Tag Archives: BoD

“The Board Brought Me In” Telltale

There’s only one executive who should ever say, “the board brought me in,” and that is the chief executive officer (CEO).  Yet, you’d be surprised how often you hear other executives — chief revenue officers (CROs), chief marketing officers (CMOs), chief product officers (CPOs), and most often chief financial officers (CFOs) — say, “the board brought me in.”

It usually comes up in an interview, with a candidate running through their background.

“Well, I was at XYZ-Co, and things were going great, but at PDQ-Co they needed some help, so the board brought me in to help get things back on track.”

A+ on storytelling, but (usually a) C- on reality attachment.  “And where,” methinks, “was the CEO during all this board bringing in and such?”

(And if things really were going so well at XYZ-Co, tell me why’d you jump ship to do a fixer-upper at PDQ-Co again?)

I always view “the board brought me in” language as a telltale.  Of what, I’m not entirely sure, but it’s usually one of these things:

  • Self-aggrandizement.  Sometimes, it’s just the candidate trying to sound larger-than-life and they think it sounds good to say, “the board brought me in.”  In this case, the candidate’s judgement and credibility come into question.
  • Innocent miscommunication.  Perhaps the candidate knew an existing board member and was referred into the position by them.  OK, I suppose technically they could think, “the board brought me in,” but didn’t the CEO interview them and make the final call?  Did the board really bring them in — as in, against the CEO’s wishes?  Maybe it’s just old-fashioned communications confusion.  Maybe.
  • Genuine confusion.  Or, perhaps the candidate is under the illusion that they somehow work for the board and not the CEO.  This can happen with CFOs in particular because, unlike all other CXOs, there is something of a special relationship between the board and the CFO.  But in tech startups, in my humble opinion, the CFO works for the CEO, period — not for the board.  They may have a special relationship with the board, they may meet with the board without the CEO being present (e.g., audit committees).  But they work for the CEO.  If you feel differently, great.  If you feel like I do — best to use this as a telltale of a potentially huge problem downstream.
  • A placeholder CEO.  There is always some chance the CEO is somehow a placeholder (e.g., a founder who’s lost all but positional power in the organization and acting in some lame duck capacity).  In this case, the CXO in question might just be saying the truth — perhaps the board really did bring them in.  But then the candidate’s going to need to explain why they jumped into such a mess [1].

I’m sure there are other possibilities as well.  But the main point of this post is to say that your ears should perk up every time you hear a CXO [2] candidate say, “the board brought me in.”  Mine do.

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Notes

[1] And I suspect the most common answer will be, “and they were planning to make me CEO in X months once they worked on the transition.”  In which case, I’d want to understand why the candidate is so trusting (or naïve), what written assurances were given, and why they would take a CXO job with a dubious call option on CEO as opposed to taking a straight-up CEO job.  (To which the best, but still somewhat unfortunate, answer is — it was the only available path I had at the time.)

[2] For all values of X != E.

 

 

Diary of a Novice NED: A Look Inside the World of Independent Directors at Startups

What’s a NED, anyway?

NED stands for non-executive director (also abbreviated as NXD) and it refers to a member of company’s board of directors who is not on the executive management team.  While NED is the more common term in Europe, in Silicon Valley we typically say “independent director,” which I have always taken to mean a director independent of both the company’s executive management team and the company’s venture capital (VC) investors.

Startup boards typically have three types of directors:

  • Founders, who represent the common stock [1]
  • VCs, who represent the various classes of preferred stock [2]
  • Independents, who represent (what they believe) is the good of the company [3]

By virtue of my joining the board of European work management leader Scoro, I came to meet Martin Fincham of The Gorilla Factory (presumably a reference to Geoffrey Moore’s metaphor), a fellow NED, and the board chair of Scoro.  So I naturally was eager to read Martin’s new book, Diary of a Novice NED, and put it on the top of my reading list once it came out.

While I won’t dare to review a book written by a new colleague (and our board chair!), I will say a few things about the book:

  • It’s a quick read, enjoyable, and at times quite funny.
  • It truly is a diary:  mostly written in the first person and with lots of interesting stories.
  • It bottles a lot of wisdom:  Martin seems to be a fellow reductionist, so the book features many pithy pieces of wisdom, derived from his years of experience.
  • It has a European tilt to it:   while it’s certainly relevant to startups everywhere, some things are different in Silicon Valley [4]
  • More than anything:  it provides a rare inside look at how Martin prepared for and made the jump to “going plural” [5], making a new and satisfying living as an advisor and director.

Diary of a Novice NED is available on Amazon here.  Congrats Martin and looking forward to the foreshadowed second book!

For my thoughts on how to be a good independent director, or NED, see here.

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Notes

[1]  While founders typically have common stock, they sometimes have their own series, often called Series F (founder), that has the same liquidation preference as the common stock, but additional rights such as multiple (e.g., 10x) voting rights or protective provisions.

[2] Read this paper from Wilson Sonsini for a look at the challenges faced by VCs in wearing two hats on company boards.

[3] For more on the role of an independent director, you can read this UK article, The Role of a NED, or this Utah Law Review paper, The Role of Independent Directors in Startup Firms.

[4] And it discusses tax “schemes” (I love the connotation difference between the UK and USA on this word) that are UK specific but, I believe, have rough spiritual equivalents in the USA (e.g., QSBS)

[5] Seemingly, a UK idiom for working with multiple companies as an advisor/consultant, as opposed to just working at one “real” job.