The Perfect Board

Last month Sam Altman wrote a post about board members and why you should want them. I read it and then tweeted it out:

In Sam’s post, he says:

Personally, I think the ideal board structure for most early-stage companies is a 5-member board with 2 founders, 2 investors, and one outsider.  I think a 4-member board with 2 founders, 1 investor and 1 outsider is also good (in practice, the even number is almost never a problem).

I’ve been serving on boards for 25 years. I’ve been in every conceivable configuration. To my mind, the perfect board is either five or seven and it looks like this:

Founder CEO, Two Independents, Two Investors

Founder CEO, Three Independents, Three Investors

If the Founder is no longer the CEO, then I like this configuration:

CEO, Founder, Two Independents, Three Investors

If you have less than three investors (yay!), then replace investors with independents in each formula and you’ve got a winning configuration.

An entrepreneur the Gotham Gal is invested in asked me this question via email a few weeks ago, and I told him this:

This is a long way of saying that you aren’t done once you put one independent on the board. You are going to need a bunch.
Finally – don’t try to satisfy your VCs. They will want “names” “trophies” and the like. Satisfy yourself. Find people, ideally peer CEOs, you like respect and want to spend time with who you know can and will add value.
A great company deserves a great board. And a great board has bunch of people on it, ideally a bunch of people who are experienced at running a business, growing a business, and dealing with all the stuff that comes with that. Do yourself a favor and build a great board for your company.

Comments (Archived):

  1. pointsnfigures

    Also, don’t be afraid to change your board as your company grows and changes. The initial board members might not be the best when you are scaling. It’s sometimes hard to ask people to leave the board, but if that’s what is best for the company then their ego shouldn’t be hurt if it’s the right thing to do. Tailor your board to your company stage. But, keep the former board members engaged somehow because they might be able to help you in some way.

    1. fredwilson


      1. William Mougayar

        But it costs you accelerated 100% vesting of their options, no?

        1. fredwilson

          you don’t have to do that. you can give them what they have earned/vested on the way out or if you feel that they really delivered for you, then you can accelerate more

          1. pointsnfigures

            If the board member really cares about the company, they will figure it out.

    2. JimHirshfield

      I think indie board members should be given 2 year terms, renewable. Makes it easier to move on after a few years if you want. You can still move on earlier if it’s not working out.

      1. pointsnfigures


  2. Nicholas Bagg

    How do you go about sourcing these independents? Should they be within your industry?

    1. David Semeria


    2. fredwilson

      It’s better that they are but you can use a liberal definition of “your industry”. You find them the same way you find people to hire for your company. You search for them

  3. robdiana

    In the cases above, if the CEO is a founder, why not have just one more founder on the board? I am curious as to why only one founder gets chosen.

    1. fredwilson

      If the founder is in the business it’s complicated to have employees on a board. Then you have to do executive sessions to discuss certain things. I prefer only one employee, the CEO, to be on the boardThat said, I am on many boards where there are multiple founders on the board. It’s just not optimal

      1. dan_malven

        The topic of multiple founders but only the ceo founder having a board seat deserves a lot more discussion. Most cases the founders will be equal shareholders, so it’s a tough situation. Having onlythe ceo founder on the board might be best for the board dynamics but not best for the company dynamics, especially in the early stages.

        1. ioates

          I think in many cases co-founders do not have equal equity, and in my opinion they almost never should. I think it is important that when the shit hits the fan there is someone who can exercise control. Less important about who is the one in control and more important that someone is.Extending “all founders are equal” to the board is just exacerbating the problem. There is no reason that co-founders or other managers can’t attend some or all of a board meeting, but that is different than having a board seat.

          1. fredwilson


          2. fredwilson

            and, i would say, that if the founder/CEO selects the “independents” based on their own criteria of what is required in the role, they will be “independent” but aligned more with the founder than the investors. which is the appropriate dynamic

        2. fredwilson

          i agree with that Danbut asking a founder to get off a few years in is no party eitheri’ve been through this so many timesi would prefer to have the other founders attend the meetings but not be on the boardthen it is easier to move away over time easily

          1. Scott Barnett

            if a startup insists they want both founders on the board, will you still consider investing? Or is this such a red flag that it would cause you to back away?

        3. Twain Twain

          Can you provide examples of where successful founders have been equal shareholders?My understanding is that in Apple, GOOG, Amazon, FB, Twitter, Uber etc. there is 1 founder who has a majority share.Mark Suster also wrote about how equal shares amongst founders doesn’t work and isn’t a reality:* http://www.bothsidesoftheta…There was a situation I found myself in this year involving organizing all-female hackathons; wanting to do my bit to increase diversity in tech.Over a fortnight, I’d produced 90% of the work from my idea by the time we had the co-founders’ conversation. Generous to a fault (I know this is one of my weaknesses, btw) I suggested 50-50 on the revenue splits but that it would be 60-40% in shares.The other party does not have my skills set nor track record and had done 10% of the work yet believed she was entitled to 50-50% shares AND the right to veto my suggestion that once we were up and running we’d appoint an Operating Committee of talented women (5-7 people) to run the platform. That operating committee having decision-making votes on a 1 for 1 the same as us.She argued that because she was here first she should have more power than them.Needless to say, I said, “Thank you and no thank you” and learnt some valuable lessons about co-founders.I also made the decision to focus on delivering the system I’ve been working on to market instead of doing something short-term that would help diversity.

      2. Mario Cantin

        I had that question in mind as I was reading the post. That answers it.

  4. BoardProspects

    Great post. My platform, can assist start-ups with board recruitment by connecting them for free with thousands of high quality board members.

    1. William Mougayar

      Like an “arranged marriage”? hmm…does this really work? or maybe for mature companies, but not sure for startups. If the CEO can’t find qualified board members on their own, there’s a bigger issue underlying that.

      1. BoardProspects

        We are a sourcing mechanism. BoardProspects provides start-ups with the ability to go beyond the “Who do you know?” conversation when it comes to Board of Directors/Advisory Board recruitment.

        1. William Mougayar

          So, you can search with specific parameters based on structured data?

          1. pointsnfigures

            went to the site. very very very clunky UX.

          2. LE

            Specifically what? Anything can be improved (copy wise particularly) but nothing stands out to me as “very very very clunky UX”. Noting “very very very”.Also keep in mind that not everyone running a business on the web has access to millions in venture funding and can hire the absolute top end UX people.Separately the two board members front and square on the home page add legitimacy. Perhaps they are targeting a different type of startup or business than one that would want “sama” on their board.

      2. LE

        If the CEO can’t find qualified board members on their own, there’s a bigger issue underlying that.Not an arranged marriage. An arranged marriage is a decision made by others not by you picking from qualified candidates. This is more like online dating.Think of making that statement with regards to dating in the traditional world vs. online dating.Prior to online dating it was a totally different ball game. (Of course the most qualfied obvious candidates always had a world of opportunities. )Online dating otoh brought together a large diverse group of people that would never be in relationships if online dating didn’t exist. [1][1] I can’t even imagine where I’d be today, or who I’d be with, if I wasn’t able to methodically examine and sample the dating pool as I was able to with online dating zeroing in on the best potential mate (if you want to call it that). I mean to me it’s the greatest thing ever invented and has totally changed my life for the better. Compared to the “friend of a friend” method of years past.

        1. William Mougayar

          Good points 🙂

    2. LE

      Interesting. Can you give an idea of the typical amounts paid to board members and the variables which determine what board members are paid and what is required of them time wise typically? (I know of someone who is looking for board members is the reason for the question).

  5. Guy

    Not sure what is meant by early-stage, but I find a BOD of 3 as ideal following the 1st funding (pre seed). It doesn’t make much sense to have more BOD members than people working for the company. Does it?As to the composition – You may find great independent directors – but that’s easier said than done.

    1. fredwilson

      I think you are right that a board should not have more people on it than the company!!

  6. William Mougayar

    Can you talk qualitatively about board differences in seed vs. post-Series A? Specifically, is the CEO expected to nail their board early at the seed stage, even when there is no product/market fit yet? How do they evolve it, especially if a Series A investor will likely ask for a re-shuffle if they don’t like what they see.

    1. fredwilson

      i think it is something you build slowly but surely over time and you should start doing it during the seed/angel stage

  7. William Mougayar

    What is considered “independent” these days? Is it based on not being invested in the company prior to the appointment? What if the person is a small angel investor with .5-1% of the company. Is that person still considered an “independent” director?

    1. fredwilson

      i think if you have a seed/angel investor who is bringing a ton of value, you should keep them on as an independent. that’s what Alex and Eric did with Christophe Maire at SoundCloud.

  8. Levi Morehouse

    Good post. How should independents be compensated for their time and effort?

  9. William Mougayar

    How about the parameters around Board voting control? Not sure if you have written about this before, but that’s another underlying factor. Is it best at 60%, 66%, 60%+1 founding vote, etc…

    1. fredwilson

      i am a fan of one director, one vote

      1. William Mougayar

        but what majority % rule do you favor?

        1. fredwilson


          1. William Mougayar

            Hmm….I’m seeing a lot of 60% as the base, and some 66% in the starting point seed SHAG with just angels in it.

          2. Elia Freedman

            Whats SHAG?

          3. JimHirshfield

            Austin Powers should jump in here to tell you. Not sure he’s on Disqus.

          4. Elia Freedman

            Yeah, baby!

          5. William Mougayar

            ha…Shareholders’ Agreement. Lawyers call it ShAg 🙂

          6. JamesHRH

            I see it called USA (Unanimous Shareholders Agreement).

          7. William Mougayar

            ah…USA AKA SHAG 🙂

        2. Twain Twain

          From Venturebeat: ” While Zuckerberg only owns 28.2 percent of the Facebook’s shares (A class), the additional “shares subject to voting proxy” gives him an additional 30.6 percent of the voting power, leaving him with a total of 56.9 percent of the shareholder voting power. That gives Zuckerberg full control of the company’s decision making.”*…The argument could be made that the unicorn startups only became unicorns because their founder CEOs had the final decisions (and actually knew what they were doing) without board interference.The argument could also be made that dictatorship leads to the founder CEO running the company into the ground because of their ego.The majority % is the one where the founder CEO and their board can “deliver without destroying value”.

          1. William Mougayar

            He’s an exceptional case who was able to retain board control via the shares classes. I was thinking about him alll along. But he has delivered big time.

          2. Twain Twain

            Zuckerberg was/is interested in the psychology of people. His mother is a psychiatrist, his major at Harvard was in psychology and he was a computing prodigy. FB is a social psychology platform. Look at how they did their emotion experiment.The Google founders’ approach is so much more Mathematics oriented because of their innate biases towards that subject.He started with a great base team of engineers: Chris Hughes, Dustin Moskovitz and Andrew McCollum as well as Adam d’Angelo (of Quora).Then he met Sean Parker who negotiated that share structure for him.Then he met Peter Thiel whose philosophical leanings were that of Rene Giraud and FB fitted that…Then he hired Sheryl Sandberg away from Google.That’s an example of both the serendipity of meeting with catalytic people who bring N times the value and also that our past knowhow informs our choices and future.Success is a continuum and spectrum rather than a singular event.

          3. ShanaC

            it isn’t so clear chris hughes understands people right now….

          4. William Mougayar

            Interesting analogy Psychology vs. Mathematics re: Facebook vs. Google.

  10. OurielOhayon

    Fred, given the important of outsiders and independents that begs the question: what is the perfect independent board member? (beyond industry expertise?) how do you find him? what is his role? and how does he interact during/outside board meetings with founders and investors?

    1. fredwilson

      well i have many real world examples but here are some of the qualities – experienced- professional- responsible- engaged- active- wise- generous- brilliant- fun

      1. OurielOhayon

        sounds like the perfect husband 🙂

        1. JimHirshfield


          1. Jeremy Robinson

            The experience and learning here is about good relationships- friend, colleague or spouse, right? We want similar qualities in all of these folks.

          2. JimHirshfield

            Indeed. Which is why I said wife… To balance it out. But you’re 100% right. Applies to all.

          3. Jeremy Robinson

            Wives do this better than we do as husbands, no doubt. Gives us something to aspire to- J

        2. LE

          You’d have to add “earns a good stable living” to the list for that to be true.

        3. fredwilson

          And wife !

          1. OurielOhayon

            Which is the right comparison “area”. Investor/Founder is close to a wife/husband relation

          2. LE

            Since you have no experience with online dating (and I do) I will tell you that it’s god’s gift to being able to satisfy many things on that list.Anyone who fails at online dating either doesn’t handle adversity very well or their expectations are out of whack with what they deserve given what they have to offer. [1] I would agree that it’s easier for men than women but it’s not impossible for women keeping “expectations” inline. Harder does not mean “non starter give up”.The funny part is it all starts with the quality that is missing, which isn’t everything but is definitely something:”Looks”.[1] Same with buying a house, car or anything not everyone can hit all the notes.

      2. JamesHRH

        Those apply to any job or person!

  11. pointsnfigures

    http://www.streamlinksoftwa… Here is a post on how to properly set expectations. has a software package, BoardMax that a lot of non-profit boards use. But, for profits can use it too. It’s great if you serve on a number of boards because of the dashboard. (I am pimping them but I am an investor)

  12. Jeremy Robinson

    I like this post. Very straight-forward. Practical. My experience is the best CEOs I coach are the ones who leverage Boards as partners. They are also very transparent with their Boards. It’s interesting how trying to do things to please or impress others usually ends up causing a huge mess- some giant co-dependency mix-up. Further proof [if needed] that living from the inside out is the best way of spending your time alive.

  13. LE

    Question about time and adding value.When is a typically qualified board member potentially of less value because they are overtaxed in both their day to day responsibilities “day job” and/or the amount of boards that they serve on?Obviously it depends on the needs of the company, and quality and experience of the CEO, but I would think a board member or board members that are not particularly accessible at a moments notice or are constantly short on time could cause problems. Business decisions are about nuance and an art and as such someone who doesn’t have the time or isn’t able to devote the amount of thought or investigation needed to properly discuss an issue could end up being quite a detriment.

    1. fredwilson

      That’s something to be wary of. Overtaxed board members can’t add much value

  14. JimHirshfield

    MBA Sundays?

  15. John Revay

    curious – would you add one of your “good friends” as a director if qualified ..or just keep as an advisor

  16. vruz

    I’m curious, Fred…What do you believe are the cons of Sam’s five-member board configuration?And what are the advantages of your preferred configurations over Sam’s?Can you cite cases where yours works a lot better?I don’t like founders’ underrepresentation much, but there’s probably powerful reasons you believe your approach is a lot better.

    1. fredwilson

      not enough independents, who are the real value adders on a board

  17. David Haber

    Timely topic for us. One thing I’d say too is that having a board (albeit, informal) has been very helpful in our seed. Useful to have accountability / periodic check-ins / etc, especially as a first time founder. Good habits to be building as we start to scale.

  18. John Revay

    RE: The Perfect Board…..when is the perfect time to get D&O insurance assuming you don’t have a ton of cash in the bank?

    1. LE

      I can’t imagine someone agreeing to be on a board without that coverage being in place. (As well as actually verifying that the coverage is in place.)

  19. georgebc

    Since we are on the topic of boards, does anyone have recommendations for decent board management software? i.e. something to manage meetings, board papers, voting, note-taking, etc.

  20. cavepainting

    Just as with management teams, the culture of the board – in terms of how it communicates, collaborates and functions – has a disproportionate impact on its effectiveness.It is critical for founders to be vulnerable and transparent with their boards. When founders are hesitant to discuss the real risks and issues in the business, they are losing the opportunity to get real help that can make a difference. The truth is incredibly more powerful than appearances or pretenses.A board culture focused on seeking and dealing with the truth / reality is a pre-requisite to do a good job. When there is an environment of trust and partnership, even boards that look average on paper can be hugely effective. And in its absence, what appears a perfect board on paper, may turn out to be dysfunctional.

  21. Twain Twain

    In my case, my board will include a Neuroscientist because I’m building an AI system. Other companies would think of MBAs/Economists, Computer Scientists, Media/Marketing and people with the same expertise as them (only more advanced) but that’s not how I think.That’s because I’m aware of the types of myopia and gridlock that can occur at board-level when the mix isn’t right. I was board observer on 20+ investments in my 20s. Every month I’d dial into board calls and then write reports about where the company was going from where it was at.My view is:(1.) It’s easier to get quora when there are odd numbers of board members.(2.) Not all investors are equal and some don’t need to have a board seat.For example, some of the institutional investors are simply passive. Yes, they may put in N times the $$$ but they’re not going to add as much value as an investor who puts in less but is proactive (spots all the potholes in the road ahead and DOES THINGS to either enable the company to avoid the pothole or actually patches the pothole up, e.g. there’s a difficult-to-secure hyper-valuable relationship and the board member leverages their network to secure that relationship). The latter investor should get a board seat.(3.) Diversity matters at board level as much as in the company.Founder CEOs should find people who are neither “Yes” people nor naysayers. Often, a board member throwing them a constructive curve ball that makes them think of the problem differently produces much more effective strategies.

    1. ShanaC

      which would you rather have, board or company level diversity, if you could only have one? Also, what kinds of diversity matter?

      1. Twain Twain

        Company-level diversity because every second of every day the team should reflect and serve the diversity of users and the wider global society.Users don’t interact with the board and the board doesn’t design, code or ship product operationally to make users’ lives easier, happier and more informed.Board diversity is important to keep the founder on their toes; it means they don’t get trapped into “groupthink”.All kinds of diversity matter: age, gender, culture, sector, educational level.If I met an 18 year-old girl who was a dropout from Congo who was whipsmart about Neuroscience and AI and passionate about doing something positive with that knowhow, I’d consider her for my board on a fair basis with the 50-year old Harvard MBA “Gray Hair” with a PhD in Symbolic Systems from Stanford.

  22. awaldstein

    Reread this Fred and realized that of all the boards I’ve worked with, perfection was always an idea.Some were really good–in fact, the best ones were with a public company–but there was always something that made the boards an extension of the CEOs personality rather than a true platform for oversight that worked like a team.Possibly the limits of my experience.

    1. William Mougayar

      Maybe it depends on the size & maturity of company. A smart startup Ceo could get out of their comfort zone, and have a board that challenges them & helps them grow, instead of being in their shadow.

      1. awaldstein

        This is why I believe that easy rules often hide the truth.Depends on all of those things for certain and whether the company is doing well or not.

    2. vruz

      For some companies, especially young ones, I think the presence of a co-founder helps to moderate the impact of large CEO personalities.

  23. mattb2518

    I agree with every word in this post. We have a perfect board, and it’s because we’ve cultivated great board members over the years (both independent and investor), and because I think we manage the board well. Great companies do deserve great boards. I’ve seen great companies totally screwed by bad boards, and it makes me angry to see that every time I do.

    1. fredwilson

      much of what i’ve learned about good boards, and much of what i wrote in this post, i’ve learned from you and your boards at Return Path

  24. jacksmith112

    What about the non-CEO founders – How do you see them interfacing with the Board?

  25. William Mougayar

    Thing is, “board doing a good job or not” could be a subjective thing. A CEO might like to keep a board that doesn’t challenge her too much, and that’s not a good thing. Who decides that the Board is doing a good job or not?

  26. William Mougayar

    but that’s only one aspect, and typically the next bigger investor is going to dictate the “preferred” course for shares classification, no?

  27. William Mougayar

    agreed. that’s what I was getting to.

  28. fredwilson

    i disagree. there is a big difference in founder control by virtue of who they are and what they bring and dictatorship

  29. LE

    Is that concept though really good for the company?And it kind of contradicts the point of this post which is that a founder needs experienced individuals to help and give oversight. What’s the basis for thinking that the founder knows better than the people on the board if they are the right people to be on the board?Of course it’s better for the founder wanting to hold on until “the bitter end”. [1][1] “are derivations of the nautical term and refer to anyone who insists on adhering to a course of action without regard to consequences.”…

  30. Elia Freedman

    How does 60% or 66% (or some other configuration) necessitate founder control? It’s early here — which might be my excuse if I’m missing something obvious. 🙂

  31. LE

    Could also argue that just like with politics if there is a chance of a veto or something not being able to pass because of majority control then it will never be argued or even approached or discussed and considered correctly. Because in the end it will never pass and so on.For example let’s say you are in a band and you know that the wife of one of the band members, let’s call her “Yoko”, [1] will never let something fly because she exerts veto power in the end. Don’t you think that is going to alter the discussion and actions of the band?[1] Who holds male reproductive assistance vessels in a vise.

  32. LE

    Haha.You wrote exactly 12 words. And you expect that someone is not going to make assumptions?Note also that my first sentence was a question and not a statement. A question is asking for clarification.

  33. Elia Freedman

    I think I get it now. You are arguing against the whole premise of the post, not a response to William in particular.

  34. JamesHRH

    Founders who do non-voting arrangements are violating the principle “Just because you can, does not mean you should.”Most BoD are echo chambers. Can you imagine having @JLM:disqus & Phil Sugar on you BoD as independents? Yessirree, you would get value out of that twosome.