The Strategic Approach to Building a Board

Building your board forward from product-market fit—instead of backward from an IPO date—helps you clarify the most critical challenges facing your company and find the right people to advise you.

A good board of directors can be one of the most strategic—and most undervalued—levers a CEO has to address the challenges of operating at scale. Conventional wisdom advises CEOs to start building out their board 6–12 months in advance of an IPO, but if you work backwards from a transactional moment and a list of regulatory requirements, you’ll miss out on a wealth of business value for your company.

We have consistently found that the best founders and startups build their boards forward from product-market fit—instead of backward from IPO—and approach it like building a presidential cabinet. The composition of a board will evolve alongside a company, and there is no one-size-fits-all approach to building a board. There isn’t a set number of board seats or a particular balance of personas that solves every business problem. That said, we have found these questions work well as jumping-off points for building a strategic board: what are the major business challenges facing my company, and do I have the right people on my management team to help me tackle those challenges? If not, which independent directors can I bring on to augment that team?  

Identifying the critical challenges facing your company will help you prioritize hiring independent board members who have the experience and expertise to tackle those issues. Though many executives will have skill sets that cut across different areas, we’ve found that grouping independents into one of five personas can help you clarify their value-adds to your board: the CEO whisperer, the voice of the customer, the industry expert, the functional expert, and the public readiness expert. 

TABLE OF CONTENTS

The CEO whisperer

Think of the CEO whisperer as someone who can offer CEO-to-CEO advice on the strategic direction of the company and day-to-day tactics of running an organization. These board members are skilled, proven business operators and are usually sitting or former CEOs, general managers, or presidents of large divisions. Typically, this persona joins a board in the earlier stages because they can act as a sounding board for the CEO as the company begins to scale and build out key organizational structures—including the board of directors.

Sample challenges this persona addresses:

• Board building: How do I balance the right combination of knowledge, skills and attributes on my board? How do I ensure they all contribute to an overall high-quality board culture?
• Exec hiring: How do I build my executive team? How do I hire my first CFO? How do I fire my CMO? Do I need a VP of sales? 
• Pacing growth: Do I need to consider a reduction in force? 

The voice of the customer

The voice of the customer board member typically represents the buyer of the company’s product. They are usually functional leaders—for instance, CIOs, CTOs, or CMOs—who can provide feature and functionality feedback to the CEO, identify ways to improve relationships with already-existing customers, identify new customers, and advise on branding and marketing. 

For instance, the CEO of a media company that is starting to see a significant uptick in Gen Z users might want to bring on a former media executive who has worked extensively in scaling media products for Gen Z. Or, a company that sells a marketing automation tool to CMOs might want to bring on a former CMO to provide feedback on the product roadmap and proposed new features.  

Sample challenges this persona addresses:

• Building pipeline: How can we get introduced to decision makers to expand key accounts?
• Product feedback: Are our products ahead of industry trends? 
• Customer retention and satisfaction: How do we retain an existing customer base as we’re adding a second product or expanding into a new vertical?

The industry expert

If you’re asking yourself, how do I navigate the ins and outs of, or establish credibility in, a specific industry?—you’re looking for an industry expert. The industry expert is usually a high-profile executive who brings builder knowledge, connections, and credibility to your company: they can familiarize you with the challenges and benefits associated with operating in a certain industry and can introduce you to important players and regulators in the space. Bringing on an industry expert also typically signals that your company has “arrived” and is operating at a scale that warrants specialized expertise. 

The CEO of a company that builds hardware for national defense agencies, for instance, might want to bring on a former Boeing or Lockheed Martin engineering executive who has extensive experience building aircraft, can offer insights into the typical challenges associated with building in the aviation space, and whose credibility signals to others in the industry that the company is emerging as a key player. The CEO of a company in a heavily regulated industry, on the other hand, might want a former government official to help them understand the intricacies of navigating public institutions and introduce them to key regulatory decision makers. 

Sample challenges this persona addresses:

• Credibility: How do we establish my credibility in a key market? 
• Industry-specific product feedback: Who can help us understand the nuances of building and scaling in a particular industry and give industry-specific product feedback? 
• Regulation: Who can introduce us to regulators in our industry?

The functional expert

Whereas the industry expert helps you establish credibility in a key market, the functional expert brings organizational expertise to a particular area of your company. Functional experts may be senior sales leaders, marketers, people practices leaders, or technologists who can help a CEO work through specific organizational design and team-building challenges in a specific area of the company. For example, a CEO with a finance background might want to bring in a product-oriented functional expert—like a former chief product officer—to help them understand what to expect as the product scales. Or, if international expansion is a key part of a company’s growth strategy, the CEO might bring on an executive who has extensive experience in building operations overseas. 

Sample challenges this persona addresses:

• • Scaling a sales org: How should we think about the role of a CRO as the company scales? How and when should that profile evolve as the company evolves?
  • People practices: How should we be thinking about learning and development across the organization? 
  • Product strategy: How do we continue innovating on one product while investing in new product lines? How should we adjust pricing as we move upmarket?
  • Go-to-market strategy: What leading indicators or metrics should we be tracking? How should we think about partnerships and alliances and how they scale the company’s growth? 
  • Marketing: How can we manage the public narrative around the company? 

The public readiness expert

In advance of a public offering, founders will need to organize their boards to meet regulatory requirements. These requirements vary by stock exchange, but almost all boards will need an audit chair to oversee the audit process. This person must be a “qualified financial expert”—which usually means they have past employment experience as a CFO or as a high-level executive at an investment bank. It’s helpful, but not required, that they have previous public board experience, since they will help the CEO navigate SEC regulations, questions about company stock, and public capital markets. 

In order to get the most out of a public readiness expert, CEOs should bring them on about a year in advance of an IPO. This gives the expert time to become familiar with the company’s books. 

Sample challenges this persona addresses:

• Preparation for public readiness: Do we have the right CFO for the job? Are we using the best audit firm?
• Navigating stocks: How do we navigate public markets and issuing and pricing stock?

As we mentioned, there is no one-size-fits-all recommendation for building a best-in-class board. As complex problems emerge, you might find you’re bringing on board members with skill sets that cut across different personas or rearranging your board to better address a new phase of growth. Shifting your focus away from reacting to regulatory requirements to proactively addressing emerging business problems turns the board-building process into a strategic operation instead of a tactical exercise, and articulating the challenges you’re facing in terms of the personas we’ve listed can help you see those challenges more clearly. Building a board forward from product-market fit not only puts you in a better position when you’re filing your S-1—it also helps you accrue real benefits to your business much, much sooner.