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Architect your board like your product
Choosing board members
Many founders pick board members the way someone might pick a date at a bar: they talked to me, so let's go out Friday. A lead term sheet settles nothing, since everybody gets one. What counts is who has the skills and temperament that complement what the founder already has.
Why discomfort helps
Complement means a bit of discomfort. A second engineer on the board adds nothing for an engineer, and a board member with no experience adds nothing to a team that has none. The better choice is someone who has been through the cycle and whose experiences are very different, which means the first meetings are hard to follow, and that is where the learning comes.
The worst board member
Personal traits decide the rest. By Doug Leone's count, out of ten venture investors about three are incompetent, four are what he calls know-ops who nod with the group and do no damage, and as few as two know what they're doing. Some also spend board meetings managing their standing in their own firm, so the founder gets an interpreter of what the firm might want. Inexperience, a duplicate background, self-protection, and incompetence together make the worst board member, one who does damage.
How does a startup board usually get formed?
At the earliest stage, a startup's board is often just its founders. A first outside round typically adds an investor seat, and a common structure by the Series A is two founders, one or two investors, and sometimes an independent member. Each later round can add seats, which is why early choices shape the group for years.
Why does a mix of backgrounds improve decisions?
Political scientist Scott Page of the University of Michigan argued in his 2007 book The Difference that groups with varied ways of framing problems often outperform groups of individually stronger but similar people. Similar thinkers tend to get stuck at the same points, while different ones notice different options. His models show the effect grows when the problem is hard enough that no single approach is enough.
Why might a director put their own firm first?
Economists Michael Jensen and William Meckling described the agency problem in a 1976 paper. It arises when a person acting for others has incentives that differ from theirs. A venture partner sitting on a board answers to their own firm's partners, so decisions can be shaped by how they will look inside that firm.
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