When you start developing your startup, you are often 2, sometimes 3 co-founders. You may have seen more than 3 co-founders, but experience shows that it is not sustainable to be more than 3 (because everybody has less ownership for instance… but also because it becomes difficult to take decisions move forward quickly). The ideal composition of an internet/software startup is to have one UX/UI designer, a software engineer and a businessman/-woman. The 2 first members are the ones who will actually develop the product and the last one, the one who cares of everything else (administrative tasks, product management, marketing, business development, financials, fundraising, recruiting, etc.). You need to understand and to respect each other really well to make it working. As the businessman/-woman of the team, you need to be on the field, going to meet as many potential customers and partners as possible. In a strategic order, of course. The reality is that you don’t always have a detailed plan, or at least during the first months, that you’d like to evaluate almost every opportunity related to your business.
What do often lack young (or less young) entrepreneurs in the first phases of their startup journey?
Industry experience and an extended network! You may have a great idea. Or have deep technical knowledge. Your vision (and product) seems right and clever. You’ve met potential customers, who love the service you will be offering. Mistake #1 you may have done is telling them you are a startup… Launching your startup sounds cool and hype nowadays. But never tell a potential customer you are a startup. First, because they don’t know if you will still be there in 6 months. So the first effect will be that they may tell you to come back in 6-12 months (why on hell would they risk the reputation of their company by being the first to spend money to buy your product/service?). Secondly, why would they risk their position (if that’s more than a couple hundred bucks) by betting on you? Third, they may like you and your product. But if you are that good, why do you need them rather than going to the bigger fishes? They may want to see other taking the risks and feel reassured. Every one is a sheep and if you can convince some big and respected names, the other ones will follow.
But let’s go back on the importance of board members in a startup.
You may have heard the feedback “you need some grey hairs in your company”, that is, some people with a long industry experience, more business wisdom and an extended network. Ok, but how can you convince such highly experienced professionals to join your startup? You may have not enough money to pay yourself, how could you pay them? Startup founders sometimes think first on raising money and then hire them. There are however better ways to attract them. Try to meet them, convince them and recruit them as advisors. And then as board members. Starting with an informal Board of Advisors is a way to test their commitment, knowledge and willingness to help. Without being costly for startups (you may agree on sharing equity, but with vesting conditions). Once you know them better and the relationship is working, you can ask them to join the startup as a board member. A board member has legal responsibilities and the board is the CEO’s boss. So you’d better select carefully the guys and gals who will be in this board. In the early stage of a startup, board members have typically been selected based on other merits than skills, namely having close relationship with the founders. It is the easy way to go, but if you do not explain them early on that you will have to replace them at a given time, it will be an extremely hard process for you.
Founders often don’t spend enough time in building an optimal board. It may not be easy (and time consuming), but getting one to provide you with competitive advantage is no rocket science. List down the key competencies your board should have to support your company in reaching its key strategic targets in the next few years. See what competencies are lacking in your team and in your current board. Then also consider age and gender when recruiting new members. Be also prepared to make changes on composition: board of directors can and will change over time, it is never rigid. Make it clear to your board members that you need them for the few coming years, but that you may need to replace them (for instance, you’ve grown your company and need other skills, or you have raised VC money and investors require a board seat). Startup board members can bring a startup a real boost (in terms of experience and network, or simply to avoid common mistakes or as a “knowledge base” – startup founders need to learn new skills almost every day, some learning acceleration cannot hurt!).
But where can you find potential board members?
You can use your personal network or leverage tools like Linkedin. Or search search for prominent people in your industry. You can then try to recruit them, but most of the time, you have no idea if they have:
- the desire to join boards;
- the understanding of what the role of a board is;
- enough time for board memberships;
- an affordable compensation rate (yes, most of the time, you may have to pay your board members – either with equities or with cash (less frequent in early stage startups) – except if they are also investors);
I’ve recently discovered a tool called Boardio, which is trying to solve exactly this problem. Started by Finnish guys, Boardio’s value proposition is to match the requirements of startups and SME’s with adequate potential board members. More than 500 people are on this platform and you may want to give it a try (first month is free, you can however ask Ilkka for an extended trial).
However, startups Board of Directors are quite different from traditional boards. You can learn more on being a startup board members by applying to the brand new workshop “Startup Board Members Academy”, launched by EPFL Innovation Park and CTI Entrepreneurship. The workshop is spread on 4 afternoons (26th of May, 9th/23rd/30th of June) in Lausanne and is dedicated to train potential members to bring the highest value possible to startups. The first edition of this training is filling fast and you should register now if you want to secure your seat!