If you are a startup founder or CEO, you need to be aware that seats on your board of directors are critical assets to your company. Great board members can play a significant role in the success of your business and give you access to information, insights and experience that you otherwise would not have, even more so than an advisory board.
In selecting board members, you need to make sure that they are people you trust, they know how to treat confidential information, and they don't have a conflict of interest. Ideally, you want board members who are smart, experienced, thoughtful, calm, and empathetic.
In identifying the ideal board members for your company, you need to consider the gaps in your company and your management team. What skills and abilities are critical for your business to be successful? Are you missing critical business, technical or product skills that you need as part of your core competencies? What types of people can really help you?
Consider these six things when selecting board members for your company:
1. Domain Knowledge
Domain experts have an intimate understanding our your target customers, supply chain, industry ecosystem, how business gets done, key relationships, industry specific economics, and industry specific decision-making processes.
I cannot emphasize enough the importance of having domain expertise in your vertical markets on the board. It is important when the business is doing well because you can leverage their network and experience in how to grow the company, and how to risk-assess opportunities and various strategies. However, board members with CEO experience and domain expertise can be just as important, and maybe even more valuable, during times of adversity for the company. These board members can be a sounding board apart from the company CEO, and can provide perspective based on their own experience.
2. Technical Expertise
It is good to have at least one board member that has deep technical expertise in your product area. They have an understanding of your intellectual property, a refined set of heuristics of how long product development takes, and can ask the tough questions about your product and technology.
3. CEO Experience
It is very valuable to have board members with significant CEO experience in your vertical markets, ideally spanning multiple companies, and both public and private companies. Former CEOs can provide better perspective, empathy, specific experience, and mentorship that isn't as readily available from board members that have not been CEOs. It may not be possible that some of your venture capital investor board members are former CEOs, so it makes it even more critical that you have former CEOs as outside board members.
4. World-Class Business Acumen
Your board should have adequate representation of people that understand business finance, marketing, sales, and business operations. Ideally you want board members with sufficient experience that they have "been there and done that" through "the good, the bad, and the ugly." Good board members can help you avoid stumbling blocks and pitfalls that may not even be obvious to you. It is also very valuable to have board members with experience in raising capital, including experience as a board member, investor, or CEO. Good investor board members can help to pave the road to future funding rounds.
5. Complementary Skill Set
Not every individual is going to provide everything that you need. That's why you have multiple people with complementary skill sets. No matter how good a VC is, he or she will not have the same level of technical or domain expertise as a person with deep operating experience as a CEO in your industry.
Great board members bring a set of unique and complementary experiences, perspectives and skills to the boardroom. I am a proponent of diversity on the board. This includes women, people of color, academics, various technical experts, business functional experts, and market ecosystem experts.
6. Team Player
Boards are teams. The best teams operate in a collaborative and collegial way. The board members have mutual respect for each other. You want people on your board that are team players. Ideally, you want a board that works as a team for the betterment of the company - they are all committed to the success of the company. Getting different perspectives has immense value. The importance is to maintain a strong team dynamic and collaborative spirit.
Above all you want board members that are motivated to be in the board to help the your company be as successful as it possibly can be for being on the board. They can be strong mentors and sounding boards to you as the CEO, and a passion about what you are doing and what you are trying to create.