I have had some interesting conversations over the last few weeks that made me realize many people view the role of private company boards far differently than I do. This may be because many of the board members in these companies don’t have significant board experience. Often they have brought money to the table but don’t have the right experience to provide value to the entrepreneur. Or in some cases, people take board seats because they still want to run a company but aren’t willing to commit the time and reputation risk of being the CEO. Both of these cases are terrible for the entrepreneur and can lead to the company’s failure.
Because of this, entrepreneurs must be very selective about who they allow on the board. You should put at least as much research into selecting a board member as you do when hiring an executive team member. The first step is to check with every CEO you can of companies where the individual has been a board member. Hopefully, you can find out how the board member behaved not only when things were going poorly, but also when things went well.
If the individual you are considering has never been on a board, then it will be necessary to spend some time discussing his or her view of the board role. It is easy for an investor who puts up a significant amount of money to feel like he or she should have a right to determine specifically how that money is spent and how the company is run. This never turns out well.
Any good CEO understands that running a company – even when focused on it 24 hours a day – is a very difficult task. When board members believe they can spend a few hours each week thinking about a company and then dictate what should be done, they are deluding themselves. I have more than 20 years of successful CEO experience, and I would never feel comfortable making key company decisions based upon my limited view of the company as a board member.
So how should a board member approach a board position at an early stage company? In my next post, I’ll share three main roles for the board.