Tag: startup boards
The 2nd Edition of my book Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors launched today.
My co-authors, Matt Blumberg, the CEO of Bolster, and Mahendra Ramsinghani, were a joy to work with.
While the 1st Edition was a good book, I wasn’t particularly proud of it because I didn’t feel like it was my best writing. We worked hard on this edition, and I now feel like it’s equivalent in quality to my other books.
Effective boards are critical at this moment in the entrepreneurial ecosystem. While I hope this downturn is short, I think it will be long and painful. In either case, highly functioning boards can help startups navigate this moment, while dysfunctional and weak boards can accelerate the demise of startups.
If you have a board of directors, want to have a well functioning one, are a director, or want to be a director, I encourage you to grab a copy of Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors.
About a year ago, I decided to take a summer vacation from blogging. I didn’t feel like blogging when summer ended, so I extended my blogging vacation indefinitely. I figured I’d wake up one day and feel like blogging again or not. That summer vacation (from blogging) lasted a year.
Initially, I was working on a new book that I got bored of midway through the summer. I put it on the shelf with several other partially completed books. Google Docs now has a surprising number of my started but unfinished books.
Sometime in the fall, Matt Blumberg (Bolster CEO) approached me about doing a 2nd Edition of Startup Boards. Matt and I were on the board together of Return Path, his previous company, for almost 20 years. So when Mahendra Ramsinghani came out with the 1st Edition of Startup Boards in 2013, Matt gave me plenty of feedback on the book. Then, in fall 2021, he correctly suggested that the book needed a significant refresh.
While I always felt the 1st Edition was an important book, I never loved it. Mahendra and I worked hard on it, but I felt like I forced a lot of my writing at some point. Long-time readers of this blog know I had an extended depressive episode in the first half of 2013, and this book was one of the chores that I felt like I just had to get done in that period. Mahendra was kind and patient with me, but I’m sure there were moments when he wanted to scream something like, “Brad, will you just do the writing you said you’d do so we can get this book finished?”
So, we decided to do a 2nd Edition which is now finished and shipping on 6/15. I’m psyched about it. Matt contributed a lot of new content, and I had a chance to rework and refactor the entire book. I had plenty of energy for it, and, given that I’ve written a few more books and thousands of blog posts since 2013, my writing has continued to improve.
Early in the refactoring, we got feedback from several women that the 1st Edition wasn’t very accessible to them because all the sidebars and quotes were from men. So I made a Google Sheet of all the sidebars and quotes, and my brain broke for long enough that I had to go for a walk. So even though I thought I was self-aware and engaged in gender equity in tech in 2013, my actions, at least concerning this book, didn’t match my words.
Subsequently, we replaced about 50% of the sidebars and quotes with new ones from women and people of color. We also changed the pronoun dynamics to use the Singular They, which I am trying to do in all my writing (if you are interested in this topic, Khan Academy has an awesome video.)
Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors 2nd edition launch day is 6/15. If you are interested, pre-order it now.
I had lunch recently with a founder. We were talking about current and future board configuration for his company and he said “Up until this point, all my board seats were simply for sale. Whenever a new investor showed up, they wanted – and got – a board seat.”
I loved the phrase “board seat for sale.” It’s exactly the opposite of how I think about how to configure a board of directors, but I recognize that it’s a default case for many VCs and, subsequently for many entrepreneurs and companies.
It’s a bad default that needs to be reset.
I wrote about this a lot in my book Startup Boards: Getting the Most Out of Your Board of Directors.
In the past few years there have been some interesting changes. In pre-seed and seed stage companies, there’s been a trend against having board of directors. Instead, there is no formal board, or no formalism around the board, so it’s just a free for all between the collection of early investors (angels and pre-seed/seed VCs) and the founders. This can be fine, but often isn’t when there are challenging issues that involve founders, financing, execution, or conflicts. And, when things stall out, figuring out what to do is often harder for the founders because of the communication dynamics – or non-communication dynamics – that ensue.
Post seed boards tend to be founder and investor-centric. This is the norm that I’ve seen over the past 20 years. With each round, the new lead investor gets a board seat and all of the other significant investors get either a board seat or an observer seat. The board quickly ends up becoming VC heavy and the board room expands to have a bunch of investors in it since they all have observation rights. Having been in plenty of board meetings with over 20 people in the room, I can assure you that these meetings are ineffective at best and often trend toward useless.
One approach to this is the pre-board meeting, where only the board members meet with the CEO prior to the board meeting (similar to an executive session of the board.) This is an effective way to deal with part of the problem, but it then makes the board meeting, in the words of a good friend and fellow VC, kabuki theater.
I prefer dealing with reality. I have a deeply held belief that as long as I support the CEO, I work for her. Yes, I do have some formal governance responsibilities as a board member which I take seriously and am deliberate around them. But most of my activity with a company is in support of the CEO. When I find myself in a position where I don’t support the CEO, it’s my job to do something about that, which does not mean “fire the CEO.” Instead, I have to confront what is going on, first with myself, then with the CEO, and finally with the rest of the board, in an effort to get back to a good and aligned place with the CEO.
As a result, especially for early stage and high growth companies, I think the CEO and founders should be deliberate about the board configuration. I like to have outside directors on the board early as it helps the CEO and founders learn how to recruit and engage non-investor directors. The CEO can learn how to build and manage the board and get value out of board members beyond the classical dynamics around an investor board member.
Most of all, I hate the notion of board seats for sale. I get that many investors want board seats as part of their investment. I appreciate that some now have strategies of never taking board seats. But too few VCs think hard about what the right board configuration is at the point in time that a company is doing a new financing. I think that’s a miss on the part of VCs and I encourage CEOs to think harder about this.
When I wrote Startup Boards: Getting the Most Out of Your Board of Directors with Mahendra Ramsinghani, our goal was to help entrepreneurs understand how to create an excellent board of directors, manage it effectively, and get optimal value out of it. This was challenging to do, as the topic of boards can be boring. Based on the feedback we’ve gotten, including consistently positive reviews on Amazon, I feel like we accomplished that goal.
Last year the Kauffman Foundation, with which I’ve had a long relationship and am a big supporter of, approached me about doing a Kauffman Founders School video series on Startup Boards. We completed it early this year – the teaser follows.
There are seven modules that are each five to ten minutes long.
- Board Functions and Responsibilities
- Forming and Organizing Your Board
- Choosing Your Board Members
- Recruiting Your Board Members
- How to Run a Board Meeting
- Managing Your Long-Term Relationships
- Managing Company Transitions
Each module also has suggested additional readings, beyond our book Startup Boards.
I’m proud to be part of the Kauffman Founders School, which includes some great courses such as the ones listed below by folks like Dan Pink, Steve Blank, Bill Reichert, and Meg Cadoux Hirshberg.
For those of you that missed my note yesterday, I’m going to start using the first paragraph of my posts with an announcement about something in my world. Today’s is the launch of a new product from Orbotix called Selfiebot. My Orbotix friends are masters at creating amazing robots and are hard at work on the next generation of what we are calling “connected play.” Selfiebot is an autonomous flying robot that shoots HD photos of you, freeing you from the limitations of a handheld startphone when taking selfies. Check out Selfiebot today.
While we are on the topic of Orbotix, let’s talk for a little while about expectations for outside board members. Yesterday I met with an outside board member of another company I’m on the board of. He’s been on the board for about six months and is feeling uncomfortable with his contribution. He’s a very experienced CEO with a large exit under his belt, a founder/investor in several other companies, and an excellent operator. But he hasn’t been an outside board member much. He wanted to get feedback from me on how he was doing and whether his expectations for his own engagement were correct, and what he could do to work with the CEO and leadership more effectively.
I’m an enormous believer in the value of outside directors relatively early in the life of a company. I like to keep boards small and weighted toward outside directors as the companies grow, rather than just a cadre of VCs sitting around the board torturing the CEO with conflicting advice and opinions. I’ve written about this extensively in Startup Boards: Getting the Most Out of Your Board of Directors.
I generally see three types of outside board members getting recruited to a board of a VC backed company.
- The friend of the VC: This director is really a proxy for the VC and not an independent thinker. Danger danger.
- The friend of the CEO / entrepreneur: This director is really a proxy for the entrepreneur and not an independent thinker. Danger danger.
- An independent director. Now, this person can be a friend of the VC, or a friend of the CEO / entrepreneur, but is an independent thinker. Or they might be someone from industry that is known to one of the investors or the entrepreneur, but is recruited specifically by the CEO to join the board. Or it might be someone lightly known, or even unknown, but again is an independent thinker.
Note the emphasis on independent thinker. It doesn’t matter who the relationship originates from. There is a unique role for an outside director in a startup company and it’s one that can be profoundly helpful to the CEO. But that person needs to be operating from a headspace of an independent thinker, not a proxy for one of the other participants on the board.
The person I was talking to yesterday is definitely #3. While I’ve known him for a long time and was an investor / board member in his successful company, he most definitely is not my proxy. I learn an enormous amount from him about the particular dynamics of the specific business since he knows it so well, so when he talks, I listen carefully. I have no interest in being in between him and the executives of the company or hearing about what comes up in his operating level discussions, unless he feels like it’s a board level issue and discussion. But most importantly, I want the CEO to learn from this outside director and his experience by developing his own deep, personal relationship.
Back to Orbotix. We’re recruiting at least one outside director to Orbotix as part of the continued scale up of the company. Paul Berberian, the CEO, wrote a magnificent short overview of his expectation for a board member that he’s sharing with everyone he’s talking to. I asked his permission to reprint it here – it follows. If you are considering adding an outside director, I encourage you to prepare a similar document, and make sure it’s for all of your directors, including your investor directors.
Orbotix Board of Directors Expectations
Orbotix is a startup company and our expectations for board members can be summed up with the following statements:
- Be True
- Be Prepared
- Be Present
- Be Available
- Be Supportive
- Be A Player
Be True: No bullshit or tap-dancing on any subject. Be honest with your thoughts and opinions. Our time together as a group is limited and holding back or sugar coating any issues or concerns you have with the business is simply wasting time in trying to get to the real discussion. If you don’t have an opinion or relevant experience to make an informed decision – say so. No one knows everything. And of course all the other table stakes for serving on any board such as always act in an ethical manner and in the best interest of the company.
Be Prepared: We put a lot of time into preparing the board book – read it in advance. We do not review the board book at the board meeting unless there are questions. The first few minutes are open for questions, approval of standard business items and then we dive into a deep discussion on one to three key subjects. These subjects will we outlined in the board book but additional material may be presented at the meeting. Try to come to each board meeting with one big question or insight you’d like to be addressed during our strategic discussions. Each board meeting will end with an executive session where the directors can give feedback to the CEO as well as talk privately without management present. The lead director will then follow up with the CEO to provide any final thoughts on the meeting.
Be Present: We have four board meetings a year and expect board members to be physically and mentally present. Board meetings are typically 3 hours or less. If you cannot attend physically getting access to a high quality video conference system can be a substitute. We take great care to plan BOD meetings around your schedule so please make them. Missing one board meeting can happen, but it should be rare. If you miss multiple board meetings we assume that something else is taking priority and you should evaluate ongoing participation. When at the board meeting turn off you phone and laptop and participate in the discussion. We will take breaks to allow you to check messages. If you are highly distracted due to other pressing matters, please let us know in advance so we don’t question your willingness to participate. We have a “small group meal” in advance or after the board meeting – typically a dinner the night before. The meal will have 2 to 4 people and will include an equal number of board members and management. This is the opportunity for the board to get to know management and each other at a deeper level – groups will be different for each board meeting. They are not designed to conduct the board meeting in advance. An Orbotix exec will coordinate the meal in advance.
Be Available: One of the key roles a startup board member can provide is to act as a coach or sounding board for the CEO. These interactions typically occur between board meetings. Making time on your turf to have these interactions is invaluable. The expectation that these meetings will not exceed more than a few hours per quarter. Often approvals are needed in short order – board members are expected to be responsive on emails / calls that clearly declare action needed in the title or message.
Be Supportive: As a board member you are expected to support the company and CEO. If you support the company but not the CEO you have three options 1) coach the CEO 2) replace the CEO or 3) resign. Unless there is some unusual circumstance, options #2 and #3 should not be without warning as it is expected feedback will be shared with the board in the executive session. An engaged and supportive BOD member will use their best efforts to help Orbotix succeed. Examples include leveraging your network for creating meaningful partnerships and introductions, and freely sharing your expertise and insights on strategy, products and performance. Additionally we expect every board member to speak about the company favorably in public and share their enthusiasm for our work with others.
Be A Player: We make fun things. That is why before each BOD meeting starts we begin with a play session to highlight our accomplishments and developments since our last meeting. We want our BOD members to embrace their inner child and play with our creations, offer feedback and most importantly share with their friends and family to help us shape our products and experiences. We cannot build fun things unless we are all having fun – so let’s play!
On Thursday March 6th I’m doing my first public talk about my newest book – Startup Boards: Getting the Most Out of Your Board of Directors.
If you’ve got a copy, bring it and I’ll sign it. If you don’t have a copy, our friends at Silicon Valley Bank have sponsored one for each of you. But don’t be bashful, every good writer loves it when you buy a book also, even when he gives one away.
Since this is the first time I’m giving a talk on Startup Boards, it’ll be an alpha talk. It’ll be rough. I’m trying out some new material. And I’ll be looking for a lot of feedback from anyone who attends – either directly or by email later – about how to make it extra special great.
I probably gave my talk about Startup Communities 20 times before I hit my stride. The feedback that I got along the way was extremely helpful. So, in addition to learning something and getting a free signed book, you’ll be helping me out.
Also, everyone who attends will get a second extra special gift. It’s a surprise, so you’ll have to be there to learn about it.
You can sign up for the event at the Silicon Flatirons event page. Or hit the big Register Now button at the top of this post.
In my new book, Startup Boards: Getting the Most Out of Your Board of Directors, in addition to decomposing and explaining a lot about the functioning of board meetings, I also describe my ideal board meeting.
I had four of them this week. That’s a lot of board meetings in a week, but my weeks tend to either be “lots of board meetings” or “no board meetings” as I generally bunch them up. Thankfully, all four of them used my ideal board meeting template.
A critical aspect of my ideal board meeting is that the entire board package should be sent out several days in advance to all board members. It should be thorough, including whatever the CEO wants the board to know about what has happened since the last board meeting. While I prefer prose to a PowerPoint deck, either is fine. Optimally it’s in a format like Google Docs where everyone on the board can comment on specific things, allowing open Q&A on the board material prior to the board meeting. I like to decouple monthly financial reporting from the board package, but including a look back of the financials, along with discussion and framing is useful. But the meat of the board package should be what’s going on now and going forward, not looking back. The looking back is for support of the discussion.
Then – the board meeting has a simple structure intended to fit in three hours. Optimally all participants are either in person or on video conference. Since I’m not traveling for business right now, almost all of my board meetings have a video conferencing component. When done correctly, it’s often just as effective as an in-person meeting, and in some cases (if you follow my video conferencing rules) even more effective. What is not effective is when one or more people are on an audio conference.
Once everyone is settled, break the board meeting into three discrete sections. They, and their descriptions, follow:
Administration (30 minutes): Board overhead, resolutions, administration, and questions about the board package.
Discussion (up to 2 hours): Discussion on up to five topics. The five topics should fit on one slide or be written on the white board. The CEO is responsible for time boxing the discussion, or if he needs help, he should ask the lead director to do this. If you don’t have a lead director, read my book and get yourself one. This should be a discussion – you’ve got your board in the room – use it to help you go deeper on the specific topic you are trying to figure out. These topics can be on anything, but my experience is that the more precise the context is, the richer the discussion. I prefer for the full leadership team to be in the meeting for this part, although it’s entirely up to the CEO who is in the room.
Executive Session (30 minutes): CEO and board only. Here the board can give feedback specifically to the CEO or sensitive issues around personnel or other things the CEO wants to discuss separately from the management team can be covered. At the end, the CEO leaves and let’s the board have some time alone where the lead director checks in if there is any feedback the board would like to give the CEO.
If you have less than five topics, the board meeting can take less time. Or if the five topics only take an hour to go through, the board meeting can take less time. There is nothing ever wrong with ending a meeting early. Ever.
Now this template doesn’t always work – you often have other specific things you have to address. When a company is going through an M&A process, the board meetings tend to be frequent and cover other stuff. Or, when the company is in a downward spiral, or dealing with a crisis, the focus is often very precise.
But in my world, the day of the “board update” is over. I find no value in sitting in a room for three hours, paging through a PowerPoint deck while people present at me, and the people around the table ask an endless stream of questions, mostly demonstrating that they haven’t been engaged in what the company has been doing since the last board meeting.
Just before Christmas I ran a week long pre-order campaign for my new book Startup Boards. It’s officially shipping at this point so if you are interested in it but haven’t yet ordered it, give your friend Brad a solid.
The winner of the campaign is Angie Lawing from Mercury Labs in St. Louis. I’ll be hosting her and her board in Boulder for a board meeting whenever she wants.
Thanks to all who participated. And, if you’ve read the book and have any thoughts about it, toss a review up on Amazon or Goodreads!
My newest book, Startup Boards: Getting the Most Out of Your Board of Directors, will ship at the end of the month. As a result, I’m activating Operation Pre-order today.
Between now and Sunday, if you pre-order a copy of Startup Boards on Amazon, you will be entered into a random drawing. If you need immediate gratification, the Kindle version of Startup Boards is already shipping. If you want the hardcopy, you should have it right around the beginning of the year.
I’m going to pick one winner. All you have to do to be entered is email me the electronic receipt by 11:59pm EDT on Sunday night. I will announce the winner on Monday morning.
The winner will get a board meeting at our office in Boulder. I’ll host you and your board and participate as an observer at your board meeting for up to three hours. I’ll then join you and your board for dinner afterward.
If you play, make sure you also tweet out about the book, Facebook the purchase, or do whatever other social media thing lights your fire.