“Let’s look at the term sheet,” Marcia, our lawyer, said to me.
“It looks pretty good,” she said. “There’s nothing out of the ordinary. The terms are normal. In fact, they are quite generous.
“The board composition looks normal too. The investors are proposing a five man board. Each investor will get a seat, you will get a seat, and there will be two outside board members.”
So we started life as a three-man board. It was me and our two investors on the board. And we could add two outside board members.
When we were about one year into the company’s post funding life, I went to the investors and told them I wanted to add an outside board member. The investors agreed to my suggestion.
You don’t just get to choose who you want to be on the board. Your investors get a vote too.
One of our investors, “Raul”, said he wanted someone with sales experience. I thought of my old friend Bill because Bill had run sales at Maxim, our large competitor.
Gill, my other investor, suggested Barry*. Barry had run sales for various parts of Intel, and he and Gill had worked together in the past.
So Raul met with Bill, and I met with Barry. Barry and I met a couple of times for lunch so we could get to know each other.
I liked Barry, and he was very free with his advice which I liked too. However, I wasn’t sure if he was right for us now.
Raul’s feedback was equally ambivalent about Bill. “I’ll support him being on the board if that’s what you want,” Raul said. “However, I think you can do better.”
In other words Raul was politely saying, “Keep looking.”
However, I did wonder why Raul wasn’t more forceful if he didn’t believe Bill was right for the board. Didn’t the board have the true power? I’ll get back to this later.
I called Barry to let him know we would be looking for someone else. Barry was gracious, and we agreed to keep in touch.