'Competence is underrated', not what one would aspect to hear on the topic of what makes great board members. However, that was the core strand from our interview with Rory O'Driscoll, Founding Partner @ Scale Venture Partners. As Rory states, 'in the mind of the entrepreneur, they are not thinking is my board great but can I make sure they are not bad?' Yet, Rory did outline 4 key roles that transition a board member from competent to good.
Hire & Fire The CEO
Arguably the main role of a board is to manage the core executive of the team, this includes the hiring and firing of the CEO. For Rory, when seeing a CEO take a bold and deliberate move against the advice of the board, he asks, 'is this a mistake or a fatal error'? If the latter then the decision-making process becomes far easier.
Finance The Company
The continued financing of the company is central to the role of the board. This shows the undivided loyalty to the CEO, vision and future that lies ahead. It is also important as a funding withdrawal from the board would act as a negative indicator to the wider market, preventing future external funding.
Agree With CEO On Broad Strategic Direction
The alignment between board member and CEO is also crucial. However, there is some nuance, this applies to the macro vision stated at the beginning of the relationship and does not mean that the board and CEO have to agree on iterations and updates in the future. For example, Tesla's Board of Directors must be aligned in wanting to bring a more ecologically friendly consumer vehicle to the mass market.
Determine with CEO When To Exit
Exit expectations can be a challenging aspect of the board vs CEO relationship. Often the board, consisting of VCs requiring $Bn outcomes, will push for higher and higher valuations. This could go contra the desire for a company to be acquired for strategic reasons (Deepmind) etc. However, as Jay Desai stated in a previous interview, exit expectations must be agreed upon pre-investment. Therefore, in acquisition discussions this should not be a point of contention.
Ultimately, there is much more to a board member than mere introductions and advice. Entrepreneurs should think extremely carefully in the board formation process, this is an individual you can never get rid of, as long as you are private board seats last for life. In addition, this person has a one in 4 vote of firing you. As Rory suggests, the most attractive trait in a board member is a 'rational decision maker.'