I talked to a founder a while back who felt like they’d lost a year or two thanks to some strategic distractions foisted upon them by a well-meaning board of directors. While most startup boards try to follow the Hippocratic Oath, some — like well-meaning but overbearing parents — smother their founders and their companies with love. This was, in my opinion, such a case.
It wasn’t the first time I’d heard this tale, so I thought I’d write a quick post on the topic, which serves as a follow up to my previous post, Whose Company Is It Anyway?
Most of the writing I’ve done on board relations focuses on the hired CEO for two reasons:
- That’s the path I personally took, having been a hired CEO at two startups. I could write about it first hand.
- I thought it was the harder path. Alas, the grass is always greener, so I always assumed life was easier for founders because they possessed the irrevocable moral authority of being founder and accompanying invisibility cloak [1] that shield them from the same level of termination risk as a hired CEO [2].
But some founder/CEOs — particularly younger, nicer, and/or first-time ones — suffer from a dangerous delusion that we need to challenge. When I asked the aforementioned founder how they ended up in this situation, they said this:
“I was younger then. I was still under the impression that the board were my bosses.”
That’s it. The board boss delusion: the belief that a founder/CEO should try to please the board in the same way that an employee wants to please their manager. Why is this a delusion?
- The board is not a person. It’s a committee. It’s not of one mind. It may literally be impossible to please everyone, and often is.
- The board does not want to be the boss. Despite appearances otherwise, the board always wants the CEO to be boss. Admittedly that may be more apparent with some boards than others, but even the most idea-generating, directive [3] boards do not want the CEO treating them like the boss. They’re just adding value by providing ideas.
- As CEO you are accountable for results, not for pleasing people. You’re not a director executing someone else’s plan who is rated on execution and congeniality.
- There is no get out of jail free card. If a founder/CEO fully executes exactly what a powerful board member said and it fails, they do not get to say, “but, but we agreed that was plan.” The invariable response if you do: “you’re the one running the company and you decided to do it.” It’s on you. It’s always on you.
- The board is usually not qualified to be boss. How many of your board members would make the short list in a search for your replacement? Some, maybe, even ideal in cases. But most? No.
- The board doesn’t work there. You spend 50-70 hours/week at the company. They go to six four-hour board meetings per year and sit on 8-10 other boards. Informed outsiders? Yes. But outsiders.
- It’s your company. As a hired CEO it’s metaphorical, as a founder/CEO, it’s literal. Either way, you need to run it. The board’s there to challenge you, give you ideas, pattern match, and leverage their networks. You’re there to run the show.
If you don’t believe me, try one of these ideas:
- Ask your board members, over a coffee (not in a board meeting), if they want to be treated like the boss. They will say no.
- Throw them the keys. A few of the gutsier founders I know do this when the board gets too directive. They literally take their car keys out of their pocket and throw them across the table: “if it looks so easy, you can do it.” They will throw them back.
- Ask them to tell you a story about CEOs who got replaced. Drill into those stories. Find out whose plan the CEO was executing. Ask if the board approved the plan. Ask if the CEO failed executing an agreed-to plan, particularly if they were executing it well but it just wasn’t working, why they got replaced? They’ll say, in the end the CEO decided to execute it, so it was their plan.
Whose company is it? Yours. Run it that way.
Is the board your boss? No. And the faster you learn that, the better.
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Notes
[1] Potentially including actual control provisions.
[2] I am not saying this is bad, by the way. Having “it’s my company” moral authority makes founder/CEOs less vulnerable to termination in ways that I believe are more good than bad. Yes, in the end, if someone is continually failing they need to be replaced. But, on the flip side, if it now takes 13 years (i.e., 52 quarters) to go public, there is a virtually 100% chance of bad periods along the way and, particularly on a VC board where there are N stakeholders with potentially divergent opinions, it can be difficult to survive such downturns without either a protector (i.e., alpha) on the board or the moral authority of being a founder.
[3] You should do this! You should do that!