Start-up Boards; Getting the Most out of Your Board of Directors
by Brad Feld and Mahendra Ramsinghani
ISBN: 978-1118443668, Publisher: Wiley (2013)
Reviewed by: Julie Garland McLellan*
As a company grows a board becomes necessary. Good boards can launch a great company but bad boards can sink a venture faster than you can say 'Titanic'. This book attempts to show how founders can recruit a good board, how staff can relate to the board effectively and how directors can add value to the enterprise. It is a valiant attempt; serving the needs of different user groups in one book is as difficult as serving two masters, which we all know is something no man can do!
Against all odds this book succeeds in meeting its aims.
The book is written and presented in a colloquial, up-beat modern manner. It will appeal to younger entrepreneurs although it would add value to even the greyest haired founder. Whilst it lacks scholarly depth, it is a highly practical book with some great tables and process recommendations that will help a novice CEO, founder or board member to approach and mange board challenges with confidence and a good chance of success. Some of the processes are described in a step by step manner. This makes it an easy to follow guide for designing board composition, recruiting members, developing a board agenda and even handling the tricky issues of CEO and board succession.
The inclusion of some unhappy endings in the selection of case studies is one of the factors that lifts this book out of the ordinary and into an exceptional class of its own. Anyone can cobble together a homily based on the insights of a successful entrepreneur - not many authors can counter balance those with insights extracted from a range of other successes, achieved in other ways at other times, and then compare these to failure stories to achieve a set of recommendations that should stand the test of time (and entrepreneurial ingenuity).
A few definitions lack rigour. I was particularly perturbed by the confusion of lead director and chairman roles. A cursory review of governance theory would have cleared that up. The executive nature of start-up boards and the role of a founder as CEO or Chairman was handled well. Start-ups are renowned for combining and confusing these roles and the text does well to illustrate where they differ and where they can safely overlap. Then it shoots itself in the foot by assigning gender to 'chairman' when the terminology is based on the Latin for 'serving' rather than any gender. The imprecise terminology is one of the key areas where the modernity and contemporary style has overtaken scholastic rigour.
An inclusion which is entirely modern, and very well researched, is the section on gender diversity in the boardroom. This is addressed with refreshing candour and from the correct viewpoint of increasing shareholder value. It is also written simply, directly, without any references to public policy, rhetoric and with no Pollyannaism. Hopefully this will be the beginning of a trend in addressing that particular topic.
The section on conflicts of interest is a much needed addition to start-up board literature. Too many books extoll the virtues of alignment and vested interest without considering the downside. This book not only considers the downside, it gives simple steps for managing the issues and avoiding the downside. It also provides guidance for those occasions when the downside is inevitable and tough decisions must be made.
I will certainly be sharing my copy widely and giving a copy to the start-up boards that I advise. Governance scholars and more experienced directors may wish to read this in conjunction with Adam Epstein's book 'The Perfect Corporate Board'. Founders and VCs who find this book useful now may opt to read that one after they have grown to a positive revenue stage or, at latest, prior to IPO.
Overall Mahendra and Brad have done a superb job: This book is a valuable addition to any director's bookshelf and comes with my highest recommendation.
* Julie Garland McLellan is a professional non-executive director, board and governance consultant and mentor. She is the author of "Dilemmas, Dilemmas: Practical Case Studies for Company Directors", Dilemmas, Dilemmas II: More Practical Case Studies for Company Directors (Volume 2), "The Director's Dilemma", "Presenting to Boards", "All Above Board: Great Governance for the Government Sector" and numerous articles on corporate strategy and governance.