Startup Board Management Tips
Last year I wrote about board management tips based on my own experience as CEO and that of a couple boards I was on on behalf of investors. Last night I attended an event put together by Clark Waterfall, a local headhunter (BSG Team Ventures), where about 30 startup CEOs spoke with each other about board issues.
It started out with a brief panel discussion and the panel consisted of:
By way of background, all three panelists are second, third or fourth time CEOs of venture backed startups. Novomer is an early stage (Series A) biotech company. Zipcar is a later stage (about $120MM revenue) and venture backed with an A-list investor group. And DigitalGlobe is a later stage company ($200MM revenue and recently filed their S-1). So here are some tips on startup board management from the panel and the other CEOs at the event (in chronological order of how they were discussed):
- Be inclusive. Invite key members of management team to participate in board meetings. Your CFO will likely be in most of all the meetings. Other executives will participate as appropriate for the agenda. Jill made the point that it's easier to have "spot invites" as opposed to "standing invites" because that avoides creating the expectation of attendance for your management team.
- Focus on strategic. Every CEO in the room agreed that the biggest board issue was how to get out of the tactical and into the strategic. All of the panelists and several other CEOs said the number one thing they do to focus on strategic is to schedule the board meetings for the morning and then also schedule a mandatory board dinner the night before. The dinner provides a forum to ferret out any issues behind the issues. Scott mentioned that he would fire off emails to his team after the board meeting and then they'd come to the meeting with any new data / slides.
- Invest in the board. Consensus that board management takes 10-15% of CEO time if business is going well and can take up to 50% if things aren't.
- CEO is firewall. The management team shouldn't get unnecessarily get dragged into board issues.
- Be transparent. Good news travels fast and bad news travels faster. Scott talked about how a couple times per month he would send informational "no action required" emails to board members to keep them abreast of issues. Don't sound defensive. Check with colleagues if your message sounds defensive.
- Plan to sunset directors. Scott and Jill described how they had set up staggered three year terms for directors. This is obviously harder to do with early stage professional investors, but worth discussing. One tactic suggested for early stage companies is to identify a rock star potential director and bring them to the table in the context of, "we need to make room for this person."
- Measure board effectiveness. The panel advocated scheduling time to assess board effectiveness. Scott mentioned how Zipcar had brought in some consultants to help with this and it was worth it.
The session closed with a brief discussion about managing a board in an economic crisis. Nothing major came out of that other than the obvious point of get ahead of the issue in the short term propose an appropriate cost structure, particularly if that includes cuts and then address strategy.