“Hiring” your Board

By Craig Danton

Reading the news about the recent fallout at Groupon had me thinking about the lessons I could apply to startups scaling. After all, where better to look for lessons than a company that was termed as the “fastest growing company in history” only to tumble to the list of drastically underperforming tech IPOs.  The troubles with the board are just a few of the anthology of problems that plagued Groupon however they contain valuable insight for entrepreneurs as they overcome the Series A crunch and bring investors on board to scale – see what I did there. Here are three of my takeaways and thought starters for things to consider when choosing and working with your board:

1.    Know your skills set – Groupon had some serious bigwigs on their board from Marc Andressen to Howard Schultz yet they was crushed by accounting scandals during their quiet period – an avoidable mistake. Some boards are hands on others are not, this is the nature of the business. Recognizing when you need to look beyond the brand name of a board member for someone with more time that will check that your i’s are dotted could be essential.

2.    Look beyond exits and connections - Lefkofsky the new co-CEO and founder of Groupon runs his own investment firm called Lightbank, he not only has lots of capital but amazing connections and could be a powerful investor in your company. As with all VC’s however it would be important to do your homework before taking the money to ensure that such a strong personality would fit with your vision for your venture. Most VCs will offer to connect you to their other portfolio companies, I would seize this opportunity and not only ask about the firm but what kind of force that particular partner will be on your board. 

3.    Beware of the loudest voice – Prior to the IPO Google offered $6 Billion to acquire Groupon, an offer than in hindsight would have been a steal (market cap of $3.5B on 3/15) yet Oliver Samwer (then a board member) was strongly opposed to the move and convinced Mason against it (according to Ben Popper from The Verge).  No one could have known the future Groupon but it seems Mason allowed himself to be swayed by a strong willed board member (Samwer) who mostly cashed out rather than seeing the business through to this higher valuation (WSJ).  Given the controlling stakes of the founders and Samwer together it would not have mattered if there was opposition on the rest of the board but my lesson here is that meeting individually with board members occasionally might bring out more effective feedback.



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