Tiny Companies Need Tiny Board
[Source: Fred Destin, Accel] I got a call from a brilliant young French entrepreneur the other day asking me about composing the board for his startup as he was closing his seed round. It seemed like every angel writing a check wanted to be on the board as well as some notable industry players. Here is what I told him: resist the pressure!
Optimize for speed
As an early stage startup, speed is probably your core KPI. Of course you need to carefully consider your strategy given that you’re acting with limited resources, but the reality is that you’re having to make important decisions ALL the time. Recruitment, product, pricing, fundraising, co-founder issues, you name it. Having a tight group of board members allows you to convene a board at the drop of a hat and make informed decisions quickly. Aim for zero complexity in reporting, organising board meetings and making decisions. Speed will give you a decisive advantage, starting at the top.
Optimize for intimacy
In the early days of a company, having a very tight relationship with a small number of advisors will ensure that:
- any advice you receive is on point and highly informed
- you can take real risks
- you can change course on the fly
The last thing you want is a mildly engaged board who doesn’t fully understand the realities of your team and business and is likely to respond to fear as soon as the going gets tough. The ability for you as a founder to be totally transparent, including about your own fears and shortcomings, with a small group of engaged partners is key. It breeds the trust and for lack of a better work, intimacy, that you will need to thrive.
It’s easier to add than to subtract
It’s easy in the early days to yield to all the well-intentioned pressure to “build a strong board”. It’s important to bear in mind though that it is much easier to add board members later on than ask an existing board member to leave … especially if your company is doing well. France is a particularly bad offender when it comes to massive boards. No one EVER wants to leave a successful company, and incoming investors are typically so clubby that they don’t apply brute force to keep the board small. So you will routinely find Series B companies with 7 board members. I came across a consumer finance company recently that already had 9 (nine !) board members and was looking to add two. All the names looked great on paper, but I shuddered at the thought of having to sit through marathon reporting sessions with 11 people around the table. There is a time for structured governance and large boards, but seed ain’t it. You will need an iron fist to run a board that big efficiently, and you’re most likely not ready for it!