Why Good Boards Matter

As a several-time entrepreneur, I understand how heads-down and focused the CEO and management team must be in order to execute well. Running a startup, no matter the size, requires intense focus. You are forced to filter out lots of non-essential information and minimize distractions. You become a complete expert on your sub-market, attend every meaningful conference, network with companies relevant to your business, and read absolutely everything having to do with your sector. Quickly, however, the trappings of focus pair down your peripheral vision. Innovations in other categories go unnoticed. Valuations and business models in other sectors become unfamiliar. You now have startup blinders on. Welcome.

There is nothing wrong with this, of course. We all go through it. The question is how best to deal with it (and whether you should).

You should deal with it. A great CEO is both a visionary and a synthesizer. To make good output, you need good input. Your staff and management team will have great ideas and perspectives, but they too will begin to develop startup blinders. The longer you work together, the more group-think becomes a real risk. This is where a great Board of Director and/or Board of Advisors can help.

If you have raised money from other people who make it their job to be hyper-aware of everything happening, you can take advantage of their perspective. You can look forward to board meetings and informal discussions with your directors not just as a a chance to vet your ideas, but to hear about the things you are missing. You want to best understand what is working elsewhere and how you can incorporate successful models into your planning.

Great VCs spend lots of time looking around. In the last four months, I have been deep diving into many sectors I knew little about owing to the fact that I had been deeply heads down in digital music for the past five years. Advertising technology, mobile applications, real-time web, social media, digital video, etc. There is some super valuable learning coming from these sectors that I wish I better understood at eMusic. One of the reasons I missed some of this stuff was that we didn’t have a board filled with valuable outside expertise. We were not surrounded by successful entrepreneurs, VCs, or business leaders who had fresh and relevant experience and who could impart to us their observations from other sectors.

So, as you look to raise money and assemble a board, think about not just what style of people you want to have around you, but how diversified a perspective you want them to have. You really want to have a few people in your orbit whose entire day is filled with making sure they know everything going on around you. You want them to challenge you with their learnings and make sure you are incorporating successful models into your planning. It takes some pressure off of the CEO and management team, allows them to focus, and offers them a chance to depend on the broader insights a competent board can bring.