How to Build an Effective Board for Your Startup
A successful board relationship starts with recruiting the right people and knowing how to cultivate those bonds
By Matt Hoffman
Last Updated: September 13, 2021
Published: July 30, 2021
As with any effective long-term relationship, the relationship between a startup founder and their board must begin with trust. That begins with finding the right person and cultivating that bond.
At our recent Future Perfect: Influence event, I sat down with Fable Founder and CEO Padma Warrior and Bolster Founder and CEO Matt Blumberg to discuss what makes an effective startup board member, how to maintain productive working relationships, and more.
As you build out your own board, keep these tips in mind:
Understand the role of a board member versus an operator
As a founder, it’s important to remember that while your board members can help you keep your startup on the right path, they do not typically make the path themselves. For board members who may also be operators themselves, realizing this difference is essential if they’re tapped to serve on a board.
Warrior sits on the boards of Microsoft and Spotify and is also a founder and CEO herself. As a board member, she says, “[y]our responsibility is to coach the management team, to challenge them, and to really help them think about things that perhaps they don't think of every day. Bringing your experience to the forefront, you're not there necessarily to solve problems. You're just there to see if they are taking the right approach to solve the problems.”
Prioritize independence and diversity from Day One
In the early stages of a company, investors are often the first players called to the table but shouldn’t be the only ones on your board. Both Blumberg and Warrior believe that having independent board members can help balance your board alongside members who are experts in your field, financial experts, and auditors.
Have people with complementary backgrounds and diverse skill sets. Think of it as a jigsaw puzzle. What’s missing?
Be sure to recruit board members with these qualities
When it comes to adding people to your startup board, there are a few things you’ll want to screen for:
Interest in your company
Time to dedicate to board activities
A deep understanding of your startup, how it works, and all its services and products
Consider creating a board that can challenge you as a founder
You want board members who share your vision, but you’ll also want to seek out those who are committed to sharing different perspectives.
As Warrior says: “Your role as a board member is to understand the business deeply and then help [company leaders] think about things that are not perhaps in their linear way of thinking about the business. So, you bring in that outside perspective, and occasionally challenge them in their thinking and encourage them to think beyond.”
Of course as the founder, it’s up to you how you receive and respond to that feedback. Remember:
There will be disagreements with the board. That’s healthy. The board is there to challenge you and offer a different perspective.
Don’t forget to nurture relationships with board members
Blumberg believes it’s critical to find ways for board members to connect with each other and with you outside formal meetings. In a time of nonstop Zoom meetings, that might include agenda-free conversations over virtual coffees.
“You have to cultivate that ‘teamness’ with your board and get them working together well as a team, so that they can best serve you and the business and your leadership team.”
Keep your board members informed and engaged
You’ve chosen a board with members who understand your business, share your vision for the company, and are patient and dedicated. It’s a missed opportunity if you only reach out once or twice a year or if you only talk when there’s a problem.
Warrior recommends quarterly updates that include:
Financial information about your startup
The current state of corporate culture
Predictions on upcoming challenges and new competitors
Finally, remember that as your startup grows and changes, the size and composition of your board may need to evolve as well. “What you need in year one and year two of a startup might be very different than what you need in year three or four,” Blumberg says. “There's nothing wrong with a one-year option grant or a two-year option grant.”
While there may not be a standard recipe for success, we hope these tips can help you find the right board members who can influence the trajectory of your startup.
To catch up on more of M13’s Future Perfect: Influence series on everything from the creator economy to social impact, check out the full video replay.