A startup isn’t a public company and a startup board shouldn’t be like a public company’s board, many of which focus primarily on status updates, performance against plan, governance and compliance. Admittedly, this is a caricature, but directionally correct, as bigger companies have existing businesses to sustain and protect, and significant assets with which to pursue them.
By contrast, a startup board really needs to focus on understanding where the company is, from the perspectives of product-market fit and sales learning curve, building the right team for the stage of the company, and helping the management team think a couple of moves ahead on strategy and financing.
Here are five things you can do now that will help you use your board to your advantage:
1. Get the right people in the room – Shape your board so that both investors and independents have areas of contribution. You want input from a diversity of perspectives and experiences, but you also want people who understand their roles.
2. Define the board’s role and rules of engagement. Have a conversation about what you want the board to do – relative to management and its role. I’d typically propose input and guidance on strategy and even tough tactical decisions. Help the management team to think and navigate through complex issues, but leave the actual decisions to them. Hold the management team accountable, including compensation policies (and the ultimate responsibility to hire and fire the CEO). Be advocates and evangelists for the company and an arm for business development and recruiting. As for rules of engagement, it is great to have input and points of view – even to be able to argue vociferously during periods of debate – but board members shouldn’t forget that management necessarily has ten times more information about most subjects and that they should ultimately make the call, unless it touches on corporate development (M&A) and financing, or will require the company to raise additional capital.
3. Use meetings as a time to reevaluate and/or reaffirm strategy and touch base on critical issues. Focus the board’s time on the critical issues – both strategy and tough operational issues. Tee those up in advance by doing the staff work and sending out memos or presentations that provide the board context for the discussion. As former Return Path board member Scott Weiss (now a partner at A16Z) used to say, “We’ll eat what you feed us, so tee up the right stuff.” One or two issues is ideal, but no more than three. Some CEOs, like Return Path’s Matt Blumberg, includes a section called “On My Mind.” While you should do the staff work, the issues don’t need to be fully processed and ready for decision. If you’ve got the right people in the room, don’t feel like you and your team already have all the answers. You won’t get as much out of the discussion.
4. In order to free up time for this more meaningful discussion, you need to limit the time dedicated to status updates and reporting . This is the part that requires more work from you. To that end, develop the right metrics for the business and design a consistent reporting template. Send out the board packet, including all the data, at least two full days before the board meeting. Give board members time to prepare – and expect them to do so. Tell the board that you’re not going to go slide by slide, but instead, will dedicate as much time as necessary to asking and answering questions. While even a startup board has a role of giving visibility to (and providing motivation for) the broader management team, you simply can’t have each VP report on their function – or you won’t have any time for the meaty discussion above. You might choose one functional review as one of your topics for the meeting – but only one.
5. Enjoy. The right board can help you dream higher than you might have thought possible, bring expertise and experience that you don’t have, and extend your company’s reach. The path to doing so is by engaging your board and treating its members like partners in building the best company you can build.