Brad has been an early-stage investor and entrepreneur since 1987. Prior to co-founding Foundry, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures. Brad is also a co-founder of Techstars and the Blackstone Entrepreneurs Network. Brad is a writer and speaker on the topics of venture capital investing and entrepreneurship. He’s written a number of books as part of the Startup Revolution series and writes the blog Feld Thoughts.

We held an exclusive interview with Brad Feld on the release of his new book, Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors. Authors Brad Feld, Matt Blumberg, and Mahendra Ramsinghani provide seasoned advice and guidance to CEOs, board members, investors, and anyone aspiring to serve on a board. This comprehensive book covers a wide range of topics with relevant tips, tactics, and best practices.

Interested in your own copy? Purchase the book here.

Why did you want to do a second edition now?

We wrote the 1st Edition in 2013 and it was starting to feel stale. In addition, the gender dynamics in the book hadn’t aged well as most of the sidebars and quotes were from men. Matt Blumberg, the CEO of Bolster and a long-time friend (I was on the board of his previous company, Return Path, for 20 years) offered to be a third co-author to add an entrepreneur's perspective. We took a deliberate approach to replace many of the sidebars and quotes with ones from women and people of color. When we started working on the book early last fall, the public markets were still accelerating and the private markets were positively out of control. Governance and boards took a back seat, especially in fast-growing startups that were founder-controlled and public companies with super-voting shares. Many early-stage startups didn’t even have boards. We felt like a refresh on the importance, and value, of boards, was useful to the entrepreneurial ecosystem. Now that we are nine months into the tech downturn, the importance of strong boards to help companies navigate challenging times is once again front of mind for many entrepreneurs and leaders.

What elements should management/the company have in order before starting the process of organizing a board?

I believe every early-stage company should form a board. While many entrepreneurs get (and some give) the advice to wait as long as possible to form a board, this advice misses the value of having a board, since these entrepreneurs are concerned about control and governance issues, rather than viewing the board as another team to help them build and scale their company. As a company raises more money from multiple investors, the governance issues become more important, but at earlier stages, a functioning board can continue to be helping to build the business.

In the BEN Ecosystem, there are always a lot of discussions around who should be on a startup board (e.g., family/friends, celebrity, an operator) What guidance would you give when working with entrepreneurs during this type of discussion?

View the board as a team, the same way you do with your executive team, and correspondingly use the same logic. The CEO should always be on the board. If you don’t have any outside investors, then there is no need for investor shareholders. If the CEO is not a founder, then you’ll have at least one founder on the board. Then, add outside directors who augment the skills of the CEO and the founders. If you have investors, add one outside director for every investor you add to the board (Matt Blumberg calls this his “Rule of 1s.”) Celebrity and fame are less useful than a highly functional and experienced board member who will engage and do work.

What are some of the potential downfalls an entrepreneur might face when putting together a board?

While many entrepreneurs over-index on issues of control, it’s worth making sure everyone on the board understands their roles and responsibilities. If you put together a board consisting primarily of friends and family on it, when you add investors, you’ll risk ending up in a polarizing situation whenever there is conflict. Instead, try to have a balance on the board with a clear set of rules of engagement, especially around conflict.

How involved should a startup board be in both the tactical execution and long-term strategy of the company?

There is a lovely cliché “nose in, hands out.” A board member should have their nose in and be intellectually involved and informed about what is going on. But, they should be hands out, not touching the machinery of the day-to-day operations of the company. While boards can help guide long-term strategy, they should not define them, nor should they be involved in the daily operations of the company.

Should startup boards be paid or not, and if so, how?

Investor board members and founder/management board members should not receive any compensation for being on the board, although they should be reimbursed for any expenses. Independent directors should be compensated in equity, which is typically between 0.25% and 1% of the company vesting over four years, depending on the stage and valuation of the company. In addition, they should have their expenses reimbursed.

How does inclusion impact the success of a board?

Once they have increased the diversity of the board, what can company leaders do to enhance the equality of roles and responsibilities of board members? It’s well documented that more diverse teams are more effective. This is true for boards, as it’s another highly important, and hopefully highly functioning team. If a company is committed to diversity, equity, and inclusion, then the board is another team to incorporate this into. Furthermore, behaviors around DE&I, especially in enabling the team so all members are heard and respected, are important for a board to embrace. The CEO sets the values for the company and should share these same values with the board to discuss and incorporate.

Tell us about the most effective board you’ve ever seen and a few of the ideal practices a Board of Directors can adopt.

Fortunately, I’ve been on many effective boards. In all cases, each board member respects the others, the board understands its role, is direct and clear with its feedback, and is comfortable debating any issue. The respect between the various board members and the CEO is clear, even when there is a disagreement. However, once a decision is made, the board moves on and doesn’t revisit it. In tense or challenging situations, board members calmly explore solutions together, with the goal of figuring out a constructive path forward. All of these discussions happen out in the open of the board room, rather than 1:1 or behind the scenes.

Looking back on the period of your life when you wrote the first edition, what would you tell your 2013 self about how to handle/manage the depressive episodes? Is there anything you wish you would have done differently?

Looking back, I’m pleased with how I handled that depressive episode. I was very open about it, blogging regularly, and got a lot of support from my friends and colleagues. I was no longer ashamed of being depressed. I didn’t enjoy it, nor did I want to be depressed, but I accepted it and patiently worked through it.

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Exclusive Interview with Brad Feld on the Release of his New Book