At the Springboard Enterprises Health Innovation Hub Bootcamp session in Washington DC in May, the topic of board members came up--do I need a board at this stage of my company's development, what do I need in a board member, what is it like interacting with a board, and what is the ideal board member? The answers to these questions change as the company grows, which means after the decision is made to form a board, the company must continually evaluate its needs versus the qualifications and contributions of its directors. In my experience, the ideal board member for a small privately traded company has 7 traits.
1. Is self-actualized. Remember, you are picking your bosses, so make sure the people that you invite (a) will not be angling for your job when the company becomes wildly successful, and (b) do not need to make themselves look good by pushing others (you) down. An accomplished professional who is looking less to criticize than to guide and less to provide a list of things that need to be done than a rolodex of people who can help is critical in the early stages.
2. Is a believer. You need people who believe in what you are doing and buy-into the opportunity, as well as several who believe in you, personally. The last thing you need to worry about is energizing and motivating a board. So, don't pick a "name" for the sake of the name--pick someone who has already crossed a few bridges and is ready to be helpful, not someone you need to continue "selling" in order for them to engage meaningfully.
3. Has been around the block. CEO's of start-ups are typically quite young, therefore, their experience with business and political cycles and other macroeconomic events is virtually nil. Directors who have lived through bursting bubbles and irrational exuberance and other tough times are needed to help you see the company apart from the market dynamics, and to help identify ways to react to changing climates.
4. Enjoys coaching, but not too much. Directors who have experience in running companies, doing deals, raising money are critical to you--go get them! And, you need them to impart their wisdom onto you, and to challenge you, tactfully. What you don't need are people who love to hear themselves talk and try to make you into their mold.
5. Is willing to share vast contacts. Probably the single most important function of a board member in an early stage company is the ability to get you meetings with investors, potential clients, employee talent, policy makers, etc. Select board members who not only have these contacts, but also are willing to share them with you--hint, if they are believers (see item 2), your chances go way up.
6. Is unflappable. Building a company and growing a business is riddled with problems. Murphy's Law is re-proven regularly. Things go wrong even when the strategy was right and the tactics were implemented according to plan. You need directors who know this and will not make snap judgments. One of the hardest thing to do as CEO is to give a plan time to work; especially if the Board is not behind you, the reflexive urge to try something else will be too overwhelming to resist
7. Is emotionally capable of friendship. Being CEO is a very, very lonely job. You need one or two individuals to whom you can present yourself in your rawest most unfiltered form without fear of judgment or reprisal. As the company grows, the board will change. The most dramatic change will be when venture capitalists and other private equity institutions invest--they will demand board seats. If you are lucky enough to have terms sheets from competing investor syndicates, think seriously not only about the financial terms, but also about the individuals who will be joining your board.
My last bit of advice is probably the most important when it comes to picking a board--select board members for the company you are now, not for the company you hope to be in 2, 3, or 5 years. Don't underestimate today's problems! Boards can be incredibly helpful, or incredibly dysfunctional and destructive. Select wisely
Joseph V. Gulfo, MD, MBA, author of the book, Innovation Breakdown--How the FDA and Wall Street Cripple Medical Advances, and a member of the Life Sciences Council of Springboard Enterprises, and the Executive Director of the Rothman Institute of Innovation and Entrepreneurship in the Silberman College of Business at Fairleigh Dickinson University. He is a serial biopharmaceutical and medtech entrepreneur and CEO. He teaches graduate courses in Cancer Biology and Strategic Innovation Management. Dr. Gulfo is passionate about removing obstacles to breakthrough innovation, managing start-up companies, cultivating young managers, and developing products that can make huge difference in the lives of patients and individuals. @josephgulfo