According to Caldbeck, he wrote the letter after CircleUp had bought out the investor’s firm because he wanted to provide constructive feedback, given that this individual’s “involvement was incredibly difficult for all of CircleUp and our board,” as he explained to this person, whose identity was shielded.
The saga begged questions about what happens behind the scenes at startups and about board composition specifically. But Caldbeck’s situation may be more anomalous than not, suggest some veterans of the industry who have common sense advice around how to avoid problematic board members and how to deal with them if they can’t be avoided.
First, and most obviously, get to know a potential board member as well as possible because who winds up as a director with your company can be a “life-changing decision” in both good and terrible ways, says Joel Peterson, a professor at Stanford’s business school, a former chairman of JetBlue Airways and the founding partner of Peterson Partners, a Salt Lake City-based firm that invests directly in startups and has stakes in many venture funds.
Peterson’s advice is to “interview investors just as they’re interviewing you,” including not only to get a sense for whether someone is knowledgeable and shares your same values but also to get a sense for how much time they have for your company. In his view, venture capitalists are “often the worst board members while angel investors are often really good because they really care about the entrepreneur and have a more hands-on connection with them while they’re developing the business.”