The Board of Director Advice I Wish I’d Known
Sir Kensington’s Cofounder Scott Norton rounds up what he’s learned in his time as a CEO, Investor, and Primary Board Partner.
I cofounded Sir Kensington’s more than a decade ago, and back then didn’t fully appreciate the importance of a board of directors. I thought of our board meetings more as something necessary to endure rather than a counsel to inform and enable the company’s path. Since then I’ve also served on boards as an independent director appointed by the founders of Smallhold, as a Series A lead director via N+1 Ventures in MUD\WTR, and as a representative observer appointed by Primary at Firstleaf.
Though the title of Jerry Neumann’s post Your Board of Directors is Probably Going to Fire You is certainly attention-grabbing, I also think it’s too fatalistic. From my time on boards, I’ve seen they can play a very positive role in the development of a startup. No two boards are the same, and I consider myself a beginner here, but I’ve started a collection of research and reflections I wish I had when I was getting started. I hope other founders find this helpful, and if you have your own tips to add, get in touch. It would be my pleasure to add more helpful advice here (and of course credit those of you who share it).
The (reassuring) basics
The legal purpose of a company's board of directors is to protect the best interest of shareholders. A board represents more process, communication, and control points, all of which increase in formality after each fundraising round. As a CEO, this doesn't sound very useful to you, does it? I've seen too many CEOs view board meetings as something to endure with the goal of survival without dismemberment rather than treating their board as a tool in their toolkit to build a better company. Board relationships are full of contradiction and tension, and this is what makes them both potentially so powerful and so taxing. So, how do you develop a board of "teammates pulling in the same direction" as Reid Hoffman says? And as Gucci Mane and I like to say, to make sure you don't get "lost in the sauce?"
Good news: Practically speaking, for early stage companies, the only way that board members can create value for their shareholder constituents is helping you, the CEO, be successful. Whatever proclivities you and your board members have coming into the relationship, let this truth be your north star in defining the relationship.
Lesson 1: The CEO's cardinal sin
The cardinal sin that I've made and seen other CEOs make is to relinquish agency in defining the board's purpose and how it engages with the company. You must take the pen. In the same way that you define the roles, goals, and cultural standards within your own executive team, you'll need to stay on the front foot with the board. It's easy to assume your seasoned board members will come with an explicit model for how to make the forum most productive, and since this may be your first time, it might be tempting to defer to them. However, just as many cutting-edge academics make poor teachers, investors rarely take the time to proactively map out with the CEO what "great" looks like for board engagement. In reality, the vast majority of board members don’t have the capacity to deliberately define board culture. Instead, they will be refreshed and impressed when you treat them as peers rather than managers. If you lead, people will follow.
Lesson 2: It's not just about the board meeting
This may sound obvious, but for all the energy that goes into engaging a board, it's impossible for the quarterly three-hour meeting itself to hold everything you need to achieve with a board. Most crucially, you can set a norm that the board meeting will not be used for educating board members on the business, and instead will be used to inform key strategic decisions made by the CEO and her team through discussion. This means that you and your team will need to spend time preparing a detailed pre-read with the latest company performance metrics and key decisions to be made, ideally developed into a standardized reporting pack to save your team time. If someone has questions about the material, you can invite them to ask you over email ahead of time or choose to answer it in the meeting. Packed board meeting agendas also mean you'll need to keep the conversation on track (see agency from #1 above) without letting a talkative member derail the agenda.
All of this preparation and structure also has an added benefit. It creates an opportunity for engaging your team members in the board process by sharing these board materials and discussing the decisions with them. At Sir Kensington's, I didn't do this nearly enough, and instead shielded the team from vital board discussions as to not create distractions or challenge morale during tough times. In fact, even in challenging times (e.g. always) bringing the company into the realities of board discussion has a positive effect, as people are not only curious as to what the board is focused on, though can better contribute when they hear what's urgent.
Lesson 3: Be proactive about who serves on your board
Boards are a way to get talent and expertise contributing to your company that you wouldn’t be able to hire full time. You have the opportunity to craft a board that serves as a foil to your executive team, with diverse experience that can not only help you strategically, but can also offer tactical insights. First and foremost, you've got an opportunity to carve out an independent director seat and "cast up" the role to offer perspective that an investor couldn't. Second, work with your lead investors to proactively think through who should be in their seat before it's officially filled. By default, the seat will be occupied by the partner at the VC firm so they can look after the investment, but perhaps you make "what talent will you bring to our board?" a point of leverage leading up to the financing. Likewise, if a career investor sits in the director seat, consider allowing their fund an observer seat where they can place someone who's more focused on accelerating the company in partnership with you. Related again to Lesson #1, think about what your all-star board would look like and bring that to your lead investors to help unlock it for the company.
Now, onto resources from people wiser than I:
Earlier this year, N+1 portfolio company CEO Ju Rhyu of Hero Cosmetics posed this question asking for tips on running effective board meetings and got great responses. In the thread are posts by Marc Suster and Keith Rabois that offer particularly helpful advice. Thank you, Ju, for sharing this with me as part of my research process.
Recommended in the Jerry Neumann blog post from the top of this note is Brad Feld and Mahendra Ramsinghani's book Startup Boards. If you've made it this far in my email, then this book is a must read. It balances both the procedural mechanics of board engagement with the wisdom that comes with the authors' experience, written clearly to aid the CEO. It's a fast read and will give you an understanding of the scope and framework of the board structure that will allow you to forge your own path with confidence.
Listen to Reid Hoffman's Masters of Scale podcast episode all aboard boards. It’s a great supplement to all the materials shared above, with well-told stories and more weight on the director's perspective and what makes a great board member. Hat tip to Smallhold CEO Andrew Carter for sharing this one.
I also received this cache of board deck templates from Quaestor and this in depth series from RA Capital on board management