Managing Your Startup Board — A Short Presentation
I was invited to do a keynote presentation at the Khosla Ventures CEO Summit this week in Sausalito. It was an amazing gathering of some of the most ambitious early-stage CEO’s looking to make a dent in fields related to healthcare, biology, AI and other transformative fields. It’s encouraging to know that there are still great VC firms like KV that are looking to make these short of big bets on shaping the future. Hearing views from Bill Gates on how the world deals with issues like climate change, Jack Dorsey talk about the role of social platforms and government and discussions with Kevin Systrom (Instagram), Todd McKinnon (Okta), etc were fascinating.
My talk was about “managing your startup board” and the full deck is on that SlideShare link and embedded below. I also wrote an entire series on the topic of Startup Boards if you want to do any more reading that link has several articles you can dig into. Below is just the highlight points.
How Do Boards Get Out of Sync?
For years software development worked on a “waterfall model” in which you did research, design, build, test, deploy and then watch how users reacted to your product. Often these projects took 12–18 months so by the time companies shipped product they often found out that the product didn’t meet customer needs. I think this analogy can hold for boards. Often executives are operating their businesses for long periods of time where non-exec board members aren’t familiar with the nuances of the changes in the company and therefore are surprised or unprepared when they come to your board meeting.
I think it may be helpful to think about your relationships as “continuous boards” in which you more frequently send texts or emails or do short update calls to keep investors in sync on the changes in your business. The more you are regularly checking in the more room for course correction or at a minimum the more bought in board members are because they participated in the process.
If you take the mentality that your board members are usually pretty well connected and often willing to be helpful if asked, one of the best ways to keep board members involved is to ask them for help. Yes, there is some overhead in the increased communications, seeking opinions and asking for favors but in the long-run I believe it pays huge dividends in keeping your board aligned and supportive.
Why Does My Board Get So Unfocused at Board Meetings?
In each board meeting it is helpful to think through what your goals are. Are you truly looking for board members to debate and make a decision? Most of the time this is a bad idea. I think the best run companies let executives make most of the hard decisions and should try to be helpful in thinking through high-level strategy and weigh in on difficult topics.
Boards will comment on anything you put in front of them. If you want to have a 30-minute debate on whether your company should spend $12,000 on a coffee machine for employees then ask your board and I promise every member will have an opinion. Or as I like to say, “if you ask us to weigh in on your colors or logos and we debate it fore 30 minutes — that’s on you!” We won’t debate at this level if you don’t put it in front of us.
It is the job of the executives to make this level of decision and you can certainly show us your designs but honestly it’s much better to share this kind of information outside of a board context. If you’ve assembled what should be some of your most strategic and motivated people involved with your company to spend time together you really ought to put us to work on your most important, strategic issues.
What Should We Talk About at Board Meetings?
One of the biggest mistakes I see at board meetings is what I call the “filibuster board” in which the executive team spends 2 hours going through 100 slides and runs out the clock with no discussion. There are times where this is useful, for example, in letting senior staff show their work to the board and letting the board get to hear from the broader team. But in general it’s not the best use of board time because much of that knowledge can be shared before the meeting and the team can come prepared for debate.
If you filibuster through long presentations then as a board we walk away understanding your company better but you don’t walk away with any real value. I believe a much better approach is to have a debate with your board on strategic topics. I recommend sending your financials out 72 hours before the board meeting and having you or your CFO call each board member to walk through the financials in advance. You can send out a “pre read” so that board members have to read and digest information and show up ready to discuss these topics.
You’ll notice that in this graphic I’m not proposing that you ask your board to make these decisions for you. You can have a 2-hour debate on important topics including pricing, product features, key hires, whatever and then still go away from the board meeting and have your executive team make decisions. In fact, if you ran your board this way and asked them to empower you then board meetings would feel less like approval meetings and more like a group of senior execs helping you make the hard calls.
Of course there are times where you do need consent and a vote to be made and these ought to be only the most strategic, existential questions of the company. But these kinds of actual board decisions are rare and often only come up once every 12–18 months. Again, if you ask for approval on decisions on stuff that ought to be in the purview of your executive team then don’t be surprised if your board feels entitled to make the decision with you. I would argue this isn’t in your interest or the boards.
Summary
Boards are organizations that need managing just as you would do for your management team. You need to make sure everybody is aligned on the goals of the board and you need regular communication to keep everybody in sync. Boards can be helpful if you manage them and put them to work or can be a pain in the ass if you don’t manage them and if they feel uncomfortable with the company’s direction.
Below is the full presentation embedded. I discussed a range of other topics that I didn’t address in this post.
