Managing Your Startup Board — A Short Presentation

This week, I was invited to give a keynote speech at the Khosla Ventures CEO Summit in Sausalito. It was a great gathering of ambitious early-stage CEOs who are looking to make a difference in areas such as healthcare, biology, and AI. It is encouraging to see that there are still outstanding VC firms such as KV looking to make these small but significant bets on shaping our future. It was fascinating to hear Bill Gates' views on how the world addresses issues such as climate change. Jack Dorsey spoke about the role social platforms play in government. Also, discussions with Todd McKinnon (Okta) and Kevin Systrom (Instagram) were interesting.

The talk was about managing your startup boards. You can find the complete deck at that SlideShare link, embedded below. You can also find a series of articles on Startup boards that I wrote. Here are the highlights.

How do boards get out of sync?

Software development was based on the "waterfall model". This meant that you had to research, design and build your product, then test it, deploy it, and then observe how users react. These projects often took 12-18 months, so when companies finally shipped products, they often discovered that the product did not meet customer requirements. This analogy could be applied to boards. Executives often operate their companies for long periods of work. Non-executive board members don't know the nuances of changes and are therefore surprised or unprepared to attend your board meeting.

It may help to consider your relationships as "continuous board" where you send updates to investors via text, email or phone more often. You will have more opportunity for course corrections or, at the very least, more board members who are involved in the process.

You can keep your board members engaged by asking them for their help. Although there are some costs associated with increased communication, asking for opinions, and asking for favors, I believe that it will pay huge dividends in the long-term in keeping your board supportive and aligned.

Why does my Board get so distracted at Board Meetings

It is helpful to reflect on your goals before each board meeting. Do you really want board members to discuss and make a decision? This is often a bad idea. The best companies are those that let their executives make the tough decisions. They should be able to help with high-level strategy planning and discuss difficult topics.

Anything you present to them, the board will respond. Ask your board to debate for 30 minutes whether $12,000 should be spent on coffee machines for employees. I guarantee that every member of the board will have an opinion. Or, as I like it to be called, "If you ask us for our opinions on your logos or colors and we debate it fore thirty minutes -- that's on us!" If you don't give it to us, we won't debate at such a high level.

This decision is up to the executives. You can show us your designs, but it's better to share such information outside of a board setting. You should bring together the most strategic and motivated people in your company to discuss your most pressing strategic issues.

What should we discuss at board meetings?

The "filibusterboard", which is where the board meets for 2 hours to go through 100 slides, and then runs out of time with no discussion, is one of the most common mistakes I see in board meetings. This can be useful at times, such as when senior staff present their work to the board, and the board gets to hear from the wider team. It's not the best way to use board time. However, most of this knowledge can be shared prior to the meeting so that the team is prepared for discussion.

You can filibuster through lengthy presentations, but as a board, we leave understanding your company better, but not with any real value. A debate with your board about strategic topics is a better way to go. Send your financials 72 hours prior to the board meeting. Have your CFO or you call each board member and go through the financials. A "pre-read" can be sent to board members so they can read and understand the information before arriving at the meeting.

Notice that I am not suggesting that you ask your board for these decisions. It's possible to have a two-hour discussion on key topics such as pricing and product features. Then, you can still leave the board meeting and let your executive team decide. If you asked your board to empower you, then it would be less like an approval meeting and more like a group senior executives helping you make tough calls.

There are occasions when consent is required and votes may be cast. These should not be the most important strategic or existential questions for the company. These kinds of board decisions are very rare and rarely come up more than once in 12-18 months. If you ask your board for approval on decisions that should be within your purview, don't be surprised if they feel entitled to make them. This is not in your best interest and it's not in the interests of the boards.

Summary

Boards require the same management skills as your management team. Regular communication is essential to ensure everyone is on the same page and that the board's goals are being achieved. If you can manage them well and make them work for the company, boards can be very helpful. However, they can also be frustrating if they aren't managed properly and feel uneasy about the direction of the company.