Board of Directors and/or Board of Advisors

By: Janis Machala, Paladin Partners, janism@paladinpartners.com

Since this newsletter goes to angels and entrepreneurs I thought it would be interesting to discuss start-up boards. Who should be on a board of directors? Is an advisory board a good thing?  How to use advisors effectively? I’m sharing a great piece by Steve Blank (who also has a link in his piece from Brad Feld).

People often tell me they are advising several companies but when I ask what they’re doing as part of this role it’s usually coffee once and a while with the founders.  That’s expensive equity and cost of coffee for founders. I also know from recruiting board members for the board of directors and advisory board members that every one of those individuals needs to be led and not left to figure out how to be useful. Also, don’t recruit so many advisors that you can’t possible use them to maximum effect. More advisory board names in your executive summary or on your website is not growing your value as a company or adding to your legitimacy as an inexperienced team.

I often recommend an advisory board to founders: 1) it’s great practice for learning how to lead senior executives; 2) it’s a great try out for potential board of director candidates; 3) leading an advisory board is great at preparing the CEO to chair a board of directors; 4) reaching the right industry players who can open doors to the C-Suite for B2B companies is a valuable use of a modest amount of equity; and 5) your advisory board is there for the CEO/Founders while the board of directors is there for the company (big distinction).

I’m in Brad Feld’s camp about building your board early. As soon as you take in any outside investment it’s good business practice to have outsider(s) on your board. It prepares the founder(s) in leading a board before the “big gun VCs” join the board at your venture financing stage. The outsider(s) have hopefully been a CEO and lived in your shoes. Just because someone writes a check to invest as an angel or a seed VC does not automatically provide a right to a board seat. Boards where founders are 2-3 of the board seats, a waste of critical founder talent on the wrong things. The CEO should be on the board but there’s little value to other founders being on the BofD since their equity ownership will provide sway on critical issues such as financing terms, addition of shares, hiring/firing CEO, etc. It is typical that the other founders who want to be on the board think it’s a big deal but that’s their egos talking.

I am often surprised at how little thought goes into board of directors and advisory board composition. The people you keep company with in these roles can add enormous value to your company or be a “pain in the you know what” if they are not a cultural or capabilities fit. Treat each of these roles and recruits with the same care you use to pick your cofounder or your executive team members.

Check out the new Office Hours!

Woohoo, more mentors at Seattle Angel are offering Office Hours. Ryan Porter has an incredible background as an engineer and has now been investing in young companies through the Seattle Angel Conference and the Seattle Angel Fund for the last couple of years. This is a great opportunity to meet with a young angel investor with a wealth of experience and perspective to share about building businesses, getting an investment, and designing world class software.

Join Ryan Porter on Monday at SURF Incubator!

How do you sign up? Register here.

Meet Janis Machala

Years involved in the Northwest startup community:

20 but it seems like yesterday as it's always exciting and new

Types of involvement in the community:

Board member for the WSA (4 years), now called the WTIA

President of Northwest Entrepreneur Network (3 years) and Board Member (10 years)

Board member of WA First Robotics

Co-founder of Seraph Capital, first women's angel group in the country (with Sue Preston and another 10 or so like us)

Mentor in Tech Stars, 9 Mile Labs, Microsoft Accelerator

Notable companies you’ve worked with:

Evidence-Based Practice Institute, EVRNU, Glympse, JW Secure, Koverse (currently a board member), OfferUp, Omni Retail Group, Payscale, Performant, Scale Out Software, Transform.Digital

Three things most excited about in the Northwest:

1) Women with BIG ideas starting companies and leaving BigCo's

2) The commitment to building a more diverse workforce by large and small companies

3) The vibrancy of our angel community and the growing sophistication of angels as deal leads

Ways to connect:

janism@paladinpartners.com or 425-260-5354

Meet Susan Preston

Years involved in the startup community

Currently, I am the managing member for the Seattle Angel Fund (focused on PNW Start-ups), co-managing member for the Element 8 Angel Fund (focused on early-stage clean tech companies), Buerk Endowed Fellow for Entrepreneurship at the U of W (teaching a year-long class on angel investing in the MBA program), General Partner for the CALCEF Clean Energy Fund (in Bay area), Co-Chair of the Angel Resource Institute (Publisher of the HALO report and leading educational foundation for angel investors, and Chair of Women First Enterprise (Program of ARI). I frequently speak on panels at events in the greater Seattle area and beyond. I frequently meet with entrepreneurs, investors, professionals, etc., related to early-stage investing and thoroughly enjoy it all.

Notable companies you’ve worked with

Right now, through the investments by Seattle Angel Fund, I am working with Aqueduct and C-sats. I am also working with Alphabet Energy through the CALCEF Clean Energy Fund.

Three things you're most excited about in the Northwest today and for tomorrow

There seems to be a real excitement and determination to re-build our investment horsepower. When I left for the Bay Area nine years ago, we had several Bay-Area based VC funds with offices in the Seattle-area. When I returned 2+ years ago, all of them had left. There seems to be most recently, a growing awareness and understanding that we must rebuild our investment community to support all the great PNW companies. I am excited to be part of the journey.I have been working at or with start-up companies in the Northwest since the early 90’s, with the position of General Counsel at early-stage biotech companies. As a partner at Cooley Godward starting in 1999, my participation broadened. This was also the year I began speaking with women colleagues about starting an all-women’s angel investment group. Seraph Capital Forum was launched with the help of other highly engaged women like Janis Machala. I continued to be extremely involved in all aspects of the start-up community until my move to the bay area in 2007 to start a seed-stage clean energy venture fund. I returned to the Seattle area in 2013 and am delighted to be back and fully re-engaged.

The Virtual Coffee Networking Strategy

Are you taking your networking to the next level, by making connections without leaving your home?

We’re not talking about a phone call, although a very productive Skype, Facetime or old-fashioned telephone call can be an outcome of your successful at-home networking strategy.

To kick things off, let us know when was the last time you had a conversation with someone on Twitter? Many of you are saying: “Never”, right?

The truth is, we spend hundreds of hours a year at meetups and other networking events and completely ignore one of the most powerful networking mediums: social media.

Yes, social media can be confusing, but it is powerful. With social media a person can be anywhere at any time, quite literally. You can strike a conversation with anyone anytime, and many times get an appreciative response.

And, don’t think we’re advocating that you completely stop going to networking events. Rather, think about social media as a logical extension of everything you do.

If you are among those who said never to social media networking because it seemed so time-intensive, try this:  set aside 15 minutes tomorrow. As you grab your first cup of beverage of your choice, head to Twitter and try to connect with one of the following segments of the social community:

Connect with your customers:

In addition to gaining amazing customer insight and validating your ideas on social media, you can start building a tribe of loyal fans for your product. After all, people love to be personally involved and there is no more personal medium than social media.

If you are unsure where to start, go to Hootsuite and create a stream with the keywords your customers would be using. Create a “stream” using these keywords. Spend a few minutes liking and replying to some of the tweets you see related to your topics.

Following some of the Twitter users and asking them a direct question is also a tactic that works great in gauging how “sticky” your idea is. One of the best ways to find followers is by looking at some of the top leaders in your industry and identifying who follows them… Which brings us to the next step….

Connect with thought leaders:

Thought leaders command attention of your customers on social media. A mere comment on your Tweet may be perceived as an endorsement of your product. Better yet, if you build initial connection with the thought leaders (investors, potential mentors, partners, etc), you can make it easier for you to approach them later with an ask.

Google “top 10 influencers in x industry” (insert your industry). Find their Twitter handle and add them to a Twitter list. Add the list to Hootsuite and reply or retweet some of the comments and conversations.  If you actually click on the link, read their latest content, and respond.

Bonus tip: find out which events and conferences they are attending. Pay attention to the hashtags used for these conferences and retweet/like a few tweets with one of the hashtags.

Connect with journalists

Everyone in the startup world is seeking reporters’ attention, but only a few are successful. Network digitally first: journalists have no time for crackers and cheese!

Use Muckrack to find trending journalist coverage and commentary. Once you have a list of reporters in mind, you can start building relationship with them: Remember, you’ll connect with them and their readers.  How to do this?  NOT by showing up and asking for coverage (you know your parents raised you to be more polite than that).  Be helpful:  share their stories on social, comment on their stories (both on the blog and social media), suggest sources and stories that are not about you – be a helper first. 

Once you get to know them, deliver value: include them on the Twitter that offer insight research, opinion on trending topics or prediction on future trends.  When you are ready to move to the next step (better done in email!), be ready with images, research and quotes. 

Just think, over a cup of coffee, you, your computer and social accounts can make connections that are insightful, interesting, and possibly a conduit to a valuable business, partner or media coverage opportunity.

PS:  For your first social task, how about connecting with the writers of this article?  @Tredigital and @Pam_A.  Let’s hashtag this as a #GreatPlaceToStart.

How to Vet an Executive Coach and Get Best Outcomes

Written by Janis Machala, Managing Partner, Paladin Partners, janism@paladinpartners.com

As I was researching for this Part II piece on executive coaching [read part I], I ran across a few charts from Harvard Business Review blogs on executive coaching. The first is a chart on what’s most important to clients who’ve worked with executive coach(es). The second is a great visual on the difference between consulting, coaching, and therapy.

In selecting a coach consider the following:

Evaluate their certifications and relevant experience. The International Coaching Federation is an excellent certification body although not all coaches have or need the ICF credential. I recommend hiring a coach who has been at the same level as you. It also helps if they understand your industry. If the coach hasn't walked in the same-size shoes, they likely won't understand the pressure you face or the types of decisions you need to make.

When you interview coaches beware of vague descriptions of skills. When you hear descriptions like "sounding board" and "talking through things," they don't tell you what the coach can do for you. Ask specifics about what you can expect and if the coach can't provide them, consider that a red flag.

An experienced coach will describe the process and what you can expect from your time together. Ask about typical lengths of engagement and how success is measured. Your coach should be willing to discuss a game plan with you and give you some detail about how you'll set and achieve goals together. Ask about how the coach has made a difference in his or her clients' professional lives and ask for a few references. Be concerned if none are available.

Beyond the credentials, skills and track record, it's important to have chemistry. Consider your gut reaction to the coach. You don't have to be best friends, but there should be a decent amount of chemistry between you. effective as it could be. What this means for you is that before you hire a coach, you should ask him how he handles dependency in relationships.

Formal coaching relationships are based on written agreements between the coach and the individual being coached. This written agreement delineates the goals and mutual expectations for how the coaching relationship will work.

Excellent coaches had never stopped developing themselves. They constantly look for new things that they could engage in to enable them to coach even more effectively. They work with a wide variety of ideas, theories and models that are appropriate to particular individuals.


R.O.C. (Return on Coaching) – Over time, if the results are not exceeding the predictable results or aren’t feeling like a good investment, the relationship ceases to be effective. A common timeframe for initial executive coaching is 6 months, with a second scope of work possibly continuing for an additional 6-12 months. If you’re too comfortable with your coach you may be using them for the wrong type of work. Coaches should be growing, pushing, stretching your abilities. I recommend a mid-point assessment and a final assessment (close of the relationship).