What should founders consider in developing a Board Of Directors?

Take-aways from a talk in the Trust Center on 6/16/16

Prepare for board meetings:

• Come prepared!
• Don’t sugarcoat problems  - “the straight shooters are always the ones that persevere”: Present problems as they are - what’s right, what’s wrong, and what needs to be fixed. 
• Don’t surprise your BOD - contact individuals in advance to inform of any significant events - both good and bad. Provide the presentations ahead of time.

• Be reasonable - don’t overwhelm the board. Present information to maximize use of your time.

• Focus on the market - “No customer = No company”
• “Deliver on the promise” - when identifying a viable market, make sure you design a product that delivers
• Have a viable business model - “You need to make money”.
• Be flexible - the market is dynamic and sometimes you’ll need to pivot your direction
• Successful teams are: motivated, cohesive, have common sense

Team dynamics in relation to BOD:

• Your BOD is your boss!
• BOD and the leadership team must be in synced. This is a team effort.

“The nature of your board changes at different stages”

 The different stages:

1.  Early stages (1st round of financing): “Your board is your VCs - choose them wisely”

• Choose VCs on an individual basis. Your VCs are your first board of directors and will have a strong impact on strategic decisions for your company.
• Try to get at least two of your team members in the board (CEO + CTO/CMO)
• Recommended board size: up to 5 members (odd number is critical for decision making)

    2.  Growing phase (2nd-3rd rounds of financing): Adding independent board members - ”Don’t waste board seats”

• Choose independent board members based on the expertise you need - recommended: sales and marketing skills, high influence / connections
• How to recruit independent board members

• Recruiting companies that specialize in matching board members with companies
• Develop connections with advisors that can be prospected independent board members
• Recommended board size: 7 members (odd number is critical for decision making)

    3.  Before IPO - Setting committees

• Audit committee: responsible for the direction and financial health of the company.
• Choose an audit chair who’s a financial expert
• Additional committees (sometimes combined): Nomination, Governance, Compensation