The Board of Directors: Guest Post From Scott Kurnit

I am developing a standard format for these MBA Mondays series. I do five or six posts on a topic and then I solicit four or five guest posts to wrap it up. Today we begin the guest posts on the Board Of Directors series we've been doing for the past six weeks.

Hopefully everyone who has been following this series on Boards understands the point that you want independent directors on your Board and that the best choice for independent directors are fellow entrepreneur CEOs who have been through what you are going through.

One of the most sought after independent directors in the world of internet startups is Scott Kurnit who has started a couple internet companies and has sat on eight boards including several public boards. If you are not familiar with Scott, here is an interview he did with me in late 2010 at the Paley Center.

I asked Scott to lead us off in the guest post section because I know that he has some strong opinions about Boards and Board composition. And he shares some of them with us in the guest post below.


Fred has done his usual fabulous job outlining the critical issues with Boards. Today I’m going to address two concepts that surprise people every time, end up generating lots of head nods, then usually don’t happen. These suggestions clearly fit into the art of the board more than the science. And it’s the unwillingness to depart from traditional norms by those around the table that stop them from happening.

1. Your best friend should be on the Board, and
2. No one who works in the company other than the CEO should be on the Board.

Why would you take a valuable Board seat for your best friend? Doesn’t every seat need to be occupied by people with industry expertise, financial acumen or years of board experience? That’s logical, but what about having someone who you trust with your life? Someone you’ll truly believe when the Board is telling you that you’re not performing or that the financing you seek is wrong or that you’re spending too much or your request for stock options is too aggressive?

Ideally, your best friend has industry or financial or board expertise – but even if not, having someone who has your back… who tells you the unvarnished truth… that you believe in an instant… is in everyone’s interest. This seat is critical. Fill it.

As a repeat CEO and board member, I try to fill this role of CEO pal if a CEO doesn’t have one. I’m well aware of my fiduciary responsibilities to shareholders, but I try to think of the CEO first since if he performs, the company performs and changing out CEOs is a wrenching and often disastrous activity. A CEO should have someone he can tell anything. That makes a better company and a better outcome for shareholders.

Now, for my second point which will certainly raise the hackles of co-founders who are on the board, work their butts off and may have as much stock in the company as you do: The fact is, there’s only one CEO, one leader. And that’s why people who work for the CEO can’t also be the CEO’s boss. Yes, fundamentally, that’s what Boards are… the CEO’s boss.

Here’s the simple logic. The CEO can’t be in charge 29 days out of the month and then report to her subordinates on the 30th day. That screws up the crispness and clarity for the 29 days. A CEO should not be giving compensation or making non-objective decisions concerning subordinates, in order to make sure her own comp and Board decisions get approved on day 30. Ridiculous. You often end up with a horrible combination of dysfunctional board member and insubordinate… subordinate – all wrapped up in one person. You can’t be both a worker and a boss at the same time. Sorry, co-founders… you can observe at Board meetings… but you don’t get a vote. Period. And when the CEO tells you to leave the Board room… well, she’s the boss.

Since I have this awesome space courtesy of Fred, I could go into why Board members should have no ego, need to come to every board meeting in person, need to give performance reviews to CEOs, should only do email during Board meetings within a designated 5 minute block every hour and create an environment where everyone knows everything with total transparency. But, I won’t abuse the privilege of this space or your time.

Just get a pal on the board and keep your pals who work for you off the board. I promise, your company will be better and return higher rewards for all concerned.

Thanks Fred.

#MBA Mondays

Comments (Archived):

  1. Carl Rahn Griffith

    True friendship and trust. Priceless.Superb, clear and simple advice. Well said, Scott. Thank you!

    1. Johnson Cook

      Agreed.Thank you Scott for this great post!Hope we can get more people to follow it.Johnson Cook

    2. JamesHRH

      Your BFF has to be someone of particular confidence to be comfortable in this role, no?

      1. Carl Rahn Griffith

        Absolutely, James. It cannot be something they do if they feel completely out of their depth.

  2. William Mougayar

    Great advice that comes from the trenches. And I have 2 questions: 1) Are there any exceptions to the above situations? 2) Re:#1 How about the case where there are 2 equally strong co-founders, eg Dens & Naveen at Foursquare where they are both on the Board. Good/Bad? 

    1. Kasi Viswanathan Agilandam

      I think that is why Naveen jumped  off … OR … asked to go.ORHe is just a creator and not executor.P.S. I know you did not ask me!!! 🙂

      1. William Mougayar

        But I thought Naveen said he remains on the Board.

        1. Kasi Viswanathan Agilandam

          My bad yes.He just quit from the company and not from the board….ha … that then fits the scott’s theory of directors.Again….sorry my bad.

          1. William Mougayar

            But you have a point in that prior to that, both were on the board but Den was in essence still the “boss”. Anyways, what actually happened is pure speculation from our side. If both co-founders are totally in sync, then the 2nd person could indeed be that friend you want on the Board.

  3. John Best

    Nice – who else would have your back, and still be confident enough to tell you when they think you’re making a big mistake?

    1. fredwilson

      the gotham gal fills that role in my life

    2. Scott Kurnit

      Your best friend cares about your success… and her’s – since she also has common stock in the co. Your best friend will be the first one to tell you’re full of s—. One great attribute of a true BFF is that they are not yes men.

      1. John Best

        Thanks Scott, having someone there to hold a mirror up to you would be invaluable. Nothing like someone that you trust and has a double investment in your success to keep you on an even course.I’m watching the Paley Centre interview now.

    3. JamesHRH

      Anyone who cares more about you than anything than can gain from being friends with you.

  4. Humberto

    like the approach. simple, human and results driven.(Fred, disqus is loading very fast, but from Greader i still get sent to your disqus admin panel.. makes me do an extra 3 clicks. 🙂 )

    1. fredwilson

      that’s a bug. we are still in beta here with Disqus 2012. i will send them this bug report.

      1. DanielHorowitz

        Really feeling the awesome potential of Disqus now. Good thing FB is about to replenish their bank…

      2. sigmaalgebra

        Nice.  Disqus seems to be rushing ahead.  Doing so risks bugs.  For the kinds of bugs, e.g., small details of user interface, that don’t have big risks, rushing ahead and accepting the bugs is the thing to do.  No bugs, likely going too slow.  You use the service and see, pay attention to, and report the bugs but don’t go all postal.   GOOD. Some investors and Board Members would go all postal where the CEO had to work for many hours one on one to put out the fire and then still have to tell the developers to slow down and check everything at least a dozen independent times like millions of human lives and US national security depended on it and, thus, throttle and wound the company, all because of a naive Board Member.People writing software and their Board Members need to understand such things.

      3. Lee Blaylock

         Not to pile on the Disqus bugs, and i’m second guessing evening sending this on your fabulous blog, but as of about a month ago, Disqus stopped working in Chrome 18.0 on all sites, but works in Firefox 11 for me.  As Chrome is my default, I have to copy and paste AVC to firefox and other sites using Disqus which is a bummer.

        1. obscurelyfamous

          Hi Lee, I work on Disqus. Are you using the new version? You can tell because there’s a blue bar notice at the top saying so if you are.If not, maybe you’re disabling 3rd party cookies for Chrome? Either way, if you shoot me a note I’ll figure it out for you. Daniel @ DISQUS

          1. Techman

            When will the feature come that allows you to switch between versions of Disqus.

  5. Kasi Viswanathan Agilandam

    Good one and very crisp … i liked the “butts off” and I am thinking about it.When you say “Your best friend” is he/she the best friend of the CEO OR the best friend and co-founder OR an outsider who is the friend of the founders.Why ask this is … we have 3-directors who are employees of our company and Investor + 1 independent (too much crowded for a yet to break even company i guess). If you agree to “too many” then i have to drop out :-).

  6. Max Yoder

    Thanks, Scott.What’s the common reaction from the other board members when a CEO puts a friend on the board?I imagine there are usually cries of cronyism and whispers of stacking the deck.How do you recommend messaging this decision, apart from saying, “Hey, I need someone I can really trust.”

    1. Scott Kurnit

      Max,Credit where it’s due. This rule came from Marc Watson, my series B lead at Marc was a former SEC atty so when I told him that my cousin was on the Board I expected his reaction to be… “WTF?” Instead he said, “I love that.” and he meant it… for all the reasons I outlined. I’ve now had the chance to see this over and over again. Marc, thanks for the early wisdom.

      1. JamesHRH

        This really runs against the professional BoD grain.Doesn’t it signal weakness?I can’t say I like it or not, yet – gotta loe AVC, I will likely get enough info in the next 24 hours to complete my analysis and have an informed decision! 

  7. Donna Brewington White

    This is refreshing.This advice seems to acknowledge at least two things: (1) The CEO needs to be empowered to lead and not have that leadership diluted. (2) The CEO’s job can be lonely.I do wonder, are there limitations to the “best friend” rule? I mean, how far can you take this? Does this cause integration issues with the rest of the board?

    1. Cam MacRae

      Supplementary question: How do you sell the CEO’s best friend concept in a public company?

  8. Cindy Gallop

    Aaaahhhh, the female default pronoun. Thank you Scott! 🙂 #changetheratio

    1. fredwilson

      i noticed that too. i see it more and more. a good thing.

      1. Pascal-Emmanuel Gobry

        Yup. Ben Horowitz was the first techblogger to do it in a consistent way, I think.

        1. karen_e

          I like it, too. Pronouns/assumptions are one part of the battle. Another part of the battle is women getting P&L experience. This still eludes me, but I’m working on it.

      2. Robert Holtz

        I’m also noticing a rise of the female default pronoun and it makes me feel softly encouraged about the future of humanity every single time it happens.First time I heard it used was in the early 1990’s when Deepak Chopra said in a keynote, “Does God exist and, if so, is she benevolent?” It forced me to reframe a number of my own precepts all at once. Been using it ever since.It’s good to disrupt conventional preconceptions every so often… clears out the cobwebs. It is even more important to actively do that INWARDLY than outwardly.

  9. JimHirshfield

    Sage advice, and yet contradictory to earlier post Fred, where (albeit early on) you advocate board make up should be founders and one outside director, if memory serves correctly. I guess difference is stage.Most post A series boards I’ve seen are loaded with VCs and co-founders. I find Scott’s approach very interesting. Thx Scott!

    1. fredwilson

      just to be clear. i am not in total agreement with Scott on the first point. i would not suggest a friend. but i would suggest someone who has your back.

      1. Matt A. Myers

        I think this more is in line with my thoughts that I’d rather find someone who’s fundamentally aligned, so they can understand what I’m trying to do.

      2. JimHirshfield

        Makes sense. Some of my closest friends would not be a good fit for start-up boards. (Does that mean I need to make new friends?)

      3. matthughes

        My first impression of Scott’s comment was this:Who do you want in the fox hole with you to help you get out?

  10. jason wright…

  11. Robert Thuston

    So simple, yet makes so much sense, and cuts against traditional thinking.  Exactly the kind of thinking I respect.  Thanks,

  12. RichardF

    Great advice.  I’ve observed the difficulties of 4 co-founders all sitting on the board who started off running their board as a kind of soviet, only to have to go through the pain of having to give up those board seats and leave it to the founder that was designated CEO to sit alone on the board with VC’s and VC designated appointments.  Friendships were wrecked along the way and it was to the detriment of the company. I like the idea of a good friend (not employed by the company) appointed to the board who can watch your back

    1. JamesHRH


  13. William Mougayar

    What if your friend on the Board is that co-founder who also works for you. 

    1. Scott Kurnit

      One or the other. Co-founder can be on the Board… OR work in the co. Not both. Of course there are exceptions to every rule… but be very careful.

  14. Matt A. Myers

    Thanks for the direction.It would take some letting go of control, and hoping for the best, in order to fully trust that a close friendship, whether a business friendship or close long-time personal can perform and that the friendship wouldn’t get destroyed with resentment or malguidance, etc..Maybe just having this person as guidance and them be an observer. Otherwise, I would have to default to someone more closely that I trust is capable of understanding situations and is more aligned with my fundamental values — whether others believe that’s important or not in the decision, I do.

  15. Tom Labus

    About showing up:In Inside Apple, Jobs goes on about Ellison being the best Board member but got heat for it since he never showed up. He resorted to a life size cut out of him for his chair.Maybe Ellison was the guy who told it to him straight.

    1. Robert Holtz

      They spent a lot of one-on-one time beyond the boardroom and they WERE very close friends. I think that personal time having the counsel and advisory and discretion is what Steve was talking about there. I think that outweighed Ellison’s attendance record “in class.”To Scott’s point of advising entrepreneurs to put their best friend on the board… someone that has your back when you’re feeling outnumbered and will also administer a proper dosage of brutal facts when you may be wandering off-course — someone who speaks and you listen, Larry absolutely was on the very short list of folks Steve respected at that level. And rightfully so.Love him or leave him, Larry Ellison is a guy who is not in the least shy about telling you exactly what he thinks and even when he emerges as a bit of a contrarian to the general consensus, he displays supreme prowess at providing an articulate rationale to support his views.

      1. Tom Labus

        Finding someone to deliver honesty without an agenda is hard.

        1. JamesHRH

          Finding someone to deliver useful honestly is harder.

          1. Tom Labus


      2. JLM

        Ellison was his gray haired eminence.Look how well it worked for both of them.

      3. LE

        Larry absolutely was on the very short list of folks Steve respected at that level. And rightfully so.Jobs  was mercurial but people were also shit or great in his eyes. He was in love with Scully at one point you know. 

        1. JamesHRH

          two different idolizations….Ellison – ruthless, fearless, natural born leader (the whole Sumarai thing would really have helped).Scully – Jobs thought he knew something (big Co / B2C brand mgmt) that Steve would / could not learn.Ellison never changed – Steve’s respect never wavered.Scully turned out to only know how to run Pepsi…..the only place he had ever worked.Huge lesson for hiring in a startup…is that big Co resume person someone who would be successful ANYWHERE, or is there success situational?

          1. LE

            “Scully – Jobs thought he knew something (big Co / B2C brand mgmt) that Steve would / could not learn.”Interesting that Steve would have canned someone who was working under him who made the mistake of hiring Scully for that reason.

        2. Robert Holtz

          @JamesHRH is right.You can’t compare Ellison to Scully. They are miles apart, especially in terms of their respective loyalty or non-loyalty to Steve.Having said that, I am well aware of Steve’s propensity to very easily put someone in the “bozo” category, as he was apt to put it. You are right about how easily he could flip the switch between one assessment and its equal-opposite.But here is the key distinction:Scully double-crossed Jobs. He put HIMSELF in Steve’s bozo file. Who among us wouldn’t react in much the same way given the same circumstances?Ellison never threw Steve under the bus in any way even remotely comparable.

          1. JLM

            Scully was a salary man and Ellison was/is an entrepreneur.

          2. sigmaalgebra

            SO cruel!!!!Once I had a long limo ride, and the driver had driven for Scully and gave me the low down!   From that it was easy to see why Jobs might not have liked him!

          3. LE

            “You can’t compare Ellison to Scully.”I wasn’t comparing Scully to Ellison at all. People with Job’s personality (disorder if I may call it that) are rigid and see things not as shades of gray but black and white. So when dealing with them it’s live by the sword die by the sword.  

          4. Robert Holtz

            Well, I agree with you that Jobs had a “live by the sword, die by the sword” view on the world. You choose to call it a disorder. I regard it as intrinsic to his success.Being an entrepreneur takes balls. I am not saying you need to be male. I am speaking figuratively not literally. In fact, there are men I know with no balls and women with balls to spare. Point is this… the worst decision any leader can make is no decision. Decisiveness is absolutely key.Jobs personality empowered him to charge through areas where a lot of his contemporaries and rivals would get bogged down by “analysis paralysis”. The best thing to be doing is constantly DECIDE, ACT, and COURSE-CORRECT.I like to say of myself, “I’m sometimes wrong but never doubtful.” That would sum up Steve rather well… as well as Larry… and even others like Bill Gates. To “change the world” as these folks do, you have to be able to not romanticize over the choices or fail to act through attachment to past beliefs. It is the mark literally of just about every great leader.Maybe on a personal level it made him a bit more terse or made him come across as flippant. To me, it registered more as decisive… and passionate… and opinionated. To my way of thinking, those traits apply to all the movers and shakers of the world.Anyway I think you DID draw a comparison between Ellison and Scully… perhaps inadvertently without that being your aim. The referencing one to comment on the other, the suggestion is defined that the two subjects are equal in every way and that the behavior towards one should be illustrative of the behavior towards the other. In so doing, the comparison was inescapably drawn. I accept and believe you though if, when you say that you weren’t comparing Scully to Ellison, what you really mean is that it was not your intent to do that.And my point is, Jobs’ seemingly abrupt change of opinion on Scully was far from arbitrary. It was entirely prompted by Scully completely and utterly stabbing him in the back. He defied his trust, which Larry (as far as I know anyway) never did… certainly not on the scale Scully did.And to my view, Steve was consistently resolute there too. He realized his prior assessment, in light of the new events, was no totally wrong. It came crashing down on him that, in his own words, he “chose the wrong guy.”

      4. Tom Labus

        Ellison was then invaluable for Jobs.That was no easy task coming back from that far back.I guess you have to rate Jobs and Lou Gerstner as one and two for comebacks.

    2. Carl Rahn Griffith

      Remember, this was the era when they were both pretty obsessive with contempt for all things MS. I wonder if a lot of the allegiance back then between them was primarily founded on that common goal – or was there more general substance to it than that? 

      1. Tom Labus

        You are so right about the MSFT hatred but AAPL won’t be around today if it wasn’t for the 150m Gates investment.

        1. Carl Rahn Griffith

          I am not familiar with that, Tom; was this in the sans-Jobs period so deemed possible? Interesting. Do you have a link?

          1. Carl Rahn Griffith

            Well, well, lol… No recollection of that, but then again back then I was a Unix guy, primarily ;-)Very interesting – thanks for that, Tom! 

          2. Carl Rahn Griffith

            I only really became fully aware of the MS/Apple emotions when Scott M became involved in the anti MS stance, as I spent pretty much all my time on Sun Micro stuff – became something of a triumvirate between them (LE, SM, SJ), as I recall now, for a while back there, didn’t it?I spent so much time evangelising X-Windows – the slayer of Windows Workstations! Bloody compiling fonts all the time it seems now, just to get our apps to work! Lol…

          3. Pete Griffiths

            Call yourself a Sun UNIX guy! X-windows!? Gosling would be turning over in his grave. News – now that was a window system! 🙂

  16. Robert Holtz

    Really thought-provoking. Sage wisdom. Thank you Scott!And thanks, Fred, for letting Scott use your mic for a second so we could enjoy the benefit of his contribution.AVCers, do yourselves a favor and make the time to see that 2010 interview at the Paley Center Fred linked to in his intro. It has been almost 500 days since that was shot but the interview is still amazingly comprehensive and absolutely still highly relevant.Scott and Fred: You both rock!

  17. JLM

    I agree with the underlying BFF logic but I see it being implemented in a different manner.I have constantly preached on this blog the necessity of having a “gray haired eminence” on each and every Board.  Let me tell you why.Frankly, I think that VCs should find such people — calm, seasoned, knowledgeable, clever, guileful — who are capable of forging a relationship that is like that of a QB and a really good former QB who is now a coach.This is the “art of the VC” to find and nurture these kind of relationships to multiple the VC’s influence.  And then inject them into the right situation smoothly and without fanfare.Think about Fred Wilson and Jerry Colonna.  I want Fred for my partner and Jerry for my confidant.This guy’s job is to coax a great performance out of the CEO.  Not to criticize — nothing wrong w/ that BTW — but to reason together.  In a Socratic manner.The gray haired eminence spends a lot of talking WITH the CEO and saying — well, what’s going through your mind about the xxxxxx issue?  He initiates the right conversations but he does not dictate solutions even when he knows the solution.He keeps the conversation on track, all ways always.  In a gentle manner, like running a spy.He brings that discussion around to the universe of possible solutions, maybe suggests one or two and then lets the CEO bring it in like docking a small boat in a tight slip in a high wind.Incrementally, slowly and at each step building the CEOs confidence in his own reasoning and problem solving abilities.The gray haired eminence reports back to the Board like a co-conspirator and an alter ego of the CEO and when the CEO hits a good lick, the gray haired eminence praises him in front of the Board, drops him a note congratulating him and smiles like a hyena.  He builds up the skills that are necessary to be a successful CEO.Every CEO needs a champion — not some guy to have a pizza and a beer with, again, nothing wrong with that — whose opinion he respects and who will spend the TIME to do the job right.In the final analysis, the investment of TIIME will determine the outcomes.The problem with having it be your BFF is that if you are 26 years old, you are getting the life experience of another 26 year old.  You are not getting wisdom, experience and guile.CEOs are worth developing and this development is tough and there are no easy knee jerk ways to get it done.  

    1. ShanaC

      I’ve always wanted to know how you would differentiate “grey haired eminence” vs “old fogey” (Note: it is possible for young people to old fogeys by not moving with innovation, and for older people to be more innovative than young people)

      1. JamesHRH

        Grey haired is short hand for ‘reps’.Someone who has a lot of relevant experiences.Reps are really key. It is why Peyton Manning was let go by Indy – they are drafting a once in a generation guy (Andrew Luck) to replace Manning, but Manning is widely known as a ‘reps hog’: he takes ALL the practise reps with the team during the week (so Luck will not develop if Manning stays).Reps matter.

        1. JLM

          Brilliant analysis really.College football teams fail to develop the “right” QB because they try to spread out the Spring Training reps thereby creating a faux QB controversy.You have to pick your jockey and give him the reps so he can actually develop before the season begins.The University of Texas has ruined more QBs because of this folly. They draft more great QBs and convert them rather than develop them.Those UT QBs could start on any Div I team except for Texas. A wealth of riches.

          1. Brandon Marker

            That UT reference is GOLDEN. McCoy and Ash should be benched for a true Freshman. Mac Brown needs to retire. Applewhite for President. But anyway……..Great previous posts, and my “grey-hair” in life is my dad. I completely relate and hope to put him on my board one day (when I get my own venture going). He has been around the block and continues to do so. Calm, cool and analytic are his ways before reacting or advising. It offsets my young energy that just wants to keep the pedal down. 

        2. ShanaC

          you realize the sports metaphor is way above me head. I don’t even known who Peyton Manning is, or why quarterbacks are important…..

    2. JamesHRH

      JLM, when you hit the PAY WINDOW on your current gig, you should become the Mike Ovitz of this idea.Just take 5% of the comp of a roster of grey haired FT BoD for startups.I will be your first client.

    3. John Revay

      JLM – I like your BFF term.I agree w/ Scott – I am thinking about starting a company…and always thought that I had at least two good friends that could help/ lead the board.Several reasons – they all very knowledgeable – re: they know more about a BOD than I do & I trust their judgement.I like Scott’s thinking about having a friend represent you and watch your back. Communication is very important ….and I always thought that these friends – either one could add a lot a value w/ communications

    4. William Mougayar

      At the end of the day, a CEO’s role is to pick, recruit and surround themselves with the right people that will each contribute their own weight, and then some,- whether they are employees or Board members.Picking people you can trust, rely on or lean on is what it’s all about.



  18. Stuart Campbell

    Excellent post, thanks Scott!Having your best friend on the board is a truly novel idea for me. Do you think there is a minimum board size where this is appropriate?

    1. Scott Kurnit

      These issues work for small and large boards… private and public.Of course you try to find board members who bring lots of qualities/disciplines. And, everyone around the board table should be honest and transparent. Ironically, it’s likely your best pal who will be most frank… and be the one you’re sure doesn’t have an agenda – other than your success and the success of the company.

      1. Carl Rahn Griffith

        Someone detached from the corrosive nonsense of (all too frequent) company politics is certainly going to be infinitely more objective. 

  19. ShanaC

    I’m not so sure about this.This would be like saying Sergey Brin doesn’t belong on his board (granted, he is also the best friend)I’m also not sure knowing the dynamics of different friendships this would work.  Sometimes my friends tell it to me as it is, sometimes they are they to handhold me.  Part b would not work well on a board (note this may be specific to me and my friends)

  20. JamesHRH

    My favourite question when I was helping other people with their startups, was “how do you fire people?”.It underlies Scott’s approach to noone from the company on the BoD – which is an obvious one for me.I don’t know so much about the best friend idea….but it is intriguing.

  21. gomobile

    Great words that I hope many board members read.  You put and supposedly trust the CEO to lead, and if you feel like board meetings are becoming a pissing match of who’s idea wins- then it’s one or two things.  Either the CEO needs to go, or the board member needs to check her ego at the door.  Your comment about putting a friend on the board is caviated by them being able to tell you ANYTHING.  Friends that only prop you up are friends, not board members.  CEO leadership is both about managing up and down, with conviction, keen probing and listening skills. But at the end of the day its your (CEOs) behind to fully understand the business to optimize with the business model, the people your hung your hat on and yield the very best results.  That’s how you get your best 5 hours of sleep at night.

  22. LE

    Someone you’ll truly believe when the Board is telling you that you’re not performing or that the financing you seek is wrong or that you’re spending too much or your request for stock options is too aggressive?How can board members discuss things truthfully when they know there is a direct line to the CEO with what they are thinking (for a meeting or discussion where the CEO is not present)? And to take this one step further how would this not turn into a behind the scenes manipulation knowing that anything a particular board member is thinking will end up whispered to the CEO (which may be the idea and intentional)?  Seems the friend would be included or excluded from those discussions depending on the agenda.In a perfect world everyone could be open and honest but that’s not reality. 

  23. LE

    I’m well aware of my fiduciary responsibilities to shareholders, but I try to think of the CEO first since if he performs, the company performs and changing out CEOs is a wrenching and often disastrous activity.My emphasis – That sounds like a rationalization to me for not protecting the “fiduciary responsibilities to shareholders” which I would gather (and not my area of expertise) is the thing that is important. 

    1. JamesHRH

      LE – the problem with CEOs, in big companies, is that the great ones are grossly overpaid and worth every penny…….and the lucky stiffs who get to be CEO but turn out to be useless…..just get grossly overpaid.That I think is the point here…….once you start the CEO-go-round it becomes a known bad situation….and only bad CEOs go into known bad situations…..which is also when you really start to overpay……unless you are formally listing your situation as a full-on turnaround – I think you get the downward spiral issue by now.

  24. sigmaalgebra

    Nice.  A keeper.  For many entrepreneurs could make the difference between nice success and miserable failure.There are a lot of chuckholes in the road, and for some of them here are some big, yellow warning signs and detour paths.In some important business situations, a Board is necessary, and it can be helpful, but it can also be a threat.  Care and feeding of the Board can be important.The “insubordinate subordinate” is choice.I loved having my wife along for business meetings, even if others thought that she was just a trophy.  Trophy, heck:  They were lucky they were never in a course with her since the best they could have done was second and might have made a B due to her distortion of the curve — Valedictorian, PBK, Summa Cum Laude, Woodrow Wilson, NSF, Ph.D. in mathematical sociology, audited a 300 student lecture course and still made the best score in the class.  She was brilliant, especially at understanding social nuance.  So, when the business meeting was over, she could tell me what had really happened.  She also had access to the distaff gossip streams.  So, like Fred said here about GG, my wife could watch my back and give me good information.I would have thought that a Board would object to her membership, but it’s good to see that the idea is both good and possible.I won’t ask where to send the check for the business consulting fee because I couldn’t afford it.  No one who needs it could afford what it’s worth.I unplugged the TV cable and remain sure I’m missing nothing and saving time, cutting down noise, and improving concentration.There’s also a lot of junk on the Internet, but the best of is golden.People need a better way to find such content …! 

  25. PhilipSugar

    I have been in the best friend role.Interesting because I have never seen it stated overtly like that.I agree with JLM it can’t be somebody with no experience you must have respect of the other members because when things get tough and they will they are going to come to you to try and be the intermediary, the one who is going to take both sides and try to bring them to the middle.Don’t get me wrong I love youthful energy and sometimes not knowing what you don’t know is an asset not a liability when you are trying to change the world.

  26. karen_e

    I’ve read every word of this series, memorized some passages, and passed most of the posts to my CEO, who says “Keep ’em coming,” every time I send him a link to a post like this one. In our industry, the partners of many firms are typically all practitioners (architects, engineers, designers) as well as management. And at our firm they wouldn’t dream of composing the board of anything but themselves for fear of “outsiders messing things up.” You read it right, the owners are all (in various combinations) both management and governance. As someone who has management’s ear, how can I help move this along to something better, especially because we who have drunk this Kool-Aid believe it will ultimately be more profitable to get outsiders on the board? The recession was rough, but now we should be profitable enough to justify a small board of investors and outsiders, I would think. What is missing here? Can anybody help?

  27. jason wright

    A company is the sum of its people. The sum must add up.

  28. K_Berger

    Echoing what Charlie said, if the purpose of the best friend is to be the guy who is always trusted and who has to have the hard conversations, that has to be a truly deep friendship.  I’m not sure many people have someone who is that good a friend and has the business skills to be a board member.

  29. amy thompson

    This is, by the way, one of the differences between being geographically located in a hub of curiosity and drive (like SV or NYC). You get a difference class of people that are really driven and intense that you don’t get in the suburbs that you can interact with.

  30. David Clarke

    A lot of the discussion so far has been on the BFF topic. On the other point, about no-one other than the CEO being on the board, is this not a wrong characterisation? Most board topics never ‘go to a vote’. I would be hard pressed now to say which of the key people in my prior companies were formally ‘on the board’. We just had the right people in the room. Particularly in early-stage companies, you need at least the business/sales guy, the product gal, the CEO in the room (CEO may be all 3, but unlikely). Subsequent sessions with just the CEO, or in ‘proper’ board subcommittees cover sensitive areas like comp, org structure etc. But I think the idea of ‘not being on the board’ being equated to ‘shouldn’t be in the room for the 90+% of the discussion that relates to driving the business forward’ is just wrong. Scott, is that really what you mean?

    1. Scott Kurnit

      The key is for the CEO decide which of her subordinates to include rather than have it forced on her since Board members have the right to be in the full Board meeting. Of course logic would say, “Hey, Jim could you leave for the next 20 minutes” and I’m sure Jim would leave… but why have to have the conversation in the first place. We should be taking friction out of everything we do, all the time. This is not about votes, it’s about how to have the most productive discussions with the correct people and not having to have the wrong people in a given discussion because of an “artificial right.”

  31. WayneLifestyle

    Obviously its a detailed post about the concept of the board of directories. I have got a clear idea about the board of directories from this post. Thanks for this nice sharing.

  32. William Mougayar

    But shouldn’t that friendship withstand the test?

  33. Carl Rahn Griffith

    If one is entering a vipers nest boardroom of egos and conflict, as opposed to a ‘normal’ board environment with all its normal attendant challenges, the friend in question certainly does need to be totally aware of the abnormality of the situation they are entering and be given the choice to decline the ‘opportunity’ – else, yes, the friendship could certainly be ‘strained’ – to breaking point…

  34. Kasi Viswanathan Agilandam

    You would risk the company and not the friendship. double thumbs-up to the wise and nice man from Lancaster. 

  35. Mark Essel

    We’re all just acquaintances until we pull your ass out of the fire. For fellow math geeks (@sigmaalgebra) Ass Out of Fire is a commutative operator.I let down a close friend once a decade ago, because I couldn’t see a way around an insatiable force. That failure was enough for a life time.

  36. Scott Kurnit

    Paul,The key is to have diversity on the Board. Some folks need awesome current domain expertise, some may be “10 years out of date” but the dynamics of business and lessons learned have a place. The key is to try and cover all of the bases.

  37. awaldstein

    Same risks with Friends and Family rounds I think. Always nervous about them a bit.

  38. Max Yoder

    The same argument could be made for long-distance relationships. Shouldn’t true love be able to withstand any distance?Maybe, but you have to remember that when the dynamics of a relationship change, they change.

  39. Carl Rahn Griffith

    Very valid argument, Charlie.Sadly, there are very many ‘perfectly qualified’ people out there – many of whom are utter snakes.I’d prefer to take the risk of appointing a business-savvy friend whom I utterly trusted, given the choice 😉

  40. Kasi Viswanathan Agilandam

    I was not making any pot shot. Seriously.I really meant what i said. I would not risk a good friendship for the sake of a company. Company to me … i repeat … ‘to me’ is about making money … friendship is not.

  41. Scott Kurnit

    Paul,  posted in the right place this time…  :)The key is to have diversity on the Board. Some folks need awesome current domain expertise, some may be “10 years out of date” but the dynamics of business and lessons learned have a place. The key is to try and cover all of the bases.

  42. JLM

    There is no question that you are correct in raising the question of currency of skills. It is a valid question.I think the people you are describing could be employed effectively to provide the steadiness of principles of governance at the Board level.There are basic principles of Board governance that if not followed come hither to take a bite out of your ass in the future — Board charters, statements of expectations, committee charters, ethics policy, whistleblower policy, conduct of Board meetings, dissemination of information and a million other things which if you have someone w/ some experience you can get these things done more quickly and get on w/ setting policy.I sometimes wonder if people remember that the function of a Board is to set policy. Policy.What does not age is wisdom, character, the ability to frame and make a decision, the ability to understand people’s motivations and the necessity of keeping a positive balance in the checking account.You are not looking for every person w/ a bit of gray hair but that special someone who has maintained their skills and also has a bit of life’s wisdom, scars and war stories.The stories told around the campfire are what define the culture of many companies. If they are stories of success, well, then that is very good.

  43. LE

    There seems to be a class of individuals who were once executives but then they wanted to slow down and now they just sit on 5 or 6 different boards.  They make good money doing this, and they enjoy spending a few days each month prognosticating, but ultimately no matter how good they are, or how great their career was, they always feel kind of out of touch and behind it.This is a great point and question.  I agree with what Scott says below in his reply to this “the dynamics of business and lessons learned have a place” – with one exception. The exception is “are they still into the game of business?”. Are they reading about business, interested, eternally curious, and observing what others are doing everyday even though they don’t need to do that? Or, are they just playing golf and sitting on boards as a way to pass the time? If you are truly into something (take sports as an example) you live it and breathe it everyday and have constant interest and curiosity until you die.  If it’s just a job, well, you then loose interest the day you retire and are more interested in leisure activities, travel and dining.This is, by the way, one of the differences between being geographically located in a hub of curiosity and drive (like SV or NYC). You get a difference class of people that are really driven and intense that you don’t get in the suburbs that you can interact with.  

  44. Scott Kurnit

    One definition of a best friend (for me) is that they tell you what you don’t want to hear… but need to – better than just about anyone else. If your best friend isn’t the first one to tell you “you’re full of it” then they fail the best friend test.

  45. Matt A. Myers

    Are you sure about that Paul?

  46. ShanaC

    What if you never served on a board before? (me and friends and this is an issue)

  47. ShanaC

    @disqus:disqus this is a bug? maybe?

  48. Carl Rahn Griffith

    And such a person brings natural gravitas.Many try and feign it – (eg, politicians) and by doing so confirm they don’t know what it is and will never possess it – they typically soon morph into arrogance/hubris.Working with someone who naturally exudes gravitas is a very special feeling.

  49. leigh

    Agree’d technology and customer may change but there is a huge value having someone there who has been there and done that from a business perspective.  As long as they know what they don’t know (which is not always the case 🙂 then it works brilliantly.  We have a advisory board – one person who is retired who used to do mergers and acquisitions for a large Agency network – i’m not sure he always gets what we do day to day – but he provides endless insight in the running of the business…..

  50. JLM

    You make a brilliant point — the natural gravitas of an individual cannot be faked. It is both confidence and competence.And your observation that politicians are great offenders of this principle is very true. They are all poseurs and fakirs.I think in great measure that what is challenging with the world today is that the entire world’s leadership seems like they have been advanced far beyond their level of competence.I cannot help but think back about the famous Russian “re-set” button fiasco. Talk about amateur hour. How can anyone screw something like that up and how stupid do you think the Russians think we are?I am also convinced that we know way too much for our own good.I don’t blame Pres Obama because a bunch of horny Secret Service guys got laid in Columbia. They are just dumbasses and would be dumbasses regardless of who the President might be.But because we know it, we attribute it somehow to him and he falls into the trap of commenting upon it.He should just fire them all and say nothing.But then he is the ultimate light weight.

  51. panterosa,

    I’d be much happier to have a BFF on my board than raise friends and family money.

  52. panterosa,

    The skills needed to separate work and off work are the same skills we have for other relationship hygiene exercised in work and personal venues. Knowing how, when, and where to discuss certain things is a vital skill for effectiveness.

  53. panterosa,

    Actually, this makes me think that the unvarnished truth can also be delivered well by someone you dislike. It sounds counter intuitive, but many times the people who don’t like you or who even dislike you manage to really tell all. As an artist my harshest critics are those who moved my work forward the most, and made me truly work to prove them wrong, or fix a flaw they saw.That may not be trust, but it does qualify as reliable, which is a cousin of trust.I do know several people who fit my BFF role, and one who is continually hard on me who I know would never let up on me. I’d take either one on my board.

  54. sigmaalgebra

    > commutative operatorAt least a symmetric relation!  And reflexive, symmetric, and transitive yield an equivalence relation and, thus, partitions of equivalent elements! So, how to apply this to social media!!!

  55. Mark Essel