Fast Growth Needs a Firm Foundation
Jeff DeCoux, President and CEO, eCustomers, Inc.
Dynamic boards of directors and advisors are a critical necessity to a high-growth company. To grow a business quickly, you must learn from others' mistakes to avoid repeating them. A carefully selected board of directors provides the experience you need to help you set the right course and make quick and accurate decisions. It can inspire new direction, solve problems and promote the company at the highest levels of the business community.
My company, eCustomers, was just an idea in October 1998, but on the basis of experience gleaned from two earlier start-ups, I knew we needed a board of directors and advisors who could fill in the expertise we were missing. We could see far enough ahead to know we needed expertise in operations, e-commerce and the retail industry, our first target segment. Privacy was becoming an e-commerce issue, so we built our business model and our advisory board with these needs in mind.
The most difficult aspect of assembling a board is finding members who can contribute and communicate with the company. It's a unique board member who can be highly critical of the company while offering new ideas and providing solutions. We selected board members who know our business and are willing to be very active. We researched each member just as we would a senior executive of the company. Candidates selected were asked to commit to extra meetings as part of board membership.
Sources and Resources
This company is especially lucky to have industry experts who know the retail business and know customers, as well as what works and what doesn't in developing sound customer relationships. We also have experts in venture capital, equity financing, computer hardware and Web-enabled software and wireless services. Our industry experts can help us predict trends, develop business strategies and provide contacts for sales and technology partners.
In addition to their role at eCustomers, board members sit on boards for other e-commerce companies. Their shared knowledge and experience is a wealth of information, strategies, contacts and intuition we can draw on. They provide us with a wide range of knowledge on which we can build sound business practices, technical superiority and a broad customer base.
Select for Specific Expertise
When I founded SMART Technologies in the mid-1990s, my business partners and I carefully chose a high-caliber board of directors that included Jimmy Treybig, a Silicon Valley legend and principal founder and CEO of Tandem Computers. Treybig is a brilliant strategist and strong taskmaster. Now he's chairing the eCustomers board of directors, which is comprised of experts in operations, technology, and specific vertical industries.
All the directors are current or former executives or partners in highly successful companies. For example, Treybig is also a director of the Listed Company Advisory committee of the New York Stock Exchange, as well as other prominent organizations. Other directors have impressive credentials and reputations in the business world: Friedrich Bornikoel is a managing partner of TVM Techno Venture Management, and Clint Bybee and Bill McAleer are managing directors of ARCH Venture Partners and Voyager Capital, respectively; Bobby Martin is the former president of Wal-Mart International, and Chris O'Neill is a principal of Vortex Partners L.P. As founder, president and CEO of the company, I also sit on the board of directors.
Last January, we were honored to be appointed to the Federal Trade Commission's Advisory Committee on Online Access and Security. We were one of only two start-up companies invited to participate. Through that committee, we've developed relationships with a network of national and international experts in the field. The experience also encouraged us to form a privacy advisory board, which we're in the process of filling now.
Learn From the Best
We have an ambitious vision: to make the online experience more powerful and memorable than any on-land shopping experience. To make this vision a reality, we went for the best and got it for our advisory board. Members include Kent Anderson, president of Macys.com, and Dr. Jack Sansolo, executive vice-president for global brand direction at Eddie Bauer. Lou Hughes was running General Motors' international operations when he started working with us—now he's president and chief operating officer at Lockheed Martin. Allan Loren, president and CEO of Dun & Bradstreet's operating company, was an executive vice-president and CIO at American Express when he joined our advisory board. Bill Seltzer fills a similar post at Office Depot, and Gerald Storch, president, runs credit and new businesses at Target. Tom Kippola, managing director at The Chasm Group, completes the lineup. It's a savvy group that can teach us how to push the company beyond typical expectations.
The eCustomers management team meets with the individual boards regularly. In addition, the directors, advisors and management meet once a year. At our first annual summit last February, we broke into small groups and discussed core issues, like our value proposition. Then we went to a ranch in the Texas Hill Country, shot skeet and had a wonderful barbecue. Most of our other interactions are informal, on an as-needed basis, though I expect this to change over time.
- To get the most out of a board, every entrepreneur should ask the following questions at a regular (usually quarterly) meeting.
- What is your level of excitement and commitment to the success of the company?
- What are the problems or issues you have seen in our operation and how can you help us address them?
- What are the strategic trends we should take advantage of in the marketplace?
- When should we launch some of the new strategic objectives we have identified?
- What companies should we be introduced to and what relationship should we form with each?
Who Gets What
Strong boards give a company credibility. Our board members earned the label "expert" before they joined eCustomers. Because they're highly respected in their industries, they provide the validation a business needs to succeed.
Directors and advisors benefit according to the company's overall success. Like the rest of the industry, we use equity as a form of compensation, take their participation very seriously and map our packages to industry averages. If eCustomers Inc. is ever acquired by another company, our board would still be intact as part of the acquisition. Then the acquiring company could choose to continue to leverage the existing boards' contributions or discontinue their involvement. Given the executive-level members we've landed, however, we're pretty sure any acquiring company would continue to utilize their services.
In my experience, the biggest barrier to a well-leveraged board is streamlined, limited communication. Members find it very difficult to provide insight if they can't keep up with the changes in the company. At every quarterly meeting, the founder should prepare the following documents for members to examine:
- Complete financials
- Current and future critical initiatives driving the business and how they impact its success
- Strategic issues and changes within the business
- Current customer and partner lists
- Forecast list of new customer opportunities.
What really makes it all work is keeping your board members informed! Communication with both advisors and directors is crucial at all stages in a company's life.