Why Your First Board Seat Should Be Independent
Part 1 of the "Building Category-Creating Boards" series
The difference between category-creating companies that change the world and those that die trying often traces back to a single critical move: who protects your vision at the board level. I learned this through a $2.5M mistake at Nori - an empty independent board seat that cascaded into lost runway, missed opportunities, and ultimately contributed to winding down the company in 2024.
This isn't just a story about failure. It's about protecting your chance to create something entirely new.
When I was preparing to step down as CEO in 2023, a friend recommended Marc Randolph's That Will Never Work about founding Netflix. Reading about how Netflix's first act was establishing a formal board - Randolph, Reed Hastings, and an independent director - I remember thinking "How quaint. Such a '90s way of doing things."
I couldn't have been more wrong.
In rejecting "old-fashioned" governance, I made a mistake that would ultimately contribute to Nori's end. Unlike traditional startups that can rely on established metrics, category creators need sophisticated guardianship of their vision. Your board isn't just about advice or oversight - it's the legal steward of crucial decisions that can't be evaluated by conventional frameworks: when to evolve strategy, how to balance immediate revenue with category creation, and most importantly, how to protect your chance to build something entirely new.
Yet most founders today skip this crucial step, treating governance as something to figure out later - exactly when it's hardest to get right.
In today's startup world, where it's easier than ever (though still quite hard!) to start a company, raise capital, and build products, we've somehow convinced ourselves that these governance principles don't apply. When our Techstars managing director handed me Startup Boards by Brad Feld in 2019, I nodded and shelved it. When experienced founders emphasized board construction, I thought I understood.
But it wasn't until I stepped away from day-to-day operations, served as just a board member, and ultimately watched Nori wind down that these lessons became painfully clear. Sometimes the "quaint" practices of previous generations exist for profound reasons - reasons I now understand all too well.
This series pieces together what I've learned from that experience, combined with insights from books like Startup Boards and Elizabeth Zalman's Founder vs. Investor, and conversations with founders who've successfully navigated these waters. What's emerged is a framework I wish I'd had when starting out and is especially crucial for founders creating entirely new categories.
This is the most expensive lesson I've learned: your board is the guardian of everything else - your product, your vision, your ability to create a new category. You could have a revolutionary product and perfect market timing, but without the right governance structure, you won't be able to bring that vision into reality.
Let me show you exactly how governance determines category creation success at three critical levels, starting with the most fundamental: protecting your core innovation from being killed by conventional thinking.
The Three Levels of Category Protection
Tactical Level: Protecting Deep Innovation
During our 2023 bridge round discussions, we faced a pivotal moment that illustrated a core challenge of category creation: how do you evaluate an approach designed to disrupt existing systems (like carbon registries) using those same systems' frameworks? The weeks spent explaining to our investors why our innovative soil carbon methodology didn't fit traditional carbon market frameworks consumed precious runway - time and cash that could have been spent advancing our innovation rather than defending it.
This is where category creation often dies: when necessary risk mitigation collides with revolutionary approaches at crucial moments. Without a strong independent voice on the board who understands both corporate investing requirements and category creation needs, companies can get caught between innovation and conventional evaluation frameworks - exactly when time and cash matter most.
A strong independent director protects deep innovation by bringing rigor to moments when traditional evaluation meets novel approaches. They ensure category-defining work isn't killed by conventional wisdom.
Strategic Level: Evaluating Category-Defining Moves
The tension between immediate revenue and category-creating innovation emerged clearly when we developed our "blended tonne" concept. The carbon market faced a fundamental problem: buyers needed carbon removal immediately to address current emissions, but the most permanent solutions (like direct air capture) were years away from delivery. Our innovation was to combine both: pair immediate carbon removal through soil with guaranteed future delivery of permanent removal methods, creating a hybrid credit that would satisfy net zero requirements while enabling action today.
Market signals supported this direction - corporations were setting targets of achieving net zero by 2030, with no possible way for the supply of permanent carbon removal credits to meet the demand by then. But we faced intense pressure from our board to "sell what's on the cart" - focusing solely on existing soil carbon credits rather than developing this potentially category-defining innovation. Without a strong independent voice who could help evaluate novel approaches, the immediate pressure for revenue won over strategic innovation. Delays in developing the blended tonne concept meant we never had sufficient runway to properly test whether this innovation could solve the market problems we were seeing before running out of cash, as described in the $2.5M board seat story.
A strong independent director brings crucial perspective to these moments. They can help evaluate novel approaches outside conventional metrics, balance immediate revenue needs with strategic innovation, and most importantly - help boards understand when market uncertainty actually signals the need for category-defining innovation rather than just selling existing products harder.
Market Evolution Level: More Than Just Product-Market Fit
Category creators face a unique challenge during market evolution: the very landscape you're trying to create shifts beneath your feet while you're building it. This is particularly dangerous because conventional metrics and frameworks can't distinguish between temporary market noise and fundamental shifts that require strategic adaptation.
When we started Nori, carbon removal discussions centered on nature-based solutions because they were the only scalable option. By 2019-2020, market influencers began shifting focus to engineered solutions, emphasizing permanence over immediate throughput. Meanwhile, sustainability directors were freezing in place, overwhelmed by competing standards. Without strong independent governance to help distinguish between market noise and true evolution, we struggled to maintain our category-defining vision while adapting to fundamental market shifts. Critical months were lost debating tactical responses when we needed strategic evolution, and ultimately, as CEO, I was the one who needed to be pushed into action.
A strong independent director brings pattern recognition to these moments. They've seen how markets evolve, how to separate temporary reactions from lasting shifts, and most importantly - how to adapt strategy while protecting category-defining vision. They help boards balance necessary adaptation with maintaining the core innovation that makes category creation valuable in the first place.
Building the Right Foundation
When Netflix's founders prioritized strong governance from day one, they weren't being old-fashioned - they were being prescient. They understood what I learned too late: creating something truly new requires more than just rapid iteration and growth hacking. It requires sophisticated structures to protect that vision through its emergence. Without these foundations, even the most promising category creators can be forced into conventional boxes they were never meant to fit - exactly what happened to us.
Your Next Steps
If you're creating something entirely new, here are four specific actions to take this week to protect your vision:
Map your current and future board composition:
List all current board seats and who holds them
Document planned board seats through your next two rounds
Identify where independent perspective is missing
Note any seats currently empty or soon to be filled
Review your recent strategic decisions:
List specific moments where conventional thinking limited your category-creating potential
Note which decisions would have benefited from independent perspective
Document where pressure for conventional metrics won over innovation
Read Startup Boards with this lens:
Focus on the sections about board composition and voting rights
Pay particular attention to how early decisions cascade into future constraints
Take notes on which structures could protect category-creating innovation
Subscribe to this newsletter so that you get the rest of the series sent to you:
The goal isn't to make strategic decisions yet - that's coming in the rest of this series. The goal is to clearly understand your current governance landscape so you can make informed choices about protecting your vision.
What's Coming in This Series
Over the next four weeks, we'll explore exactly how to build and maintain strong category-creating boards:
Week 2: Finding Your Vision's Guardian
How to identify and attract independent directors who can actually protect category-creating companies.
Week 3: Making It Real
Practical steps to implement strong governance from day one, including protecting independent seats through critical documents.'
Week 4: Working Together
Beyond board meetings: frameworks for making governance a genuine strategic advantage.
Week 5: Evolution
Growing your board while maintaining the independence that protects your vision.
Don't make the same $2.5M mistake I did. Map your board composition today, while you still have time to protect your vision. By the time you're negotiating a bridge round, it's already too late.
This applies to more than category creators—any startup needing extended runway to hit critical milestones and unlock further financing faces this tension (90% of startups).
It seems a new category play often requires “legacy leverage” to secure big up-front investment—if you’ve got the right founder story on paper (prior exits and / or right co-f + right school + right seed pitch + right network + right uncle)—congrats. If not, be ready to humble yourself, hit incremental goals, prove value every quarter, and sing for your supper, daily. Strong governance balances these pressures while keeping the vision intact, no doubt. But attaining strong governance is a hill to climb in itself. Ensuring you’re not just giving away boardseats according to the preferences of the earliest big-check writer is easier said than done when you’re in seed / A-ville.