Brad's Books and Organizations

Books

Books

Organizations

Organizations

Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

« swipe left for tags/categories

swipe right to go back »

Do You Need A Board Chairman?

Comments (26)

I’ve been on a lot of boards. I’m still on a lot of boards. And I’ve been thinking about boards a lot as I work on my next book Startup Boards: Recreating the Board of Directors to Be Relevant to Entrepreneurial Companies.

I used to think every board needed a chairman and early in my investing career I was often this chairman (or co-chairman). At some point I began feeling like the chairman role in a private company both undermined the CEO and sent the wrong signal to the employees of the company, and I preferred that the CEO be the chairman. I also started disliking being the chairman, as it seemed to create a view that I had some kind of ultimate power and responsibility for the company that I rarely had, and that almost always belonged to the CEO. So I stopped being chairman and in a number of cases refused to be called it, even when I played the role of it. The one exception I made was non-profits, where chairman seems to have a somewhat different connotation. And since I’ve decided not to be on public company boards, I don’t have to make a decision in that context.

Several years ago I started using, and encountering, the phrase “lead director” more frequently. Recently, I decided it’s the right one and have used it to replace chairman in my vocabulary. And, when asked the question, “does a private company board need a chairman”, I now say “no, but it needs a lead director.”

The lead director is responsible for working with the CEO to manage the board of directors. The lead director is always the most active director and in many cases represents the largest non-founder shareholder in the company when a company is private. The lead director is not the communication conduit to the CEO – every director interacts directly with the CEO – but the lead director gets involved in any conflict between a director and the CEO, any concerns that arise, and any conflicts between directors. And the lead director helps the CEO manage the board meetings.

The lead director should be the CEO’s board confidant, organizer, and conflict resolver. I sort of like the word consigliere, as used in The Godfather, a lot, although it has both obvious negative connotations and a different actual function in real life than the one represented in the film, so I’m searching for a better one.

When I look at the boards I’m currently on, I play this role in many, but not all of them. And the phrase feels correct to me.

Do you have a lead director on your board? How about a chairman? What do they do and how does it feel? And is there a better word than consigliere?

Enhanced by Zemanta
  • http://twitter.com/NeilMacMartin Neil MacMartin

    Brad, I am currently the Executive Chairman giving me both power of CEO and Chairman In my family business however starting to feel the pressure of both roles. I am on the search for a Chairman/ Lead Director. Look forward to reading your book!

    • http://www.feld.com bfeld

      I’ve always found that “Executive Chairman” is simple “a CEO” which is often also the chairman (the default case for most private companies is that the CEO and chairman is the same person.) Sounds like you are on a good search!

      • Mac

        Executive Director?

        I feel there’s often more gray area between CEO and President.

        • http://www.feld.com bfeld

          Executive Director means something else entirely.

          • Mac

            I see that now. Thanks

  • Tim Huntley

    Hey Brad,

    When I started my company in 1995, I was the greenest, or green with respect to working with a board. And yet after raising money, I was the “Chairman.” Within two years I grew into the job, both as CEO and as a passable Chair, but …

    What is your view of seasoned entrepreneurs taking a role as Executive Chairman? I know this is done in cases where the founding CEO struggles, but what if it were done with the intention of helping the CEO grow into the job?

    I’ve seen founding CEOs with immense passion and leadership potential get canned when they can’t build the right relationship with the board.

    Thoughts?

    • http://www.feld.com bfeld

      Today, I’d make that seasoned entrepreneur be a lead director. Executive chairman in my book is basically the CEO with a chairman title. Give the CEO full responsibility as CEO and coach him, rather than manage down hierarchically.

      • peter bourne

        I strongly agree with the notion that the Chair/ExecChair/lead is there to support the CEO. As somebody who has done both Chairman/CEO and Exec Chair roles. I haven’t run in to the connotation that Exec Chair (or even Chair) implies any management hierarchy. The CEO reports to the Board of Directors, not to the Chairman. Still, perception is reality, and making it clear that the CEO is in the driver’s seat is important, and Brad’s suggested nuance on what to call it lines up well with creating success.

  • Amy Bevilacqua

    Hi Brad,
    I’m enjoying your StartUp books–especially StartUp Communities at the moment, so glad to read about StartUp Boards on the way. I hope in your book you expand on the role of “Executive Chairman” for nonprofits and how you think that differs from for profits. Any highlights on that?

    Amy

    • http://www.feld.com bfeld

      I will try to include this although the book is focused on for-profits. At the minimum I’ll do a blog post at some point.

  • Amy Bevilacqua

    context to my comment–since the guiding idea of the book is how boards can serve entrepreneurs well, I’m curious how that applies to entrepreneurs running nonprofits, or social entrepreneurs

    • http://www.feld.com bfeld

      Totally get it – good suggestion.

  • http://www.facebook.com/profile.php?id=1076616432 Carl Brackpool

    I’m both CEO and BOD Chair, so no issues, at least with Main Net. But I vote for “Majordomo” instead of “Consigliere.” Or “Board Factotum?” Or, “Carson.” Anyone second the motion?

  • http://twitter.com/chrisbenson Chris Benson

    Brad,

    How does a board change when the startup is a charitable non-profit? Specifically, what is the relationship between the founders and the board, since the founders are not shareholders? Since they’re listed in the articles of organization, do founders always retain absolute power in a charitable non-profit? If not, how is power transferred from the founders to the Board?

    Are you aware any good information resources for these types of questions regarding charitable non-profit boards?

    Thank you!
    Chris

  • http://www.repeatablesale.com/ Scott Barnett

    I have used and like the term consigliere – I agree it’s not perfect, but I have yet to find a better term. If it ain’t broke…. :-)

  • Pingback: Geek Reading March 11, 2013 | Regular Geek

  • Bob G

    Good Discussion – I have recently seen the Chairman role actually undermine the CEO and made his role untenable…

  • Frank Miller

    As always, with all due respect… ;)

    Before you ask whether board chairpersons are useful, maybe you should ask whether boards themselves are useful? IMHO from an entrepreneur’s POV, they are a total waste of time. They basically exist to make the investors feel good. It gives em a chance to feel important and come to the office and see that the company isn’t having parties on their money. Other than that, I don’t think I’ve ever heard a single useful thing come out of a board meeting that was useful. The time a CEO/CFO or whomever spend preparing for them is much better utilized working on PRODUCT. When you get to be public or at least have a few million in revenue, massaging investors is better done in other ways.

    • http://www.feld.com bfeld

      Frank – it sounds like you’ve had shitty boards. They definitely exist, but so do awesome ones, even at very early stages.

      • fwmiller

        Maybe I suppose. The people and firms were pretty high powered so I guess I’d be hesitant to label them that way. But at the end of the day, the CEO and folks in the company are really the ones that know whats going on and they’re moving too fast in most cases for board members who are usually way too busy to spend more than a few hours a month thinking about the company (until it gets in trouble of course ;) ). As I’ve eluded to in some past comments, the way entrepreneurs treat investors has more to do with keeping them happy enough to keep investing than it does actually engaging them. You seem more touchy/feely than most VCs I’ve encountered but I’d be careful if I were you to not think that any reciprocation is anything more than you being “handled” after you make an investment, especially a first investment. I’m sure there are exceptions in your portfolio but I’d wager they are just that, exceptions.

        • http://twitter.com/bfeld Brad Feld

          “High powered” does not equal “good.”

          My experience is very different than yours. I don’t think the entrepreneurs I work with have a goal of keeping me happy to keep me investing.

          Re: “being handled” – I prefer to think of it as being grinfucked – http://www.feld.com/wp/archives/2012/02/grinfucking.html

          I have very little tolerance for being grinfucked. It shows up pretty quickly and is obvious when one has a filter tuned to it. I call it out, confront it, and deal with it.

          Re: “wager that they are exceptions” – based on my history and experience, I believe you are wrong. I’ll take my chances.

  • Pingback: Breakfast Links - Points and Figures | Points and Figures

  • floor sanding northern beaches

    I read that content. I like the content and concept as well. Keep good Blogging..
    floor sanding northern beaches

  • http://openbook.etoro.com/thetoro/ YoniAssia

    This is really a great post, it follows the line of thought that the best form of management is leadership and the best form of leadership is mentoring. Hierarchy is a burden of traditional management, and certainly should not apply to board/ceo. It would be interesting to start a trend of transparent video boards, record them and by default have them public, that would have great ratings and would probably improve board work ;) I would tune to your boards .

  • Painters in Melbourne

    I like this website and its content. There are lot of content shared here. Thanks for the Great Effort.

    Painters in Melbourne

  • bocci lighting

    I read that content. I like the content and concept as well. Keep good Blogging..

    bocci lighting

Build something great with me