The wisdom of VC boards: Trite until you've lived it.

What I love about the world of venture capital: it forces essential truths to the surface very quickly and compellingly. Venture capital is like the rest of business, even like much of the rest of life, only more so.

This evening, in this class on "entrepreneurial finance" that I am teaching for the very first time, we covered a classic treatment of boards of directors for high tech firms, what they do right, what they do wrong, what takes them up, and what brings them down. The article is Jaffe & Levensohn's "After the Term Sheet: How Venture Boards Influence the Success or Failure of Technology Companies." bit.ly/zf0ifB

When you read it, say reading it in a hurry to prepare for class, it seems dry, unsurprising. Take this list of ten common pitfalls of venture boards:

1. Complacency
2. Inability to confront difficult issues
3. Distraction and over-commitment
4. Misalignment of interests between Board Members and investors
5. Divisiveness on the Board
6. Paralysis over liability issues
7. Board Member role confusion
8. Leadership vacuum
9. Loss of trust in the CEO
10. Resolution to fail

The list seems trite and obvious, if you breeze over it.

In tonight's presentation, though, one comment highlighted by the two presenters, Sean and Jeff, struck me: "The quality of the interpersonal relationships between VCs, other Board Members and upper management is the key to enterprise success."

Of course that's true. It struck me because in the least satisfactory parts of my professional life, the interpersonal relationships are decidedly low quality. And in the parts that are humming, the interpersonal relationships shine. And yes, the causation goes from the quality of interpersonal relationships to success and satisfaction, and not the other way around.

Jeff and Sean summed it up nicely, the key to success in business, to success in life is...relationships.

I rushed back to find the URL for the Jaffe & Levensohn article and ran across this 2005 post by Brad Feld, Foundry Group VC and author of one of my texts: http://bit.ly/cupiRN

Feld's take: "This is one of the best articles I've ever seen of the issues and dynamics surrounding the board of a venture backed company."

The lesson for me: what's important is trite, until you've lived it, and then its wisdom.