The very best entrepreneurs I’ve worked with manage their boards -- not the other way around. They leverage the skills of their board members for their own growth as a leader and that of their company.
I recently attended a board meeting for a portfolio company led by an outstanding, repeat founder whose business is on fire. The company recently hit an 8 figure revenue run rate and has grown revenue 12.5x in about 18 months. When I first met this founder and learned his background, the board experience from his prior company was a key part of his story. He told me that how he constructs and uses his board is a critical priority for his new company. This data point was important in our decision to invest in this company.
A low performing startup board is reactive.
Instead of pre-reading and making notes on the board deck ahead of time, the first time they review the board material is in the board meeting.
Instead of proactively engaging the founder between board meetings, they fail to setup routines and are usually not high on the list for the founder to call in tough times.
Instead of asking how they can help the company, they often think of themselves as the managers of the business.
This dynamic creates waste. Board meetings are a check the box activity and the company and founder suffer for it.
High performing boards are filled with active discussions, engaging, and designed to help the founder work through important strategies or operational challenges.
So, what are strategies founders can use to build a high performing board? Here are eight suggestions:
Do prepare. Two things the best boards all have in common:
Board members that have prepared for the meeting and know how they can contribute.
A CEO who knows what she or he needs to get out of the board.
Do send materials in advance. Board members need time to prepare and so they are sent materials at least 4 days in advance.
Do remain in touch between meetings. Board members are active with the company between board meetings (not just during the board meeting). These activities can include introductions to potential customers, strategy sessions with the CEO, and helping recruit for key hires.
Do be transparent always. Boards hate surprises. If your board materials will highlight a material issue (i.e. miss in financials, departure of a key executive, loss of a key customer, lawsuit or anything material), do give them a heads up 1:1 before sending the deck.
Do frame the conversation appropriately. Boards need to hear the founder’s analysis of the market to provide relevant inputs. As experienced as a board may be in an industry, they rarely understand a startup’s business and the market as deeply as a founder. Help the board understand:
Has the market changed since the last board meeting? Has that impacted the company positively or negatively?
Has the team changed? For better or worse?
Has the company’s position in the market changed?
Did the company do what it said it would do?
Do plan a dinner the night before with company leadership and board. This informal routine builds relationships, trust, and enables the board meeting to start with business from the start.
Do allocate sufficient time for discussion and not just reporting. I’ve found the sweet spot for duration to be between 3.5-4.5 hours. Anything shorter than that can prevent good discussion. Anything longer often reaches brain fried state.
Do use a recurring agenda and timebox sections. Here's a standard agenda I’ve used with success in past companies.
CEO Update - Market update, highlights, challenges, company needs (15-30 mins)
Calibration - Financials, performance vs. plan, KPIs (30-60 mins)
Company Building - Product, sales, marketing, operations, etc (10 mins/function)
Working sessions - (30 mins each)
Topic 1 - (e.g. deep dive into a functional area)
Topic 2 - (e.g. quarterly goals)
Formalities - stock grants, etc (10 mins)
Building a high performing board has to be done through deliberate actions. When done properly a good board can help a CEO and business set strategy to help it grow.