In life, they say that the only things that are for sure are
death and taxes. In venture-backed startups, the only things that are for sure
are burn-rates and Board meetings.
The most dangerous thing on earth is a well-funded startup
(and North Korea). Since startups don’t have the normal feedback mechanisms of mature companies
(look up revenues and earnings in an old business dictionary) – it’s so easy
for even a well-intentioned and hard-working CEO to deceive himself. Board meetings
should serve as intellectually-honest forums to review the fundamental mission
of the company and ponder the big questions. Is our product fulfilling a real customer need? Can we monetize this
value? How can we defend our business and scale? Do we have the right team? Are
we spending too much money too soon (likely), or are we not spending enough
money (not likely but theoretically possible)?
My VC-board involvement started personally when I founded IFN in 1994 (I was 24). Now, that I’m running a newly-funded startup at 36, the biggest difference for me is that I don’t need to pretend that I have all of the answers (I thought that I really did know all of the answers). I’ve learned to accept (perhaps even welcome) confusion. It’s more than ok to candidly ask questions of your Board, provided that you can help crystallize what the most important actions that needs to be taken to find the answers and make progress.
Top Ten Things I’ve learned about BOD meetings:
1). Drive your organization to achieve desired results for
Board meetings – but don’t drive things especially for your Board.
2). While everyone admonishes CEOs to distribute materials a
week before the BOD meeting, I’ve found that in early startups, this rarely
happens. On a practical basis, try to get at least financial data distributed a
couple of days before the meeting. If you are going to be discussing a key
contract, proposed hire, or a new product – then get that specific information
out before the meeting as well. Don’t send out your “deck” in advance if you
want anyone to be paying attention to you during the meeting.
3). When you are working on your “deck” – (likely very late
in the evening before the BOD meeting) – use that time to deeply think about
what is most important to the success of your business. Think deeply about the
important things accomplished, the key things you’ve learned, and the most
important execution required going forward.
4). Expose your key team members (and key consultants) to
the Board. It’s good for your team members, and good for your Board members. Both
groups will see that you’re not “hiding the ball” from each other and the discussion
will be more interesting and valuable for everyone.
5). Don’t ask your VCs for more money in the actual Board meeting.
Have private conversations either in advance or after the Board meeting. If you
have any bad news, share it before the Board meeting privately with all Board
6). “Real Boards” of mature companies are normally
responsible for only four things: selecting leadership, approving strategy,
approving budget, and monitoring governance issues. In VC-backed startups, the
Board has an expanded role. Think of the meetings as a combination of an
employee review, brainstorming session, and perpetual VC-pitching meeting. The
main objective is for the Board to adjourn the meeting with continued
confidence in the team and CEO.
7). While you must update the Board on key accomplishments
since the last Board meeting, focus on the key things that you have learned in
the vital areas of value propositions to customers, product development, competitive
developments, and your sales learning. Unless you are profitable or project to
be so soon – make sure that you and the Board are aligned on what needs to be
accomplished in order to secure the next round of capital. The best VCs that
I’ve worked with are most honest about managing to the next “VC-hurdles”.
8). Spend as much time in the meeting really talking about
the key issues that are “keeping you up at night” – and your direct thinking on
how to deal with these issues. Don’t “whine” – but make sure you share your key
concerns and priorities.
9). Clearly state what you think are the key milestones and
deliverables that you expect to accomplish before the next Board meeting. This
will flush out how you should be spending your time. Try to get consensus from
your Board that you are spending your time and resources on the right areas.
10). Ask your Board members for help – either with introductions, or deeper thought/involvement in areas that a member has expertise.