How do the revised rules in the Bipartisan Budget Act of 2015 affect you and your business?
Some seek the role. Some are invited. Others do, perhaps reluctantly, to protect their baby. But all are changed by it. That’s because, when a university professor joins the board of directors of a for-profit company, that professor is entering a world almost diametrically opposed to that of academic life.
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That said, professors say board experience has proved invaluable, benefiting not only their personal academic careers but allowing them to share real-world business knowledge with their peers and students.
“I actually think that being involved in biotech helped my academic career (until I gave it up completely),” says Larry Gold, Ph.D. “Academic research ought to have a real-world focus, and helping companies helps one identify important societal needs.”
Gold ought to know. The University of Colorado Boulder professor currently serves as chairman of the board and chief executive officer of SomaLogic, the company he founded in 1999. Much sought-after as an advisor to biotech businesses and as a speaker at conferences and seminars, Gold considers himself today a corporate executive rather than a university professor. The opportunity to get real-world business experience has been powerful for him, launching a second career where risk replaces security, marketing replaces research, and the organizational chart of the corporation replaces the flat structure of academia.
Gold has served on numerous boards of directors, both for companies he helped found or others that sought his counsel. The two experiences differ greatly. The founder’s natural desire to set the direction for the company often drives his or her role as a board member, while a non-founder from academia has a more defined role.
“(My) experiences were uniformly interesting and always different from each other,” he says. “The overlap was that biotech is a difficult business, and boards always face similar fund-raising issues and issues of intentions. Boards often think that founders aim too broadly, and founders often think that board members are too focused. The resolution of that tension occupies many board meetings.”
Gold adapted willingly to the for-profit environment and understands where he can add value as a board member. But many academics find it hard to make the transition to the rough-and-tumble of a world built around selling a product rather than discovering it.
As founder, CEO and board member of Prieto Battery, Dr. Amy Prieto has had a ringside seat at what it takes to market an innovative product. Prieto is an assistant professor in the Department of Chemistry at Colorado State University, holds a Ph.D. in Inorganic Chemistry from the University of California, Berkeley and completed her postdoctoral research training at Harvard University. An acknowledged expert in nanowire chemistry, her cutting-edge work on lithium batteries led her to launch Prieto Battery in 2009.
Three years later, she is grateful for the experience of running a company and serving on its board. “This experience has benefited me tremendously in terms of being able to put my research into a big-picture context and to articulate my ideas clearly to a wide range of audiences,” she says.
But it took a period of adjustment to understand how different the rules were in the corporate world where, she found, “there is much less emphasis on understanding how things work well, and more on marketing the ideas effectively.”
After years of living in the academic realm, Prieto had to make a shift. A battery is a very specific product, and there are plenty of them for sale. She needed people who could describe why customers should buy the Prieto lithium ion rechargeable battery. This was a different breed of colleague than she was used to.
“You will have to learn to communicate with people who have very different backgrounds than in academia,” she says. “It’s a completely different culture, so you need to have an open mind.”
As a member of the board of her company, she had to grow into her role. No one was going to tell her what the rules of engagement were for her as a board member. “I don’t think there is a defined role, I think each founder has to determine for themselves what role suits them best and best utilizes their talents,” she says. Her advice to company founders who are adjusting to a corporate setting is to try to stay focused on their area of expertise: product development.
“I will say that what professors need to keep in mind is that founding a company takes an enormous amount of time and effort. The key to making it work well with your academic career is to get really good people into management and board positions so that you can focus the time that you have to spend on the company on the actual ideas” rather than the everyday details of running a for-profit company, she says.
For those in academia who have been approached about joining the board of a for profit company, she advises them: “You need to meet the entire team (if possible). Determine what the culture is and if you fit it well. Make sure you understand what the expectations are.”
Todd Headley, president of CSU Ventures at Colorado State, agrees that academics need to have an open mind when they join a for profit board. Professors like Larry Gold who make the full transition to corporate executive from academia are uncommon, he says. Most founder/board members want to stay involved in the product area but prefer to hand off most management tasks. Those who are asked to join boards should be ready to learn the ways of the business world, and stay within their areas of expertise at the beginning of their experience.
Founders in particular may want to stay closely connected to their academic roots. “Eventually many of the founders we have here still want to be on faculty,” he says. “They want someone else to run the company, while they stay engaged on the technical side. Their true passion is for research and discovery, not sales and marketing.”
By stepping aside from day-to-day operational duties, but retaining a seat on the board, the founder can stay engaged in her or his “baby” without yielding to the temptation to micromanage.
There is another way to experience for-profit board duties without all the responsibilities of full board membership: Join a company’s advisory board.
That’s how George Deriso prefers to share his expertise with early-stage companies. Deriso is adjunct professor of management and entrepreneurship in the Leeds School of Business at UC-Boulder. He actually traveled a different route to his current advisory board status. His first career was in the for-profit world, where he held positions at major corporations like Apple and AT&T prior to founding Falcon Venture Partners, a Colorado private equity firm that funded start-ups. His expertise in business led him to UC-Boulder as a lecturer. He moves easily between the academic and corporate worlds, and also devotes considerable time to serving on the boards of nonprofits.
“I do quite a bit of advisory board work for for-profits,” he says. “I’ve worked with high tech companies, low-tech companies, companies that do things like hand tools and magnetic switches. Most recently I’ve gotten involved in advisory boards of social enterprises.”
These new breed organizations have missions to meet global socio-economic needs, but also to do so for a profit.
“These are impactful socially-involved for-profits,” he says. “One that I work with is Bliss, which helps Pakistani girls to get an education and teaches them skills that they incorporate in crafts integrated into high-fashion handbags. The profits, or proceeds, go for recruiting more girls.”
Deriso finds this type of board engagement highly satisfying, and less structured. No monthly board meetings, no specific roles to play. He can bring his many years of experience to solve a range of problems these young companies encounter as they try to change the world. And, there are no liability issues that full board membership brings with it.
“My role typically is not something I decide, but is something that is lacking in the team,” he says. “For example, I’ve done a lot of fund raising and angel investing. If someone is looking for capital, I look to fashion their enterprise in a package and design their pitch and talk to investors and even introduce them to investors. It’s something I’m good at and enjoy doing.”
The rewards for his academic career are primarily reaped by his students, he says.
“Business and entrepreneurship are a practitioner’s art,” he says. “You can read about business and listen to business leaders speak, but it’s very much like reading about playing the piano — it doesn’t mean you can sit down and play one. The more that I can participate with a business, the more I can bring that to the classroom and inspire them to do the same thing.”
So, for the professor considering a position on a for-profit board, perhaps the consensus advice would be: Keep an open mind, expect to encounter an organizational structure unlike one you’ve ever seen, keep your eye on you area of expertise, and don’t give up your university office.