What should founders consider in developing a Board Of Directors?

Take-aways from a talk in the Trust Center on 6/16/16

Prepare for board meetings:

  • Come prepared!
  • Don’t sugarcoat problems  - “the straight shooters are always the ones that persevere”: Present problems as they are - what’s right, what’s wrong, and what needs to be fixed. 
  • Don’t surprise your BOD - contact individuals in advance to inform of any significant events - both good and bad. Provide the presentations ahead of time.
  • Be reasonable - don’t overwhelm the board. Present information to maximize use of your time.
  • Focus on the market - “No customer = No company”
  • “Deliver on the promise” - when identifying a viable market, make sure you design a product that delivers
  • Have a viable business model - “You need to make money”.
  • Be flexible - the market is dynamic and sometimes you’ll need to pivot your direction
  • Successful teams are: motivated, cohesive, have common sense

Team dynamics in relation to BOD:

  • Your BOD is your boss!
  • BOD and the leadership team must be in synced. This is a team effort.

“The nature of your board changes at different stages”

 The different stages:

  1.  Early stages (1st round of financing): “Your board is your VCs - choose them wisely”
  • Choose VCs on an individual basis. Your VCs are your first board of directors and will have a strong impact on strategic decisions for your company.
  • Try to get at least two of your team members in the board (CEO + CTO/CMO)
  • Recommended board size: up to 5 members (odd number is critical for decision making)

    2.  Growing phase (2nd-3rd rounds of financing): Adding independent board members - ”Don’t waste board seats”

  • Choose independent board members based on the expertise you need - recommended: sales and marketing skills, high influence / connections
    • How to recruit independent board members
  • Recruiting companies that specialize in matching board members with companies
  • Develop connections with advisors that can be prospected independent board members
  • Recommended board size: 7 members (odd number is critical for decision making)

    3.  Before IPO - Setting committees

  • Audit committee: responsible for the direction and financial health of the company.
  • Choose an audit chair who’s a financial expert
  • Additional committees (sometimes combined): Nomination, Governance, Compensation

 

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