The Board Of Directors: Guest Post From Matt Blumberg
In last week's guest post Scott Kurnit advised entrepreneurs to put a friend on the Board and keep co-founders off. This week we'll continue the theme of "who should be on your Board?" with a re-run of a post that Matt Blumberg wrote for Brad Feld earlier this year. The topic is "what makes an awesome Board Member." I am the person who made the point about firing executives. Brad Feld is the person who downed two shakes in one meeting.
I’ve written a bunch of posts over the years about how I manage my Board at Return Path. And I think part of having awesome Board members is managing them well – giving transparent information, well organized, with enough lead time before a meeting; running great and engaging meetings; mixing social time with business time; and being a Board member yourself at some other organization so you see the other side of the equation. All those topics are covered in more detail in the following posts: Why I Love My Board, Part II, The Good, The Board, and The Ugly, and Powerpointless.
But by far the best way to make sure you have an awesome board is to start by having awesome Board members. I’ve had about 15 Board members over the years, some far better than others. Here are my top 5 things that make an awesome Board member, and my interview/vetting process for Board members.
Top 5 things that make an awesome Board member:
- They are prepared and keep commitments: They show up to all meetings. They show up on time and don’t leave early. They do their homework. The are fully present and don’t do email during meetings.
- They speak their minds: They have no fear of bringing up an uncomfortable topic during a meeting, even if it impacts someone in the room. They do not come up to you after a meeting and tell you what they really think. I had a Board member once tell my entire management team that he thought I needed to be better at firing executives more quickly!
- They build independent relationships: They get to know each other and see each other outside of your meetings. They get to know individuals on your management team and talk to them on occasion as well. None of this communication goes through you.
- They are resource rich: I’ve had some directors who are one-trick or two-trick ponies with their advice. After their third or fourth meeting, they have nothing new to add. Board members should be able to pull from years of experience and adapt that experience to your situations on a flexible and dynamic basis.
- They are strategically engaged but operationally distant: This may vary by stage of company and the needs of your own team, but I find that even Board members who are talented operators have a hard time parachuting into any given situation and being super useful. Getting their operational help requires a lot of regular engagement on a specific issue or area. But they must be strategically engaged and understand the fundamental dynamics and drivers of your business – economics, competition, ecosystem, and the like.
My interview/vetting process for Board members:
- Take the process as seriously as you take building your executive team – both in terms of your time and in terms of how you think about the overall composition of the Board, not just a given Board member.
- Source broadly, get a lot of referrals from disparate sources, reach high.
- Interview many people, always face to face and usually multiple times for finalists. Also for finalists, have a few other Board members conduct interviews as well.
- Check references thoroughly and across a few different vectors.
- Have a finalist or two attend a Board meeting so you and they can examine the fit firsthand. Give the prospective Board member extra time to read materials and offer your time to answer questions before the meeting. You’ll get a good first-hand sense of a lot of the above Top 5 items this way.
- Have no fear of rejecting them. Even if you like them. Even if they are a stretch and someone you consider to be a business hero or mentor. Even after you’ve already put them on the Board (and yes, even if they’re a VC). This is your inner circle, and getting this group right is one of the most important things you can do for your company.
I asked my exec team for their own take on what makes an awesome Board member. Here are some quick snippets from them where they didn’t overlap with mine:
- Ethical and high integrity in their own jobs and lives
- Comes with an opinion
- Thinking about what will happen next in the business and getting management to think ahead
- Call out your blind spots
- Remembering to thank you and calling out what’s right
- Role modeling for your expectations of your own management team
- Do your prep, show up, be fully engaged, be brilliant/transparent/critical/constructive and creative. Then get out of our way
- Offer tough love…Unfettered, constructive guidance – not just what we want to hear
- Pattern matching: they have an ability to map a situation we have to a problem/solution at other companies that they’ve been involved in – we learn from their experience…but ability and willingness to do more than just pattern matching. To really get into the essence of the issues and help give strategic guidance and suggestions
- Ability to down 2 Shake Shack milkshakes in one sitting
- Colorful and unique metaphors
Disclaimer – I run a private company. While I’m sure a lot of these things are true for other types of organizations (public companies, non-profits, associations, etc.), the answers may vary. And even within the realm of private companies, you need to have a Board that fits your style as a CEO and your company’s culture. That said, the formula above has worked well for me, and if nothing else, is somewhat time tested at this point!
Perfect. Well played.I would change…………………………………………………………………………..nothing!
‘They are strategically engaged but operationally distant.’This speaks to me both from a board and advisory perspective. You gain your experience operationally. The best make the leap to turn that experience in shareable knowledge. All who are experienced are not equally excellent.
I attempted to communicate something like this, but as usual your choice of words was much more effective!
Pragmatic & practical. Great advice & Thank you. But how about picking Board Members with respect to each other? You’re saying you want them to be multi-trick ponies & with a depth of 360 experience, but the reality is they will each have a varied & different set of experience. So what advice is there on balancing complementary skills vs overlapping ones?
Excellent post. A lot of public companies could benefit from taking this on board. The one thing I’d add is diversity. Make the effort to ensure differing perspectives. Plenty of evidence already publicized that companies with women on their boards perform better. Plus key (for all of the above reasons) if your venture has a gender-equal proposition targeting women as well as men, or operates in an area (eg social media) where women are the more dominant participants. #changetheratio
your tweet about yesterday’s post was obnoxious. nit picking every little thing about how many women there are is annoying. please stop or i will start ignoring you.
Warren Buffett on selecting board candidates:In selecting a new director [Yahoo! CFO Susan Decker], we were guided by our long-standing criteria, which are that board members be owner-oriented, business-savvy, interested and truly independent. […]Charlie [Munger, Berkshire’s Vice Chairman] and I believe our four criteria are essential if directors are to do their job – which, by law, is to faithfully represent owners. Yet these criteria are usually ignored. Instead, consultants and CEOs seeking board candidates will often say, “We’re looking for a woman,” or “a Hispanic,” or “someone from abroad,” or what have you. It sometimes sounds as if the mission is to stock Noah’s ark. Over the years I’ve been queried many times about potential directors and have yet to hear anyone ask, “Does he think like an intelligent owner?”
ideal quote response
Yet these criteria are usually ignored. Instead, consultants and CEOs seeking board candidates will often say, “We’re looking for a woman,” or “a Hispanic,” or “someone from abroad,” or what have you. It sometimes sounds as if the mission is to stock Noah’s ark. Over the years I’ve been queried many times about potential directors and have yet to hear anyone ask, “Does he think like an intelligent owner?it’s easy to get distracted from the point of doing something. striping away the unnecessary can only be done if there’s an idea of what is necessary and what is not. that comes from a filter of experience. without a filter to detect what’s worthwhile, the most intuitive idea seem correct. but often the counter-intuitive is actually correct.
Gender? We’re all in it together, aren’t we (although sometimes it might not seem that way)?Who was that person who got fired from Yahoo?The publisher of this blog is known for making calculated use of the word “she”.What was in the tweet?
This is some evidence suggesting this. There is also some evidence suggesting the average effect of gender diversity in the boardroom on firm performance is negative. Which evidence you prefer almost certainly depends on either your politics or your understanding of endogeneity in regression models.The solution lies in putting aside one’s prejudices where possible, and selecting the best candidate for the role. It may be that quotas or some such are a means to this particular end, or it may not.
I’m wondering how you feel the attached tweets you just made somehow help with the image of women? Do you need to amplify that particular stereotype?
mandating diversity is divisive and just as discriminatory as being outright sexist/racist/whatever. #theratioisirrelevant
I would mandate at lower levels, because sometimes someone who doesn’t seem qualified on paper is more qualified when you actually get them through the door. It sets up a self feeding mechanism
Any advocate of a rigid standard is an agenda only thinker.Your approach is no better than that of the deeply and truly prejudiced.And, thanks to @domainregistry:disqus , we know that you are immature enough to think that ‘being provocative’ does not impact your credibility.
Cindy, I’m feminist, but I would be more worried if there was a token female who was a yes person than a male who says no.
Corporate law sucks in the age of the internet. It hinders progress.http://www.avc.com/a_vc/201…For the first time in history there is possibly a market with a behavior that is more liquid than capital, the social web market. That may be why investing capital in this market is so difficult.Hopefully this marks the beginning of the end of the ‘tyranny’ of capital and a return to a civilized order in which human needs take precedent over capital ‘priorities’ – the end of the tail wagging the dog….and if we think society was moving quickly thirty years ago, today we are jumping to light speed. Capital needs track spikes.http://www.youtube.com/watc…
“They are strategically engaged but operationally distant”.Amen.Great post.
Totally agree with this selection – the core of the BoD function is summarized in that line.
It was a great post overall.I felt it was the best of the series. Direct and to the point.
For strategic suggestions, they should recognize the resource cost and depth of the pool for your organization. Pattern matching a solution that requires a half dozen pros to execute doesn’t help the 5 person startup. Spinning up more Team members is a helluva lot tougher than spinning up more amazon servers.
Have you tried Weyland Corporation for your board recruitment needs?
hahah, ok I deserve that for captain obvious. It should be a no brainer, but for a person that’s active on many boards and far from hands on operational knowledge, they may have great strategies that don’t fit.
Board meetings would never be quite the same again. I could finally leave the unethical to someone else. http://www.youtube.com/watc…
Oh, hadn’t seen that clip. Now I really want to see Prometheus
Great Post! It helped me put two people on my radar for future seats.
Great advice, but for the Milkshakes. How about the chocolate life shake. Best shake on earth: cashews, raw cocoa, coconut meat, raw sprouted quinoa, raw agave, vanilla and ice. Mix in a vitamix and go. It is an award winning shake!
I’m with you on raw although I’d add some greens.I partake daily.
Arnold, when does your juice recipe book come out?
Never ;)I’m building an online store for LuLiTonix now as there actually customers and there will be recipes up there.
Good enough for me!
I am part food entrepreneur. Had juice bars in whole foods markets. So successful that they did what all old school companies do when they can, they shut me down and private labeled. Lesson: include “damages” in early stage contracts when damages are hard to prove.
Words to the wise. Thanks.Tiered distribution is not the first step, especially for raw goods. Market proof in process, then NY offers many on-the-street opportunities to get in front of your customers.
It was made to order, business model worked well as i purchase produce through whole foods. Had several VCs interested in the store within a store model.
“they shut me down and private labeled”….I hate when that happens. All the major food chains seem to be doing that. Here, Loblaws is notoriously famous with their President’s Choice brand. We have a joke with my wife when we discover a nice/new product, we say “wait it won’t be long before they make it disappear and replace it by their own at 20% cheaper and 50% less than original quality.” As if they use these new products to test the market, and they copy whatever works after they discontinue it. #disgustingpractices
can I try one yet?
I drink my green goddes first and follow with the shake.
Thanks for sharing your experience!
Great post. When do you recommend that a startup up should start assembling a board. Do you assemble it pre-funding round or post-funding round.
Matt, like the specificity. Encouraging to hear the “permission to give them a tough interview, and permission to reject them even if you like them” advice. It sounds simple, but being young, it’s easy to think of what a privilege it is to have ANYONE with some battle scars to accept a spot on your board.
First I think this is all great advice Matt hit on many excellent points.With respect to this:Have no fear of rejecting them. Even if you like them. Even if they are a stretch and someone you consider to be a business hero or mentor. Even after you’ve already put them on the Board (and yes, even if they’re a VC). This is your inner circle, and getting this group right is one of the most important things you can do for your company.The best way I have found to handle situations like this is to always issue the proper caveats in advance. That way you give yourself the ability to back out of a situation if necessary. In other words if you set expectations low your “friend” or “mentor” will have a softer landing.Normally one of the easiest ways to do this is by not appearing to be the sole decision maker in any process (works great in negotiation as well). Many young entrepreneurs feel they need to be “I’m CEO bitch” when I’ve found exactly the opposite has always worked for me.
The backtrack strategy is key. I am a practicioner as well.
They are resource rich: I’ve had some directors who are one-trick or two-trick ponies with their advice. After their third or fourth meeting, they have nothing new to add. This goes along with your first point which was “They do their homework.”. If someone gets board materials in advance they should never run out of value they can provide if they are motivated. They will spend some time looking into an issue they don’t know about, or call someone they know for advice, so they can add value at every meeting. I don’t have any sympathy for people who don’t want to take the time in any situation to do a little research about someone or something they don’t know anything about. If they are to busy to do that, unless they add tremendous value in some other way they probably aren’t appropriate.
Love it. Thanks again Matt and Fred.Does Shake Shack cater for those of us that struggle with lactose? This may be an important factor.In all seriousness, this is a great companion to Scott’s piece. I was thinking who in my my local network I could bring on board, which “friend” I could ask. The above narrows that list considerably.
This checklist also works for choosing your investors… since they usually want a board seat.
It’s always challenging to strike a balance within a company’s inner circle. Inviting a VC to become a board member may seem like an obvious step for businesses, though this can potentially be a conflict of interest.
I love this thought: They are resource rich: I’ve had some directors who are one-trick or two-trick ponies with their advice. After their third or fourth meeting, they have nothing new to add. One one things missing from this “insatiably curious”?
Just found your blog. Was reading your blog on CEO mentoring (WHICH I WILL NEED). I have no business education but have just finished my proposal. I know I need to surround myself with people whose strenghts are my weaknesses. Should this be done before I engage potential investors or will they realize this when I walk in the door and help me if they want to invest in me? If I need the team, how do I find them?All comments and help will be learned from.Paul
Bootstrapping a company from 5 to 80+ employees in five countries has been relatively easy. To build the “inner circle” of people who you can rely on for advice and also listen to has been intensely hard!
Taking all the decisions according to the need of people andthe business requirements is not easy and some strict decisions will be facedby the crowd. Sell a business
Sage advice.Hard not to go back to the well of your own contacts. Breaking out of that mold makes for a better result.
Do you cold call out of your network for a board spot?
Ah, Charlie, this advice goes for hiring team members, too, don’t you think?Maybe a little more flexibility in hiring staff. I am being sobered by the weight of the decision involved in selecting board members. Not for the faint of heart….and, btw, “excellent as usual” response to a post like this, Charlie.
Good question. I think it would be difficult to recruit members to your board that aren’t already at least a small part of your network.
I may not have some friends I would have otherwise because I prefer to speak in a straightforward mannerI’ve always liked your comments here for exactly that reason.
sure, i think that’s fair……although i consider it advantageous to sell diversity on its own merits (a diverse team is more capable of thinking outside the box and innovating accordingly) rather than making it a political movement, complete with victim psychology and implied accusations of discrimination.
encouragement implies the need for encouragement. just doing it is enough.http://www.youtube.com/watc…
The reason it matters is the person will bring an entirely different network of people to the table, a different worldview, a different set of experiences, and with that, different perspectives on your business.I agree.But it doesn’t show much creativity in solving a problem to essentially whine by tweeting (if I understand what Cindy was doing) in order to achieve that goal.You would expect someone like her, especially someone from a creative background, and trying to get more women involved, to put a more effort into achieving her goal.The idea is good, the execution is lazy.
i can’t defend stupid shit other people do. if a startup only wants to employ male standford grads that have done x, y, and z, good luck to them. see how the market treats them. if it works out then cool, if not they’ll be writing blog posts to hacker news about how they should have done things differently.
So vis a vis the previous board posts here it is a delicate balance of fit vs known/trustable.
When we stop hearing about it, it will be a dead issue.
Diversity, sister to equality, is fluid, and like pornography, defined as you can’t predefine it but you know it when you see it.