of different industries––it won’t prove useful or impactful if the board can’t work together to get things done.
To this end, you have to ensure that the board you’re putting together has some chemistry—that the people who compose it balance each other out, and that the collective of styles and personalities complement each other.
Simply put, you want people who like each other. And you don’t want one board member monopolizing discussions.
If you can’t find such people, you risk seriously compromising the board’s ability to be productive––and, more importantly, to follow through on its responsibilities of holding you accountable and moving the company forward.
This is not an exhaustive list, of course.
Rather, these are simply the imperatives I’ve identified through my experience as important to look out for. But there are a variety of additional factors you’ll need to keep in mind. You shouldn’t bring more than five people onto your board, for example, as an odd number allows for a majority vote, and keeps things manageable for you. You should also make sure your early-stage board is game to give up seats to future investors, and you should expect to pay board members differently according to the rules of supply and demand.
Additionally, if you’ve raised money, you should expect that some of your investors will request a board seat. In fact, this is often something that’s written into their investment, so make sure you’re aware of that as you go about the fundraising process.
All told, though, the most important thing is that you give the composition of your board the importance it deserves. It’s a critical step in your company-building journey. The people you choose could serve to elevate your company to new heights, such that you achieve your goals and deliver a game-changing product or service. If picked flippantly, however, your board could serve to hinder your progress.
Don’t let the latter happen to you. Take this seriously, and go about building your board strategically. You’ll be happy you did.