Tag: Board of Directors
When I was working on Startup Boards: Getting the Most Out of Your Board of Directors I spent a lot of time thinking about my ideal board meeting. I also spent a lot of time thinking about why boards are ineffective and what you – as an entrepreneur – can do to change the dynamic of an ineffective board (other than firing your VCs, which is hard to do.)
On March 6, from 5:30pm – 7:00pm at CU Law School, I’ll be doing a Crash Course on Startup Boards. I’m being hosted by my friends at CU Law Dean Phil Weiser and Brad Bernthal (head of the Entrepreneurship Initiative).
I’m going to cover three things and then do Q&A.
- How an Ideal Board Meeting Works
- Top 10 Things A Board Can Screw Up
- How To Fix A Broken Board
I’ll give real examples from my experience as a board member on hundreds of boards.
I hope to see you there.
In my new book, Startup Boards: Getting the Most Out of Your Board of Directors, in addition to decomposing and explaining a lot about the functioning of board meetings, I also describe my ideal board meeting.
I had four of them this week. That’s a lot of board meetings in a week, but my weeks tend to either be “lots of board meetings” or “no board meetings” as I generally bunch them up. Thankfully, all four of them used my ideal board meeting template.
A critical aspect of my ideal board meeting is that the entire board package should be sent out several days in advance to all board members. It should be thorough, including whatever the CEO wants the board to know about what has happened since the last board meeting. While I prefer prose to a PowerPoint deck, either is fine. Optimally it’s in a format like Google Docs where everyone on the board can comment on specific things, allowing open Q&A on the board material prior to the board meeting. I like to decouple monthly financial reporting from the board package, but including a look back of the financials, along with discussion and framing is useful. But the meat of the board package should be what’s going on now and going forward, not looking back. The looking back is for support of the discussion.
Then – the board meeting has a simple structure intended to fit in three hours. Optimally all participants are either in person or on video conference. Since I’m not traveling for business right now, almost all of my board meetings have a video conferencing component. When done correctly, it’s often just as effective as an in-person meeting, and in some cases (if you follow my video conferencing rules) even more effective. What is not effective is when one or more people are on an audio conference.
Once everyone is settled, break the board meeting into three discrete sections. They, and their descriptions, follow:
Administration (30 minutes): Board overhead, resolutions, administration, and questions about the board package.
Discussion (up to 2 hours): Discussion on up to five topics. The five topics should fit on one slide or be written on the white board. The CEO is responsible for time boxing the discussion, or if he needs help, he should ask the lead director to do this. If you don’t have a lead director, read my book and get yourself one. This should be a discussion – you’ve got your board in the room – use it to help you go deeper on the specific topic you are trying to figure out. These topics can be on anything, but my experience is that the more precise the context is, the richer the discussion. I prefer for the full leadership team to be in the meeting for this part, although it’s entirely up to the CEO who is in the room.
Executive Session (30 minutes): CEO and board only. Here the board can give feedback specifically to the CEO or sensitive issues around personnel or other things the CEO wants to discuss separately from the management team can be covered. At the end, the CEO leaves and let’s the board have some time alone where the lead director checks in if there is any feedback the board would like to give the CEO.
If you have less than five topics, the board meeting can take less time. Or if the five topics only take an hour to go through, the board meeting can take less time. There is nothing ever wrong with ending a meeting early. Ever.
Now this template doesn’t always work – you often have other specific things you have to address. When a company is going through an M&A process, the board meetings tend to be frequent and cover other stuff. Or, when the company is in a downward spiral, or dealing with a crisis, the focus is often very precise.
But in my world, the day of the “board update” is over. I find no value in sitting in a room for three hours, paging through a PowerPoint deck while people present at me, and the people around the table ask an endless stream of questions, mostly demonstrating that they haven’t been engaged in what the company has been doing since the last board meeting.
Startup Boards: Getting the Most Out of Your Board of Directors is shipping. It was so satisfying to see this today.
This was by far the most difficult book to write so far. The title we came up with should have tipped me off – it ended up be extremely challenging to make a book about “boards” not be “boring.”
If you are up for it, give me some opening day love and order a copy of Startup Boards: Getting the Most Out of Your Board of Directors.
Ari Newman is an entrepreneur, mentor, investor, and a friend. He works at Techstars where his responsibility is to ensure that the connections between alumni, mentors, and staff are as robust as they can be – helping entrepreneurs “do more faster” day in and day out. His most recent company, Filtrbox, participated in the inaugural Techstars class (Techstars Boulder 2007) and was a win for all parties involved; Filtrbox was acquired in 2010 by Jive Software (NASDAQ: JIVE).
I’ve worked closely with Ari for a while and love his candor. He talks, from an entrepreneur’s perspective, with recent first hand experience. Following is his advice to early stage entrepreneurs for creating structure in their company.
Here’s the punchline: if you run your company as if you have closed a VC equity financing round even though you actually closed a convertible debt round, you’ll be in much better shape when it comes time to raise your Series A financing. Specifically, I am talking about putting a board in place, running formal board meetings, and making sure you have people at the table who act as the voice of reason and sanity. One of the key benefits of doing this early on is that when it comes time to raise that next round, the people you’ll need the most help from are already involved and engaged.
Convertible debt financings have become an increasingly attractive approach for seed rounds because it delays the valuation discussion, costs less from a legal standpoint, and is an easier financial instrument to “keep raising more small amounts of money” on. There are two different cases, with shades of grey in between: (1) there are only a few investors or (2) it’s a “party” round, with $1M+ raised and many investors. This second kind of seed financing can be a double-edged sword for the entrepreneur and company if not very carefully managed. This post is not about the economic implications of debt rounds versus priced rounds – there has already been plenty written about that including this great one from Mark Suster. Rather, this post is a call to action for entrepreneurs who have successfully raised a debt round and must now turn their idea into a serious business.
So why would you treat your debt investors (somewhat) like equity investors? This may seem counterintuitive, even even a pain in the ass. So, I’ll explain my reasoning through the story of ASC, a fictitious company that has a combination of characteristics I’ve seen across a number of early stage companies.
Acme SaaS Corp (ASC) was started by two entrepreneurs; they have a big vision and if they can execute on it, the business will be a clear home-run. One of them used to be a lead developer at [insert hot consumer tech company here]. They need to raise money before building anything substantial after determining that they needed a little dough to follow the Lean Startup methodology.
They decide to go out and raise money on a convertible note – several angel investors have signaled interest in participating in the note and they don’t feel ready to pitch VCs yet. Fundraising goes better than expected and they quickly find themselves with a $750k round consisting of several VCs and a bunch of angels. The investors, founders, and “community” are all super excited about ASC. They close on the $750k, hire a buddy or two, buy some Macs, and get to work.
ASC starts building product, but as they get into the thick of it, the team realizes executing on their vision is going to be extremely hard. Things start to get a little fuzzy in terms of priorities, but not to fret, the new office is coming along really well with all of the hiring! For the first the months, the team meets often and strategizes on what they want to build while some code gets written. Early customer development talks are going great which keeps the team really excited. Three months in, the burn is now at $70k/month.
Two more months go by and the team is continuing to iterate, but every two-week sprint results in some re-factoring and re-thinking. No updates, screen comps, or metrics have been publicly shared yet. It’s too early for that shit. Heads down on product, they say. Every now and then, investors are told things are going great and the founders are really excited about what they are doing. Soundbites from potential customers are encouraging. Eventually early product demos start happening but they’re rough and the product looks very alpha. At month six, one of the early hires leaves, a developer who turns out wasn’t a good fit. There is $350k left in the bank.
Seven months in, there is a beta product. It’s better than before, but not by miles. The people on the sales side don’t feel they can charge for it yet because who’s going to take out their wallet for something that isn’t perfect. A bunch of potential customers are kicking the tires on the product but it seems that every engaged beta customer needs something slightly different or feels as if the product is not ready to be truly used in production. “This is all a part of the normal product and customer development process,” the CEO tells the team. The burn is now at $90k/month as they had to hire a “customer delight” person to handle the beta process. The team thinks their investors still love them and that they are still a hot company. The first material update goes out to the investors, with lots of positive quotes from VPs at potential customers, and they all indicate future product acceptance if a bunch of other stuff gets in place. Investors are dismayed that there are no real customers yet. There is no discussion of burn, runway, and more financing yet. The team wants to make a little more progress first.
A month later, another email update goes out to the investors – the team has decided to pivot based on feedback and they are super excited about the new direction and once they have the product updated to capture the new, bigger opportunity, it’s going be great. Oh, and the email says the founders will be in touch to discuss another round of funding since there are only 2 months of runway left.
Sound familiar? I could continue but the odds are that this story isn’t going to end well. The company flames out and the team gets aquihired. The investors get nothing.
While you may think ASC is an extreme case, it happens all the time. I’ve observed too many companies that have some or all of these elements in their story. I’m not saying, under any circumstance, that the debt round was the catalyst or sole reason for the company’s missteps but there are a number of times in this story where good company hygiene, good governance, and a properly utilized board would have helped to positively affect the outcome. Following are a few ways that a board would have helped out.
Easy Debt Round Lasting A Year – Even if the raise wasn’t that easy, the company was able to raise enough to buy a year or more of runway. In startup time, that feels like forever. It’s enough time to hang yourself if you are not careful. Had the company created a board and run it properly, they would have ratified a budget, reviewed compensation plans, and agreed on spending levels during early product development. The year would have been a full year, not just 7-9 months.
Real Product and Market Focus – This company lost 3-6 months of execution because they got lost building towards a high level vision. That high level vision was a beast to tackle, and being younger founders, they they didn’t realize they were in over their heads. With advisors or a board, the founders could have opened the kimono and asked for guidance. There are about a dozen corrective actions, best practices, or methodologies that could have been applied during this critical time. It’s up to the team to be able to execute them, but they had their heads in the clouds for too long and no one else at the table with them.
Don’t Pivot in a Vacuum – Had ASC properly used its board, advisors, and investors, it would have brought the pivot strategy to the table early on. A discussion around overall business viability, time to market, and capital impact would have ensued. A review of the cash position, burn rate, and execution plan would have revealed there was not enough cash on hand to nail the pivot while leaving 3-6 months of time in market before raising again. The plan would have to get way tighter, way faster. They didn’t keep the investors up-to-date, then pivoted without engaging or validating whether there was going to be follow-on support. They took a right turn into a brick wall. Investors do not own the company or its strategy. I often say “it’s your company” when I’m bluntly asked what direction a company should take, especially if I’m wearing my investor hat. While that is true, if you rely on outside capital to reach escape velocity, keep the cockpit talking to the engine room.
Use The Smart Money or Lose It – Almost every investor I know makes investments because they want the return, but they also believe they can be helpful to the company in some way. When teams don’t communicate and engage with their investors, the void is often filled with skepticism, doubt, and (often false) assumptions about the business or the team. You borrowed money (or sold a portion of your company) from these folks – they want you to be successful. Leverage them for the better of the company, whether that means using their wisdom or their rolodex. They also can create major signaling problems for your next round if you allow the radio-silence void to be filled with doubt and distrust. Who would blindly give ASC another big check after what occurred above?
Company Hygiene Matters – One of the responsibility of a Board of Directors is to regularly discuss financials, burn rate, and cash management. Had ASC created a board, the company would have potentially managed their cash more conservatively and had the wherewithal to initiate the shift of the company sooner, whether it be through M&A talks, raising more capital, or making the pivot earlier.
I bet that some of you reading this post are entrepreneurs who are in this situation. I beg of you, treat your debt holders like equity holders, and utilize their expertise to help further your business. One easy way to do so is to act as if they are board members. In the super hard, fuzzy, pivot-happy early days of a company, a little structure, accountability, and organizational discipline can be all the difference between running headlong into a brick wall or creating a meaningful, well-operated company.
Follow Ari on Twitter at @arinewman or ask him about the power of the Techstars network at ari.newman@techstars.com.
At TechStars, we talk often about “mentor whiplash” – the thing that happens when you get seemingly conflicting advice from multiple mentors. Talk to five mentors; get seven different opinions! This is normal, as there is no right or absolute answer in many cases, people have different perspectives and experiences, and they are responding to different inputs (based on their own context), even if the data they are presented with looks the same on the surface.
Yesterday, Steve Blank and I both put up articles on the WSJ Accelerators site. The question for the week was “When should you have a board of directors or a board of advisors?” My answer was Start Building Your Board Early. Steve’s was Don’t Give Away Your Board Seats. I just went back and read each of them. On the surface they seem to be opposite views. But upon reading them carefully, I think they are both right, and a great example of mentor whiplash.
For context, I have enormous respect for Steve and I learn a lot from him. We are on the UP Global board together but have never served on a for-profit board together. We both started out as entrepreneurs and have spent a lot of time participating in, learning about, and teaching how to create and scale startups. I’ve been on lots of boards – ranging from great to shitty; I expect Steve has as well. While we haven’t spent a lot of physical time together, all of our virtual time has been stimulating to me, even when we disagree (which is possibly unsettling but hopefully entertaining to those observing.) And while we are both very busy in our separate universes, my sense is they overlap nicely and probably converge in some galaxy far far away.
So – when you read Steve’s article and hear “Steve says don’t add a board member until after you raise a VC round” and then read my article and conclude “Brad says add a board member before you raise a VC round” it’s easy to say “wow – ok – that sort of – well – doesn’t really help – I guess I have to pick sides.” You can line up paragraphs and have an amusing “but Brad said, but Steve said” kind of thing. I considered making a Madlib out of this, but had too many other things to do this morning.
But if you go one level deeper, we are both saying “be careful with who you add to your board.” I’m taking a positive view – assuming that you are doing this – and adding someone you trust and has a philosophy of helping support the entrepreneur. From my perspective:
“… Early stage board of directors should be focused on being an extension of the team, helping the entrepreneurs get out of the gate, and get the business up and running. Often, entrepreneurs don’t build a board until they are forced to by their VCs when they raise their first financing round. This is dumb, as you are missing the opportunity to add at least one person to the team who — as a board member — can help you navigate the early process of building your company and raising that first round. In some cases, this can be transformative.”
Steve takes the opposite view – concerned that anyone who wants to be on an early stage board is resume padding, potentially a control freak, or the enemy of the founders.
“At the end of the day, your board is not your friend. You may like them and they might like you, but they have a fiduciary duty to the shareholders, not the founders. And they have a fiduciary responsibility to their own limited partners. That means the board is your boss, and they have an obligation to optimize results for the company. You may be the ex-employees one day if they think you’re holding the company back.”
Totally valid. And it reinforces the point we both are making, which Maynard Webb makes more clearly in his Accelerator post ‘Date’ Advisers, ‘Marry’ Board Members. When I reflect on my post, I didn’t state this very well. Anytime you add an outside board member, you should be reaching high and adding someone you think will really be helpful. You are not looking for a “boss” or someone who is going to hide behind their abstract fiduciary responsibilities to all shareholders (which they probably don’t actually understand) – you are looking for an early teammate who is going to help you win. Sure – there will be cases where they have to consider their fiduciary responsibilities, but their perspective should be that of helping support the entrepreneurs in whatever way the entrepreneurs need.
The power of a great entrepreneur is to collect a lot of data and make a decision based on their own point of view and conviction. You’ve got a lot of info – including some different perspectives from the WSJ Accelerators segment this week. That’s their goal – now I encourage you to read the articles carefully, think about what you want your board to be like, and take action on it.
Over and over again people talk about transparency. Many people assert they are transparent, or are being transparent. Few actually are.
I was thinking about this last night while watching the last few episodes of Revenge: Season 2 with Amy. Suddenly the word “transparent” started being thrown around by the Grasons, referring to their new found desire to be transparent. In this case, it was simply disingenuous – they are transparent only when it suits their purposes and usually as a setup of some other nefarious act they were about to perform (or had performed).
Whenever a word makes it into a TV show like Revenge, you know that it’s lost all meaning. And, as I’ve observed in the world of tech and startups I play in, transparency is used all the time to justify something, but rarely actually supported by behavior.
In the “everything that is old is new again” category, the master of transparency, and likely the originator of “open book management“, is Jack Stack. I remember meeting Jack and hearing him talk at the very first Birthing of Giants event created by Verne Harnish in 1991. I read Jack’s book – The Great Game of Business: Unlocking the Power and Profitability of Open-Book Management – about his experience at Springfield ReManufacturing Corp – and was blown away by his thinking. My first company – Feld Technologies – was definitely not run with an open book and Jack’s ideas were very provocative to me.
Over the years, several CEOs I’ve worked with have been incredibly open book, or – if you want to use today’s lingo – transparent. My two favorites are Matt Blumberg of Return Path and Rand Fiskin of Moz. Matt shares his entire board book after the board meeting with everyone at the company (now over 400 people). He’s been doing this since the beginning, and only redacts specific compensation information and occasional legal stuff. Rand shares – well everything – including one of the best, most detailed, and completely transparent posts about a private company financing in the history of private company financings.
When an entrepreneur says he’s transparent, I now ask “do you publish your board book to your entire company?” I view this as a benchmark for transparency. If the answer is “no”, then I ask the entrepreneur what he means by “I’m transparent.” If you can’t be open with your company about the information you report to your board, how can you actually be transparent?
I’ve been on a lot of boards. I’m still on a lot of boards. And I’ve been thinking about boards a lot as I work on my next book Startup Boards: Recreating the Board of Directors to Be Relevant to Entrepreneurial Companies.
I used to think every board needed a chairman and early in my investing career I was often this chairman (or co-chairman). At some point I began feeling like the chairman role in a private company both undermined the CEO and sent the wrong signal to the employees of the company, and I preferred that the CEO be the chairman. I also started disliking being the chairman, as it seemed to create a view that I had some kind of ultimate power and responsibility for the company that I rarely had, and that almost always belonged to the CEO. So I stopped being chairman and in a number of cases refused to be called it, even when I played the role of it. The one exception I made was non-profits, where chairman seems to have a somewhat different connotation. And since I’ve decided not to be on public company boards, I don’t have to make a decision in that context.
Several years ago I started using, and encountering, the phrase “lead director” more frequently. Recently, I decided it’s the right one and have used it to replace chairman in my vocabulary. And, when asked the question, “does a private company board need a chairman”, I now say “no, but it needs a lead director.”
The lead director is responsible for working with the CEO to manage the board of directors. The lead director is always the most active director and in many cases represents the largest non-founder shareholder in the company when a company is private. The lead director is not the communication conduit to the CEO – every director interacts directly with the CEO – but the lead director gets involved in any conflict between a director and the CEO, any concerns that arise, and any conflicts between directors. And the lead director helps the CEO manage the board meetings.
The lead director should be the CEO’s board confidant, organizer, and conflict resolver. I sort of like the word consigliere, as used in The Godfather, a lot, although it has both obvious negative connotations and a different actual function in real life than the one represented in the film, so I’m searching for a better one.
When I look at the boards I’m currently on, I play this role in many, but not all of them. And the phrase feels correct to me.
Do you have a lead director on your board? How about a chairman? What do they do and how does it feel? And is there a better word than consigliere?
I joined my first board of a company other than mine in 1994 (NetGenesis). Since then, I’ve sat on hundreds of boards and been to a zillion board meetings. It crushes my soul a little to think of the number of board meetings I have sat through that were ineffective, poorly run, or just plain boring. I guess that’s part of the motivation I have in writing Startup Boards: Reinventing the Board of Directors to Be Useful to the Entrepreneur (the next book in the Startup Revolution series which should be out sometime this summer.)
In the mean time, over the past two years I’ve done a lot of experiments with the boards I’m on. I’ve tried a lot of different things – some that are awesome, some that don’t matter, some that suck, and some that have been epic fails. For any that aren’t awesome, I’ve tried to kill the experiment quickly so it didn’t hurt anything and when I reflect on everything I’ve tried I think I’ve managed to “do no harm”, which is more than I can say for a lot of the other VCs who I’ve sat on boards with since 1994.
By this summer, I expect I’ll have a very clear view on the best practices from my perspective for making a Startup Board effective. Until then, I’m still running experiments, or experiencing experiments that the entrepreneurs run. And I’m thinking out loud (including in posts like this) on what has worked and hasn’t worked.
One of the things I’ve played around with is the board package. The number of different formats, styles, information incorporated, and distribution methods over the years boggles my mind. I not-so-fondly remember toting around “binders full of board meeting material” in the 1990s. Or pre-Gmail having a “board meeting folder” in Outlook so I could quickly find the upcoming board meeting documents. Or fighting through 19 attachments to an email to figure out where the actual board material was. PowerPoints, PDFs, Word documents, text files, Excel spreadsheets, Prezi docs, videos, email outlines – the list goes on.
Recently, I had a magical moment. I’m a huge believer in distributing the board material a few days in advance, having all the board members comment on it in advance of the meeting, and then having the meeting without going through the board material page by page. No death by endless Powerpoint, no reading a document I’ve already read. My favorite board meetings are the “one slide board meeting” where the only piece of paper allowed in the room is the agenda of the meeting.
When entrepreneurs don’t get this, I suggest that they pretend their board members can read and cognitively process the information in advance. And, if they don’t believe their board members will do this, just start having the board meeting under this assumption and watch how they board members get their shit together and read the material in advance.
In this recent magical moment, rather than receiving anything via email, a Google Doc notification showed up in my inbox. I went to it and the entire board package was in a single Google doc file. The entire management team and the entire board was included on it. As I read through the Google doc, whenever I had a comment or a question, I highlighted the section in question, hit Command-Option-M, and left a comment. Then, as other people read through the package, they left comments. And then the management team responded to the comments.
Voila – an interactive board package. Zero special technology. It wasn’t planned, or assigned. It just naturally happened. When we showed up to the board meeting, everyone had the issues in their mind. We’d already cut out an hour of setup, and probably another hour of discussion. So we got right down to the higher level issues that the board material, and comments, and the responses generated.
In this case, the CEO created a very simple agenda immediately before the board meeting that captured the strategic issues we needed to address. There were a few tactical questions outstanding – they got knocked off quickly. We had a two hour board meeting – 90 minutes of it was intense and fruitful. No one referred to any paper – we looked each other in the eyes for 90 minutes and had a deep, engaged, substantive discussion.
I’ve been describing this as a part of a “continuous board engagement” – similar to “continuous deployment and continuous innovation” in Eric Ries’ The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. I get information daily from most of the companies I’m involved in. I’m in the flow of a lot of information – some “noise” but a huge amount of “signal.” Then – the week before the board meeting, the current state of things gets consolidated into a dynamic document that allows everyone involved to interact with each other around the content.
I’m going to play a lot with this in the next few months. Any suggested tweaks or changes to this approach? Any obvious pitfalls?
This week I had two meetings with CEOs of companies we’ve recently invested in where the question of “what is an ideal board meeting” came up. I’m writing an entire book on it called Startup Boards: Reinventing the Board of Directors to Better Support the Entrepreneur so it’s easy for me to define my ideal board meeting at this point since my head is pretty deep into it intellectually.
One of the things I always suggest to CEOs is that they be an outside director for one company that is not their own. I don’t care how big or small the company is, whether or not I have an involvement in the company, or if the CEO knows the entrepreneurs involved. I’m much more interested in the CEO having the experience of being a board member for someone else’s company.
Being CEO of a fast growing startup is a tough job. There are awesome days, dismal days, and lots of in-between days. I’ve never been in a startup that was a straight line of progress over time and I’ve never worked with a CEO who didn’t regularly learn new things, have stuff not work, and go through stretches of huge uncertainty and struggle.
Given that I am no longer a CEO (although I was once – for seven years) I don’t feel the pressure of being CEO. As a result I’ve spent a lot of the past 17 years being able to provide perspective for the CEOs I work with. Even when I’m deeply invested in the company, I can be emotionally and functionally detached from the pressure and dynamics of what the CEO is going through on a daily basis while still understanding the issues since I’ve had the experience.
Now, imagine you are a CEO of a fast growing startup. Wouldn’t it be awesome to be able to spend a small amount of your time in that same emotional and functional detachment for someone else’s company? Not only would it stretch some new muscles for you, it’d give you a much broader perspective on how “the job of a CEO” works. You might have new empathy for a CEO, which could include self-empathy (since you are also a CEO) – which is a tough concept for some, but is fundamentally about understanding yourself better, especially when you are under emotional distress of some sort. You’d have empathy for other board members and would either appreciate your own board members more, or learn tools and approaches to develop a more effective relationship with them, or decide you need different ones.
There are lots of other subtle benefits. You’ll extend your network. You’ll view a company from a different vantage point. You’ll be on the other side of the financing discussions (a board member, rather than the CEO). You’ll understand “fiduciary responsibility” more deeply. You’ll have a peer relationship with another CEO that you have a vested interest in that crosses over to a board – CEO relationship. You’ll get exposed to new management styles. You’ll experience different conflicts that you won’t have the same type of pressure from. The list goes on and on.
I usually recommend only one outside board. Not two, not three – just one. Any more than one is too many – as an active CEO you just won’t have time to be serious and deliberate about it. While you might feel like you have capacity for more, your company needs your attention first. There are exceptions, especially with serial entrepreneurs who have a unique relationship with an investor where it’s a deeper, collaborative relationship across multiple companies (I have a few of these), but generally one is plenty.
I don’t count non-profit boards in this mix. Do as much non-profit stuff as you want. The dynamics, incentives, motivations, and things you’ll learn and experience are totally different. That’s not what this is about.
If you are a CEO of a startup company and you aren’t on one other board as an outside director, think hard about doing it. And, if you are in my world and aren’t on an outside board, holler if you want my help getting you connected up with some folks.