Problems in VC paradise?

A mail list I subscribe to (bootstrappingjrm@mail-list.com) forwarded a whitepaper (here) that discusses some of the special problems (?) of VC-backed boards of directors. The whitepaper was prefaced in the email by the following comment:

The paper's basic premise is that VC-backed boards are particularly prone to dysfunction, due to: (1) Conflicting interests; (2) The regular addition of new board members following financing rounds; and (3) The likely presence of inexperienced members like first-time entrepreneurs, junior VCs or independent directors with strong domain knowledge but no background on VC-backed boards. Moreover, what happens if one high-profile VC is on a board with a bunch of lower-profile VCs. Does the high-profile guy always get his way, because the others don't want to lose out on the opportunity to continue co-investing?

This does not actually appear to be a very accurate description of the whitepaper, which tried to lay out some groundrules to help VC-backed boards be more effective. The author of the above statement seems not to like VC boards very much and to think that their problems are in some sense special. Personally, I've enjoyed my experience in a VC-backed company to this point, but I can imagine that the wrong chemistry could be particularly disastrous for a new company. Certainly some part of the problems described in the paragraph above must be related to "smartest guy in the room syndrome" (SGIRS). All academics think they are SGIRs and VCs are generally successful people who think likewise, but unlike academics, VCs have reasons to learn to play well with others. I think of VCs as social bees that go out seeking nectar for the hive (where nectar = money, personnel, contacts, influence, etc.), and indeed when things are working well, this is how it should be.

What is troubling about the paragraph is that it seems to assume some Platonic ideal of a board of directors that would exist if the company were not sponsored by VCs. Are non-VC boards heaven on earth? Oftentimes, small startup boards are dominated by an individual who may be technically competent, but is not particularly business savvy. Is this a better state of affairs than that of the random VC board?

In the real world, boards are composed of real flesh and blood people, and they are all likely to have their positive and negative points. That VC-backed boards have special systemic problems is a hypothesis not accompanied by any data. Many of the suggestions in the whitepaper are reasonable and could be applied to the selection of any board, but it is not clear that board selection and operation is any trickier in VC-backed companies versus those with alternative composition.