Editor’s Observe: Every week Maynard Webb, former CEO of LiveOps and the previous COO of eBay, will provide candid, sensible, and generally stunning recommendation to entrepreneurs and founders. To submit a query, write to Webb at [email protected]
Q. My firm is doing nicely and about to shut a giant spherical of funding. This presents a possibility to revamp the board. We’re approved to have a board of seven, however we’re at present operating with 5. The founders have two seats and the buyers have three seats. Two of the three investor seats might change due to exterior components. My query: Ought to we develop to a board of 9? We’d have 4 spots to fill, however this may assist me steadiness the variety of investor seats with the variety of unbiased seats.
— CEO and cofounder who desires to maintain management
Proper now, you’re working as a board of 5. Going to 9 members would practically double the size of the board. That can add a variety of complexity, together with ramping up new board members and having new voices within the room, which will be overwhelming and distracting.
In terms of boards, much less is extra. I at all times advise startup founders to maintain the board as small as attainable. My recommendation is to remain at seven. On the identical time, you must repair the steadiness of the board. You at present have an issue with buyers having two seats and buyers having three. Maintain the founder seats at two and the investor seats at three and work to get nice independents for the 2 open seats.
You talked about potential modifications with two of the members on the board. Attempt to decide if a type of members can go away of their very own volition and if the brand new investor can take that seat. This can be a delicate scenario, which would require finesse. However you don’t should be the instigator right here. Make the “enemy” the brand new spherical. Everybody understands that with this variation, comes different modifications. This may current an exit alternative one in every of your board members was searching for.
Lastly, don’t take this on your self. Enlist the assist of the lead unbiased director on the board. Have that individual method this example with diplomacy and tact. If the unbiased board member is prepared, allow them to do the heavy lifting right here, which lets you keep out of this and get again to what’s most essential, operating the corporate.