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How to Build a Board of Directors That Actually Works
It’s not about control — it’s about influence
I’ll give you the bad news first: When you’re the founder of a growing company, at some point you’re probably going to lose control of your board.
A board of directors is a legally required entity that is responsible for making a company’s most critical structural, financial, and directional decisions. At the very inception of a company, the early startup stage, the board consists of the founder or co-founders, and that’s it. But soon — very soon if the startup is successful in raising money — that board will expand.
As the board grows, the founders will have decreasing control over who is on the board, how it operates, and any constraints on the limits of its power. It can be like creating Frankenstein’s monster — awesome that you brought it to life, until it tries to strangle you.
The good news is that you have strategy and influence on your side, and if you’re careful with your decisions from the very beginning of your growth stage, you’ll have a board that works with you, even for you.
Regulate voting power as your board grows
I’ve advised several companies on board size, makeup, and the logistics around how they operate. The one lesson I’ve learned, one that’s also echoed across the lifecycles of the startups I’ve founded or had a seat on the executive team, is that control over voting gets lost before you realize it.
For most startups, boards of directors usually consist of founders and lead investors from each round of financing. So as an example, your board might be you, your co-founder, and the lead investor from your seed round. An odd number of members is preferable, so there are no ties when voting on big decisions. And because you want to maintain internal control, the tiebreaker board member should be a member of the founding team. In other words: two of you, one of them.
Now, a seed round is early in the life of a startup, and you probably still had a lot of control over where your seed money came from, and therefore who your third board member might be. But that’s likely where total control ends. The only control you’ll have over future…
