Why you should get an Independent Board Member
[Editorial notes: Should startups get an independent board member? If yes, how would you define the role of an independent board member? Here is a great piece by Dev Khare of Lightspeed Venture Partners]
Your board should be an asset to your company, providing guidance and advice at critical strategic junctures, as well as functionally helping with executive recruitement, M&A and other liquidity options, and key strategic outreach into regulators, distribution partners, suppliers and customers.
In my opinion, the smaller the board, the better. When you start out with your company, perhaps there are one or two founders and an independent on the board, for a total of three. I have seen most boards at about five and some at seven to nine members. Six or above, in my opinion is too big and unwieldy to make fast and correct decisions.
In all the hubbub of starting and growing a company, it’s easy to overlook the creation of a strong and value-added board. Most times, the board consists of management (initially founders) and investors and remains that way for quite a while. But it can be even better.
I’ve seen independent board members help out a fair amount. So whether it is an empty seat set aside for an independent or no seat at all, I would recommend getting somebody onto the board soon. And constituting an ‘advisory board’ doesn’t achieve this purpose.
Some of the roles I’ve seen independent board members play are:
- helping resolve complex and difficult situations or stand-offs between the CEO and investors.
- providing a balanced perspective when management and investors may have drifted into extreme positions
- working closely with the CEO outside of board meetings to provide specific deliverables back to the board (eg compensation proposals)
- provide a sense of real perspective from a long and successful career in their industry
- serving as a mentor and guide for the CEO to enable the CEO to learn and grow in his or her role as a leader and manager
So, who should your independent board member be?
- Should have strong rapport with the CEO and not be just a ‘yes man.’
- Should ideally have a point of view/relationships/experience in an area that is currently under-represented in the senior team
- Should have a financial interest in the success of the company. Ideally would have invested their own capital into the company
- Has time to spend for board meetings and outside of board meetings with the CEO
- Is genuinely interested in seeing the CEO and by extension the company succeed
Some good posts & examples:
- From Brian Halligan of Hubspot: The Benefits of the Perfect Independent Board Member
- From Elad Gil: How to Choose a Board Member
- From Matt Blumberg of Return Path: Why I Love my Board
Have seen you seen independent board members play other constructive roles? Please let me know in the comments section.
[Image credit: Source: Tiarescott/Flickr]