If assembled and managed correctly, a good board can deliver tremendous value. The role of a board evolves as a company matures so be cognizant you are getting the right help at each stage. See below an illustrative table from Brad Feld’s Startup Boards.
We would add governance to all three stages. The word “governance” makes some people anxious, but it’s a critical function of the board, even in the early stages. Ultimately, board members are the guardians of the company on behalf of shareholders. There should be a healthy distinction between management and non-management directors. For example, it’s a good practice to hold non-management ‘executive’ board sessions after each board meeting.
Companies can go awry for a host of reasons. Strong board governance can at least prevent the avoidable mistakes by shining light on management’s blind spots before they become real issues. Given a high level of trust and transparency, this is healthy and should be jointly celebrated. It will accelerate the development of company leadership and ultimately drive a better outcome for the company.
Board size and composition
Many companies get caught up in the number of board members: three, five, or god forbid seven. When Vocap Managing Director Vinny Olmsted was CEO of Bridgevine his board ranged from five to eight members, and his chief focus was whether the board members were helpful. As a quick example, when Ray Oglethorpe (fmr. President of AOL) recommended that Vinny put Ted Leonsis on the board, Vinny’s first response was “hell yes, this guy is a great digital visionary”. There was a quick question regarding the fact that there were already seven board members, but Vinny held strong and Ted joined the board and proved incredibly helpful.
Vinny’s other advice on board construct is to find a wide array of backgrounds. Vinny’s board at Bridgevine had complementary skillsets: industry expertise (Ted Leonsis, Michael Leitner), venture and capital raising experience (Greg Stanger, Tom Wasserman), deep operating/management chops (Ray Oglethorpe), balance sheet and accounting mastery (Paul Becker), and extraordinary exit/M&A knowhow (Pat Welsh).
For more advice on boards, see Vocap’s series on board best practices. A few key concepts covered in the series: