Trophy Board Members
I am not reading Bad Blood, the book about Theranos, but many of my friends and colleagues are.
One of the many “tells” that Theranos was not a good company was the board chock full of trophy board members.
A “trophy” board member is someone with a big name who, in theory, brings credibility and connections to your company. They are often out of the world of politics, or a Fortune 500 CEO job, or Wall Street.
I dislike trophy board members and advise our portfolio companies to avoid them. But they don’t always take our advice.
One good example is Lending Club, a very good company run by a very good entrepreneur, who got thrown under the bus, in my view, by his trophy board.
USV is an investor in that entrepreneur’s new company which says all you need to know about where we come out on that one.
Trophy board members are more concerned about their reputations than your company and will often react badly in times of crisis and challenge, which is exactly when you need your board members at your side more than ever.
Trophy board members often miss board meetings, show up unprepared, and frequently don’t take the time and effort to truly understand your business.
I am a huge fan of independent directors to complement the founders and investors on a board. The quality of the board is highest when there are more independents on it than investors and founders. Try to get that ratio right on your board as soon as practical.
But don’t put “names” on your board. Put operators, ideally very seasoned operators, who have done everything you want to do, ideally multiple times, and can help you spot the issues before they become problems and spot the opportunities with enough time to go after them.
These ideal board members are often not big names and they usually don’t have big egos. They are solid, steady, and worth their weight in gold. They come in male and female varieties and across the racial and ethnic spectrum too. It is true that it takes a bit more work to build a diverse board of operationally focused board members but it is worth it.
But whatever you do, stay away from trophy board members. They rarely help and often hurt.