The tale of a stalled ski resort explodes the myth that founders don’t need outsiders on their boards

And nestled in this yarn was an age-old management lesson: Every company needs a board.

What happened?

Summit Village was to be an eco-friendly “intentional community” for tech-centric, socially conscious entrepreneurs, with hotels, condos, restaurants, a science center, greenhouses, curated retailers, and more. There were also to be 500 elegant, ski-accessible homes built into the mountainside.

Today, however, the project is stalled, and changing business strategies. Over 90% of the promised houses have yet to be built, and the village exists only as a concept. There are no hotels, full-service restaurants, or shops on the mountain, let alone the slew of promised amenities. The reasons for the delays are myriad, including lawsuits over funding and complaints from the local Mormon community, but several sources said the fundamental problem was organizational dysfunction and friction between the owners who had paired up on the mega project—none of them with a lick of experience as real estate developers or ski resort operators.

And as I wrote in the piece, the project went several years after the 2013 purchase without a board, which Elliott Bisnow, a Summit Series founder, regretted:

Public filings required under the terms of the bond agreement with the county show that the Summit team faced a $2.2 million cash-flow shortfall by 2017 and was hemorrhaging money, paying out an estimated $14 million in payroll in 2016 and 2017 combined. The group decided to add a professional board.

When I asked Bisnow what he would have done differently on Powder Mountain, he admitted: “I wish we’d put a board together even sooner.”

Why don’t more startups embrace boards early?

I looked at this issue when Sam Bankman-Fried’s FTX crypto exchange collapsed in November. It had emerged that a prominent potential investor had suggested FTX add a board but the company reportedly replied with an unambiguous message: “Go ‘f-ck yourself.”

At the time, Peter Gleason, head of the National Association of Corporate Directors (NACD), told me that CEOs who can’t see the benefit of having a real board with independent directors puzzled him: “How many jobs in your career do you have 10 or 12 advisors to help you succeed?” he asked.

Outsider board members can provide regulatory and financial oversight, bring fresh perspectives, improve decision-making, and, crucially, offer a clear-eyed view of business risks. Independent directors can also play referee, soothing relationships when market conditions drive stress and disagreements.

The governance experts at PwC’s Governance Insights Center have looked at the reasons many private firms resist adding outside board members and concluded that many leaders fear the way it may slow down decision-making and create expectations of more formalities and bureaucracy. CEOs and founders may see meeting-planning and recording as unnecessary hassles. “These activities take time,” the consultants at PwC concede. Even so, “[t]his investment typically pays off, and in some situations can come in handy.”

At Powder, the current board has “a much more elevated set of skills than the Summit founders, whether it’s around finance or real estate development,” Bisnow told me.

Roni Yehuda, a diamond industry executive and Powder Mountain homeowner who last year became chair of the board, said he believes in a culture of transparency and diplomacy—a promising sign for the group’s future.

Lila MacLellan
lila.maclellan@fortune.com
@lilamaclellan

A Word of Wisdom

“Over many, many years, I’ve experienced huge value from outside directors at early stages, especially with first-time entrepreneurs, but also with experienced entrepreneurs, who can augment certain areas of expertise that they are lacking with another CEO on their board. They also hear things from that peer differently than they hear it from their VC investor.”

—Brad Feld, a venture capitalist who co-authored Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors, speaking to TechCrunch.

On the Agenda

👓 Read:  “I don’t know. Maybe it will grow on me,” doesn’t have the bravado of most corporate mottos, writes the Wall Street Journal, but the line from a new movie about Nike founder Phil Knight captures a leadership style that more CEOs should emulate.

🎧 Listen: Employees are working nearly a full day on their weekends. The Wall Street Journal unpacks the cultural shift in this six-minute podcast.

📖 Bookmark: A behavioral scientist and Harvard Business School professor shares four things not to do in a difficult conversation, as illustrated by dark encounters on HBO’s Succession. 

In Brief

- Chipotle CEO Brian Niccol is wrestling with a buffet of topical board-level concerns: inflation, labor issues, growth through automation. The last thing he needed was a “challenging” steak dish.

- More Fortune 500 boards are appointing directors with past experience on sustainability committees, but gaps in climate expertise persist.

- Tech firms in the U.S. should take a hard look at their internship recruiting process, according to this New York Times report. Low-income students are finding the application process favors the privileged.

- Starbucks Workers United activists turned their attention to the company’s directors this week, staging Instagram-friendly publicity stunts—a butter Siren sculpture for Land O’Lakes’ CEO, for example—designed to pressure board members to recognize the union.

Editor’s Pick 

Millions of U.S. women don’t use any type of contraceptive, fearing the side effects of hormones or painful procedures for implants, writes Fortune’s Maria Aspan in a fantastic new feature. Normally, innovative firms would step in with better products to serve this slice of the market. In this case, however, the financial incentive isn’t there for big pharmaceuticals, while small companies may not survive the costs of navigating FDA rules and winning over insurers.

To shed light on this problem, Aspan profiles three birth control makers, including Evofem, the scrappy maker of a contraceptive gel, run by Saundra Pelletier, an indefatigable CEO.

Here’s a snippet:

“In person, Pelletier often erupts into dramatic motion—whipping her thick-framed black glasses off to accentuate a point, waving her arms to literally keep the motion-sensitive lights on in Evofem’s offices. She favors bold clothing, including T-shirts with slogans like ‘No laws exist to control men’s bodies.’ While she’s slight of build and conventionally pretty—her blonde hair, which she lost to chemo in 2018, has grown back long enough to pull into a ponytail—her presence fills up a room. Whether talking to lawmakers, judges for an upcoming TEDxSanDiego talk, or the head of the Food and Drug Administration, Pelletier is always her product’s savviest cheerleader, never missing an opportunity to promote its feminist vibes. ‘She gets people to want to be a part of what she’s doing,’ Barrans says. ‘They want to believe in her.’”

Read the rest here, and have a great weekend.