The Benefits Of The Perfect Independent Board Member

By Dharmesh Shah on August 9, 2011

The following is a guest post from Brian Halligan, CEO of HubSpot.

When we were first starting HubSpot, we identified the perfect candidate for an outside board member: Gail Goodman, CEO of Constant Contact. We got a meeting with her through a colleague of mine, and that meeting only reinforced our opinion. At the end of the meeting, I asked her if shed join our board and she politely declined. Crap!boardroom2

About a year later, we raised our Series A round of venture capital from General Catalyst. It turns out that Gail knew and trusted one of the partners at General Catalyst who set up another meeting with her at GC's offices. During that meeting, we talked about the progress we made, answered a bunch of her questions, and at the end of the meeting, I closed so hard that even Alec Baldwin (GlenGarry Glen Ross) would have been proud. To our surprise, she agreed!

It turns out a perfect outside board member is even more valuable than we thought.  Here are the big categories of help she gave us in addition to a ton of little things along the way:

1. Pushed back on our VCs when she thought they were getting too far deep into the weeds.

2. Taught us the economics of SaaS.

3. Approximately quarterly 1-on-1s with me where she'd give me management advice and gentle nudges when she thought I was wrong-headed about something.

4. Monster credibility when it came to fundraising. I never heard anyone say it explicitly, but I know that her being on the HubSpot board sent a positive signal to the folks at Sequoia, Salesforce.com (Marc Benioff specifically asked about her during our pitch to him), Matrix Partners, etc.

The only bad news in this story is that over time, HubSpot's agenda and Constant Contact's agenda have overlapped a bit. HubSpot started as a TOFU (top of the funnel) company and we have recently expanded into the MOFU (middle of the funnel) business where Constant Contact has its core business in email marketing. At the same time, Constant Contact is adding social media features. It is a minor overlap, but rather than have it be awkward at all, we decided to part ways very amicably.

We are going to replace Gail with Michael Simon, the CEO of LogMeIn. I have been following LogMeIn for several years now and admired Michaels work from afar. He was kind enough to agree to a meeting where I told him the HubSpot story and asked for his help. After a couple of months of dancing back and forth, he agreed to join. I'm not good at much, but I think I'm going to end up two for two on the outside perfect board member thing.

Having a perfect outside board member is worth spending real cycles on. My advice would be to make yourself a list of the perfect candidates, network to them, tell the story, and ask for the order. If you get the Heisman, then circle back down the road.

Recruiting a perfect board member is one of those cases where you have to sell. The perfect person is ridiculously busy and has a million reasons to say "no". Think a bit about why the perfect person might want to join your mission, try to find out which reason will resonate, and pound on it during your meeting. Some non-obvious reasons the perfect person might want to join your board:

1. They are working for a bigger company and they think joining a startup board will energize them and give them new ideas (i.e. learn about continuous deployment, learn about the learn startup movement, learn about inbound marketing, learn about mobile apps, etc.)

2. They are interested in working with another of your existing board members (i.e. one of the VCs) for professional reasons that might pay off for them much later.

3. They are interested in working with another board member for personal reasons, like they used to work together and it will be fun.

4. They just like you or your co-founder and think youll be fun to work with.

5. Your stock options [I suspect this is the lowest on the list as oftentimes the perfect outside board member is all set in this department]

6. They are on the other coast, but have a relative in your city that they'd like an excuse to visit more often. 

Try to anticipate some of the perfect board members objections that will come up in your meeting and proactively handle them:

Objection 1: I'm on the other coast and I don't want to fly to your coast for board meetings.

Answer 1: If you join, we could have two board meetings a year on your coast, you can come to two on our coast, and you can do two via telephone. Thats 2 trips per year!

Objection 2: Im way too busy.

Answer 2: You can skip one board meeting a year without worry or care. I promise I wont bother you with more than 1 email between board meetings.

One of the many nice things about being venture-funded is that it sends a positive signal to the prospective candidate that the company has something going for it. In addition, the VCs are good sources of introductions. My advice would be to ask your investor to introduce you to people on your list and, if possible, try to penetrate the entire partnership's rolodex on this effort versus just your partner's network. Another tip Id give you is if you are at any stage of discussions with VCs about a prospective investment, ask them to introduce you to a perfect outside board member -- this is an easy way for them to prove their worth to you and is very valuable.

How about you? Have you got a perfect board member that you want to crow about a bit?  Any tips on recruiting that perfect board member?

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Prison Break: Escaping From Shawshank Inc. For A Startup

By Dharmesh Shah on August 1, 2011

I first laid eyes on Andy Dufresne during his orientation session here at the Shawshank Software Corporation. To tell you the truth I didn’t think much of him—I figured a couple of 4-hour mind-numbing “planning” meetings and he’d break down in tears. That’s what happened to most new developers at Shawshank. Sometimes it took a day. Sometimes a week.

Rumor had it Andy was some hotshot programmer fresh out of MIT. Usually someone that talented can write their own ticket, so why Andy was at Shawshank, I can’t say. But I’m betting it had something to do with a recruiter. Or his parents. That’s how a lot of programmers end up at Shawshank, pounding out mindless code like convicts churning out license plates. “I’m better than this,” they all say straight-faced. “I don’t belong here.”shawshank

In the beginning, Andy hardly said more than a few words to me. It was obvious Andy wasn’t like the others that were passing through Shawshank’s gate. Most fish start whimpering as soon as our CEO, “Warden” Norton finishes his your-butt-belongs-to-me speech, and the goons from HR begin their interrogation routine. Andy, though, had a quiet way about him. He was not like the others. It’s safe to say I liked Andy Dufresne. I liked him a lot.

It was a month before Andy actually spoke to me. He said that he heard I was a man who could get things done. Which was true. Shawshank required approval forms in triplicate for every little thing, and I was the only one on the team that knew where to get the forms, and who to submit them to. When I nodded, Andy slipped me a yellow Post It note with a list of items—pens, dry erase markers, white out. “And a large poster of Rita Hayworth,” he added.

rita hayworth

Warden Norton took notice of Andy, and soon he had Andy doing all sorts of pet projects, like working on the Macro Infrastructure Guide to Releasing An Incomplete Engine (MIGRAINE). I can’t even count all the Fridays when I’d be getting a drink from the bucket that replaced our water cooler, and notice Captain Hadley standing just outside Andy’s cubicle, giving him another shakedown he didn't deserve.

The fact that laptops were invented years ago or that if we upgraded the computers developers worked on more than once every 4 years, we might get the Eclipse IDE to load in less than 2 minutes was not something we talked about at Shawshank. Better just to start off a build and stare into space than make waves. Inmates at Shawshank are supposed to read specs and write code. Thinking was not encouraged at Shawshank.

Some nights, I’d find Andy sitting there alone in his cube with Rita Hayworth looking down condescendingly as he gamma tested Shawshank’s latest software release The fact that Andy didn’t know that most of his code would never actually get used by anyone was a blessing. It allowed him to carry on. Ignorance is bliss at Shawshank.

The Warden liked to use motivational tactics that he claimed were invented by Japanese monks, but we since discovered he had read about in an in-flight magazine. Like helping developers break-up the monotony of their long day by scheduling mandatory meetings every three hours.

Andy was probably the toughest screw to ever do a turn at Shawshank Software, which only made me more curious about him. “Hey, Andy, what’s up with Rita Hayworth there?” Andy glanced behind him. “Rita? Well she’s a symbol,” he said. “A symbol of a better place out there, where you’re appreciated, where people like coming to work, and you get to build products and release them to actual users.”

I thought he was crazy. “That kinda thinkin’ will drive you insane, Andy. There ain’t nothin’ like that out there.” Once you get sentenced to Shawshank, there is no other world. After a while, the place gets to you so you can’t function beyond the tombstone-grey cloth panels of your cell. Andy wouldn’t hear it—said he’d prove me wrong one day. I had no idea what he meant and thought he might be cracking up right in front of me. The circles under his eyes looked darker than usual.

Staring into his monitor, Andy got in the last word before I walked off. “There’s only two things you can really do in a place like Shawshank,” he said. “Get busy livin', or get busy dyin'.”

Get busy livin', or get busy dyin'. I couldn’t escape Andy’s words.

A week later, Andy was gone. The Warden and Captain Hadley were tearing his cubicle apart when I showed up. I didn’t know what was going on until they threw Andy’s resignation letter at me and then ordered me to take down that stupid picture of Rita Hayworth.

shawshank rain

Andy’s gone. I was still in disbelief. Andy Dufresne—put up with a world of crap, and escaped to the better life he knew existed outside these walls. A world where developers got Macbooks with SSDs and dual monitors. Where programmer productivity was not an oxymoron. And most importantly, where you got to actually write code that mattered to millions. I took the small slip of paper I found behind the poster of Rita. All it said was “PrisonBreak.me”. I smiled.

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Are you an awesome developer trapped inside a place like Shawshank Software? HubSpot can maybe help you break free and join a startup.  [We're also paying referral bonuses.  $1,000 for every year of time you've served in a big company.]

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