Typically, the only real “legal” capability of a chair (depending on charter and state of incorporation) is the ability to call for a board meeting independently of the CEO (assuming the roles are split).
In early-stage startups, the title “chair” is pretty meaningless; most won’t have a stand-alone chair.
In later-stage companies, the chair may play a board-coordination and influencer-leadership role, especially if the size of the board of directors has ballooned. For example, the chair may funnel feedback from the other board members back to the CEO in certain cases, or help with the agenda-setting and follow-up from board meetings. In these cases, you can think of the chair as the equivalent of the board’s “tech lead”—i.e., someone who can set the tone and agenda of the board without direct management responsibility for it.
In most high-growth companies, the chair role is filled by the founder, who is also the CEO. If the CEO is not also the chair, this role is usually filled in one of two ways:
1. Often, the chair role is taken by a founder who is no longer active in the company’s day-to-day operations but who has a large financial stake and/or in-depth knowledge that could be helpful to the company. For example, when Jack Dorsey stepped down from his first stint as CEO of Twitter, he assumed the chair mantle. Alternatively, if the board hires a professional CEO, an active founder may assume the chair role (and often is called “executive chair”—see below for more). For example, Jim Clark was Chair of Silicon Graphics when Ed McCracken replaced him as CEO. If a founder is still CEO, it is very weird to have an additional operationally active, non-CEO founder as the chair. This usually suggests a power struggle between the two founders.
2. Sometimes a VC or early investor will take the chair role when he or she makes the investment. For example, Don Valentine (who started Sequoia Capital) was the chair of a number of companies he invested in, and Oren Zeev is the chair of Houzz, after being the first investor in that company’s seed. “Executive chair” is a title usually given to a chairman of the board who is actively engaged with the company on a day-to-day basis, but not fully operational (for example, an executive chair may not officially manage any functional areas or organizations). The executive chair will often be focused on one or more strategic areas for the company. When Eric Schmidt stepped down as CEO of Google, he took on the executive chair title and spent much of his time on government relations and overall corporate strategy for the company.
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