The Downside to a Board With Star Power
When Starbucks CEO Howard Schultz announced recently that he was leaving the board of Jack Dorsey's startup Square, the departure caused a stir. Did it mean the company's deal with Starbucks was off the table? Had Schultz lost confidence in the mobile payment company? Did this mean an IPO was more or less likely?
When you recruit high-profile board members, you get some of their limelight. That is both the good--and the bad--news. That big names want to join your board is usually taken as a vote of confidence, but what does it mean when they leave?
Square has loaded itself with famous names: venture capitalists Vinod Khosla and Roelof Botha, former Goldman Sachs CFO David Viniar, former securities analyst now VC Mary Meeker and former Harvard University president and U.S. Treasury Secretary Lawrence Summers. Although anyone entering the financial-services industry needs reassuring heavyweights on their board--most financial institutions are averse to dealing with startups--this collection has high-maintenance written all over it. With big names come big egos.
What should you look for in board members? Credibility certainly. Experience with new businesses too. The corporate heavy hitter may not appreciate just how long and tortuous overnight successes can be. If you're lucky, a board member may become a mentor, helping you to grow as the business does. What you want most of all are people with experience and generosity, who don't want to run a business but do want to see yours thrive. What you don't want is a board that's hard to manage. Members are supposed to help you. That is, or should be, the deal.
One of the finest board members I was ever lucky enough to have was John Evans. He had worked for Rupert Murdoch for many years when News Corp. was becoming the behemoth it has since become. Too independent to stay an employee for long, he subsequently struck out on his own. Unquestionably one of the most brilliant people I've ever worked with, he taught me huge amounts about how to think about consumer markets, customer behavior, loyalty and the passion that customers and companies must share. He gave his time unstintingly and his feedback unvarnished. He also understood my other, not always straightforward, board members and was a big help in managing their expectations and assumptions. John wasn't easy but he more than repaid the time it took to understand him
John Evans wasn't famous. He was better than that. He demonstrated what you want from all board members: not ego or self-interest but a passionate dedication to the growing business. Anything else is just posturing.
I have a lot of regard for Dorsey. He's strikingly less pretentious than the other Twitter founders, and Square is a brilliant idea, thriftily and intelligently executed. The Starbucks deal that Schultz brought with him was perfect for the business. What worries me about Schultz's departure isn't that he's gone--he always said he'd do a year to embed the deal--but the crew that remains behind. Schultz knows firsthand about building an enduring business from scratch. The others just know how to profit from it.
Margaret Heffernan is an entrepreneur and author. She has been chief executive of InfoMation Corporation, ZineZone Corporation, and iCAST Corporation. In 2014, she published her fourth book, A Bigger Prize: How We Can Do Better Than the Competition.