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Wisdom on Building a Board of Directors

Updated: Jun 15, 2021

Amanda Micallef is the Co-Founder & President at Arsenic, a user submission-based digital platform magazine. Its youth-driven, provocative lifestyle has a large following among Millennials.

Elyse Dickerson

Previously, Micallef spent 12 years as a producer of film, music video and commercial productions, where she was responsible for all aspects of projects, from inception through distribution. Amanda is a board member of Jamak (the largest privately owned, international silicone manufacturing company in the nation) Reata Restaurant Management Group and four other boards with holdings in real estate, manufacturing and automotive.

She shared her thoughts about boards, as a founder and as a board member. The edited copy below is from a conversation she had with TechFW clients at its monthly Founder's Lunch.

Size and make-up of a board of directors?

My gut feeling is like eight-ish people, 7-to-9. I'm assuming two founders on the board. And 4-to-5 outside people. Smaller than that, I think sometimes you can end up missing an important voice.

I would encourage founders to (think about diversity) more as: how do you put the right team together to help you win? For that business, does the board have the best marketing person they can? It doesn't matter if they're man or woman. Do they have the best lawyer? So, yeah, I think diversity is super important.

Communicating with your board?

I think it's important to know the strengths of your various board members and that you're seeking advice from a specific board member because of their area of expertise.

For board members to be effective, they really need to know what your company is going through pretty regularly. The best situation I've seen is when you, say every two weeks, send a very brief, very quick update of what's going on. You don't need to share the financials every two weeks or even the user numbers every two weeks, but the basic things that the company is working on, thinking about, focused on. When you actually reach out, you're not trying to download them on six months of information. They already are fairly well caught up with the day-to-day and you can really get into the nitty-gritty of whatever the current question or problem is. It's important that your board members understand the whole scope of what the company is working on in order to give advice even on a small piece of it.

I like two weeks (because) it takes the pressure off the founders to feel like they actually have to put together a performance piece. The last thing your board should want is for you to spend a long time on putting this report together. I also think in a month a lot can happen. It's incredibly easy to forget important little pieces that do sometimes matter.

Making decisions

I see companies really get in trouble when they want to make every single decision together. That's just not practical. Of course, you want to be able to talk about things and openly have a conversation and give feedback, but when everyone's trying to make every single decision together and everybody has to agree in order to move forward, nothing happens. You get into this round robin and people get very, very frustrated. In order to move forward, somebody will stop giving their opinion because they think they're holding up the decision-making process and then that can lead to resentment.

I think it's much healthier to be able to know that everyone can contribute their thoughts and ideas, but ultimately, you know these sorts of decisions lie with (whomever) and once they make them, that's the decision.

Recruiting board members

It's always great when founders are upfront about where they are and what they're looking for from board members. No one wants to take a seat if they can't really be a contributor and there are only so many seats at the table. Be very, very clear and honest with who you’re trying to recruit about what it is that you need and -- be upfront from the beginning -- that this is what you’re looking for the board for today.

This might not be the same board makeup you need in two years. And so, I always like to put a real clear timeline on how long. It's a lot less awkward. If you ask somebody to be on your board for two years and then when the two years are up, if you just don't invite them back, it's less awkward than like literally firing somebody. (Usually) it has nothing to do with them not being good. You just need something different as your business has grown. So I think term limits are a super smart way to go.

Is there a threshold amount they invest to obtain a board seat?

Absolutely, there should be. It's really going to be based on the size of your round. Generally what happens is you open up one or two board seats for the key investors (of that round) and the important thing about that is you generally want those people helping you with the term sheets.

Okay, who do we want to fill out the rest of this round? (Certain skill sets.) They don't even have to invest a lot, but we just want them not just as a board member, but as an advisor. And if they put in $5,000, they're going to just take our call that much faster. And they have those relationships, so they can also pick up the phone and help you fill out the round, not just to get money in the door, but actually to really make sure that you align with the right people. No one wants to talk about the marketing aspect, but the bottom line is that if you can say you have investors from ABCDEFG, it does change people's perception and you’re rarely disclosing how much people put it in.

On expectations for board members

The hope is that you find a group of people who come with no pre-conceived ideas, no judgment, a lot of talent and an openness and willingness to share that information. And, at their core, all they want is for you to win because in most cases they have some incentive for you to win. Either they have some vested shares or they’re friends with you or an investor.

I do think it's important to make sure that your incentives are aligned. As you start raising money, people start getting seats on boards and it's very important to always ask yourself ‘are my incentives aligned with this board member?’ I don't think they're deliberately trying to make you not successful, but they are absolutely giving advice filtered through other information. They (are not) necessarily looking at the entire world; maybe it's looking at it from their set of portfolio companies. That doesn't mean that they're not helpful, but just know that sometimes their advice in certain areas may or may not be the full picture.

There are some brilliant, brilliant people, but some of the people that helped us the most weren't the ones who ultimately invested in us because what we were doing didn't match their investment strategy. But they thought what we were doing was interesting and so they sort of became unofficial advisors. And since they have no dog in the fight, they gave us fantastic advice.

I cannot stress enough that everybody should have a stable of advisors, mentors. They do not have to have any official relationship, but you want to be able to bounce ideas off of and talk openly with many different people.

1 comment

1 Comment

Jun 16, 2021

Great insights!

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