Dining last night on the best tuna tartare around, an entrepreneur asked me my thoughts on board structure. My answer surprised him, prompting his suggestion that I share it in a blog post. So here goes: Crafting the right board of directors has nothing to do with legal structure, and everything to do with getting the right people in the room.
I find that the ideal board of directors has 5 members--a nice, small odd number that allows for multiple skill sets without losing anyone's attention or complicating communications. The CEO is the only employee on the board, so that open, apolitical conversation can ensue regarding the team. VC's occupy no more than two of the seats--more than that yields rapidly diminshing returns (and fuels the conspiracy nuts who blame all setbacks on evil VC control). The remaining seats are held by outside experts recruited opportunistically--the board should regularly consider skill sets and credentials that would add value to the board (contacts, reputation, domain knowledge, customer perspective, CEO coaching experience...) and keep all eyes open for the right individuals who inevitably pop up.
For the record, my "ideal configuration" is a guideline, not a rule. Historical constraints commonly require deviation, which I have often seen work just fine.
Here's the surprising part... I don't care who elects whom, how many seats the common shareholders elect, or whether I even hold a formal board seat. Ask any entrepreneur I work with--Bart, Chini, Scott, Messiana, Risley--and they will confirm that I'm 100% easy on control terms, because I have learned from experience on 40+ boards that they don't matter. Real control has nothing to do with the documents, and everything to do with the color of the ink at the bottom of the cash flow statement. Simply put, when a private company is losing money, the investors control it, and when it's profitable, control rests in the CEO's hands--unresolvable differences between the CEO and investor group inevitably pan out this way. It's simply a matter of which is more dispensible at the time--the financial support of the venture firms, or the knowledge and momentum that the executive team brings to operations.
So as you can imagine, I'm always quite happy the day I truly cede control of the board!
Sunday, January 01, 2006
Wednesday, December 28, 2005
A Benign Addiction
The holiday period is a tricky time for me, presenting too much opportunity to fall off the wagon...
My addiction started one day with a thought experiment. Until the age of about 26, I had found even fresh grapefruit juice too sour to drink. And yet, when served a half grapefruit, I always loved to spoon out every drop of the succulent citrus. Why did I have such opposite reactions to different presentations of the same food? I conducted an experiment to test the impact of expectations on taste--I closed my eyes and imagined that the juice in my glass had been spooned out of a fruit that very instant. I sipped it ever so slowly, as I would from a spoon, and the result was literally sensational.
From that day on, I had to drink grapefruit juice with every meal. The best juice, of course, flows directly from the grapefruit--freshly squeezed at time of consumption, but Who Has Time For This?
So I came to learn the intricate differences among retail brands of juice. Now, each batch of juice is unique. The color ranges from yellow to pink, the taste from tart to sugary, and the texture from thin to pulpy. I have my preferences, but also know that there is a time and place for each vintage. Sweet, pink, and pulpy juice can be breakfast all by itself, whereas thin, tart, yellow juice really hits the spot after a workout. But variety only goes so far--I wouldn't ever recommend drinking any grapefruit juice that is made from concentrate, or that smacks of the taste of rind, or that doesn't taste super fresh (older juice tingles from the onset of fermentation).
I came to frequent restaurants (like this one) that offer fresh-squeezed juice. And with one taste, I could instantly tell you if it was really squeezed that morning, or squeezed the day before, or store bought, or actually made from concentrate. And if the juice was store bought, I could easily distinguish the different retail brands--Tropicana, Just Squeezed, Odwalla, etc.
In time my preferences became so strong that the only commercial product I could stomach was Odwalla. Delightfully, each batch of Odwalla had a different color, sweetness, thickness and freshness, and I came to open certain bottles for certain meals or occasions based on the look of the juice, or the date (once you sampled a batch, every juice from that date was the same).
I know I sound crazy, but am I really any different than the wine enthusiasts you know, who relish the juices of a different grape fruit?
At the peak of my addiction, I was consuming well over half a gallon per day. If supplies ran out, cravings compelled me to immediately shop for more. When I found myself cruising for Odwalla in the 24-hour Safeway at 2AM, I knew something was wrong with me.
So I confessed the addiction to my doctor and sought her guidance. Her response: grapefruit juice is good for you--if you're going to crave something, you might as well crave grapefruit juice. (Her only caution is that grapefruit juice can dangerously accelerate absorption of certain medications.) Blessed by science, I surrendered to my whim.
But as I neared the age of 31, my supply went bust. E-Coli bacteria infected a batch of Odwalla apple juice. EPA tests at the factory turned up negative, but somehow many children became ill, one fatally so. To protect its strong brand (and, I think, to do the right thing), Odwalla responded quickly and openly to address the problem. With FDA guidance, Odwalla inserted multiple inspection points and began to pasteurize its apple juice. But alas, in their zeal to restore their good name, the folks at Odwalla decided to also pasteurize citric juices, in which the threat of e. coli infection is only theoretical.
That day, my only source of high-quality commercial juice dried up. Forced into withdrawal, I adjusted to life with only an occasional glass of the home-squeezed nectar.
Except... on lazy, rainy, holiday weeks like this one, I find myself at home with enough time, fruit, and helpful children to re-kindle and satisfy the urge.
My addiction started one day with a thought experiment. Until the age of about 26, I had found even fresh grapefruit juice too sour to drink. And yet, when served a half grapefruit, I always loved to spoon out every drop of the succulent citrus. Why did I have such opposite reactions to different presentations of the same food? I conducted an experiment to test the impact of expectations on taste--I closed my eyes and imagined that the juice in my glass had been spooned out of a fruit that very instant. I sipped it ever so slowly, as I would from a spoon, and the result was literally sensational.
From that day on, I had to drink grapefruit juice with every meal. The best juice, of course, flows directly from the grapefruit--freshly squeezed at time of consumption, but Who Has Time For This?
So I came to learn the intricate differences among retail brands of juice. Now, each batch of juice is unique. The color ranges from yellow to pink, the taste from tart to sugary, and the texture from thin to pulpy. I have my preferences, but also know that there is a time and place for each vintage. Sweet, pink, and pulpy juice can be breakfast all by itself, whereas thin, tart, yellow juice really hits the spot after a workout. But variety only goes so far--I wouldn't ever recommend drinking any grapefruit juice that is made from concentrate, or that smacks of the taste of rind, or that doesn't taste super fresh (older juice tingles from the onset of fermentation).
I came to frequent restaurants (like this one) that offer fresh-squeezed juice. And with one taste, I could instantly tell you if it was really squeezed that morning, or squeezed the day before, or store bought, or actually made from concentrate. And if the juice was store bought, I could easily distinguish the different retail brands--Tropicana, Just Squeezed, Odwalla, etc.
In time my preferences became so strong that the only commercial product I could stomach was Odwalla. Delightfully, each batch of Odwalla had a different color, sweetness, thickness and freshness, and I came to open certain bottles for certain meals or occasions based on the look of the juice, or the date (once you sampled a batch, every juice from that date was the same).
I know I sound crazy, but am I really any different than the wine enthusiasts you know, who relish the juices of a different grape fruit?
At the peak of my addiction, I was consuming well over half a gallon per day. If supplies ran out, cravings compelled me to immediately shop for more. When I found myself cruising for Odwalla in the 24-hour Safeway at 2AM, I knew something was wrong with me.
So I confessed the addiction to my doctor and sought her guidance. Her response: grapefruit juice is good for you--if you're going to crave something, you might as well crave grapefruit juice. (Her only caution is that grapefruit juice can dangerously accelerate absorption of certain medications.) Blessed by science, I surrendered to my whim.
But as I neared the age of 31, my supply went bust. E-Coli bacteria infected a batch of Odwalla apple juice. EPA tests at the factory turned up negative, but somehow many children became ill, one fatally so. To protect its strong brand (and, I think, to do the right thing), Odwalla responded quickly and openly to address the problem. With FDA guidance, Odwalla inserted multiple inspection points and began to pasteurize its apple juice. But alas, in their zeal to restore their good name, the folks at Odwalla decided to also pasteurize citric juices, in which the threat of e. coli infection is only theoretical.
That day, my only source of high-quality commercial juice dried up. Forced into withdrawal, I adjusted to life with only an occasional glass of the home-squeezed nectar.
Except... on lazy, rainy, holiday weeks like this one, I find myself at home with enough time, fruit, and helpful children to re-kindle and satisfy the urge.
...I think I'll go squeeze some right now. L'Chaim!
UPDATE May 9, 2006: Scientists isolate the molecule in grapefruit juice that increases absorption of drugs.
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