Startup Boards, 2nd Edition

Chapter 8Board Evolution

The size and composition of your board form the foundation that helps your company scale—otherwise, it's just a collection of people. Considering board dynamics over time is essential since the board you start with isn't necessarily the one that will grow with you. It's important to think through the skills and experiences of board members since what you need as a startup in a board member could be a hindrance, distraction, or obstacle as you scale.

While a person with strong finance, audit, regulatory, and cost-control expertise would be a suitable board member for a growth company preparing for an IPO, they're less effective for a startup of three people that's pre-product and pre-revenue.

In the early stages of a company, the founders should lead the board formation process. As a company evolves, responsibility for the configuration and evolution of the board shifts to the CEO and the largest investors. As the company continues to grow and board interactions become more formalized, the board typically forms a nominating/governance committee consisting of several board members, including the CEO and/or a founder. In all of these cases, board members should actively contribute to defining the board's composition.

Startup Stages

In Chapter 6, we discussed the three stages of growth that impact your board: Startup, Revenue, and Growth. Table 8.1 summarizes the role of board members at each stage. However, it's difficult to figure out how to evolve ...