Friday, May 24, 2013

Why CEO's should sit on other firms boards

 

Why CEOs Should Sit on Other Companies’ Boards of Directors


May 17, 2013


I am currently on a few non-Zillow boards of directors, and I informally advise several more companies. These things take time and time is precious. I sometimes feel guilty spending any time advising those companies during working hours. But I truly believe it makes me a better CEO at Zillow, which is why I allow myself to do it. I am a big believer in executives branching out and learning from other companies, either by being directors or investors or advisers in other tech companies or organizations. Several of my direct reports sit on other boards or mentor startups through TechStars or other incubators. I encourage this, and I have even served as a reference for them on several occasions.
Here are a few specific reasons why it’s helpful to sit on other boards:
  1. You learn a lot and that makes you better at your job. For example, one of my boards has done some innovative things in the business intelligence space, which I will now take back to Zillow. Another company has taught me a lot about paid traffic acquisition, which has helped me at Zillow.
  2. It keeps you fresh and helps avoid the wandering eye. This is the key reason why I like my directs to be involved with other companies: it helps them scratch that itch to “see what else is going on” without actually leaving Zillow. It also reminds them that things at Zillow are pretty dang great as compared with most other companies. This is especially true if they're involved in early stage companies where they are reminded firsthand that startups are really hard and most of them fail. (So stay at Zillow please!)
  3. It makes me a better CEO to my own board. I learn a lot from watching how CEOs manage their boards – how they prepare board materials, how they run board meetings, and how they use their boards to make their companies better. There’s no doubt in my mind that Zillow board meetings are more effective because of my involvement in other companies’ boards.
How much time should a CEO devote to this sort of thing? Well it sort of depends on how much else they have going on in their life. CEOs need to make sure they’re still 110 percent committed to their primary job – being the CEO. In my case, I don’t have time for hobbies (but I hope to someday), as I’m completely consumed by Zillow and by my family. So some of my time on these other boards comes out of what other people might possibly allocate towards hobbies. Still, I think serving on 3-4 outside boards is the maximum for a full-time CEO. The number might go up or down depending upon the location of the board and how time-consuming each one is. But that’s a good rule of thumb.
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