Simple rules for board management

It’s pretty surprising how often I have calls with founders where the real problem seems to be a simmering mistrust between them and their board members. Typically they’re calling because of an inflection point: Should they take an M&A offer? Should they try to raise or not? Should they go with Investor A or Investor B? 

But when I ask what everyone around the board table thinks, I get some pretty shocking replies. It’s common to hear answers like, “Oh I haven’t told them yet” or “Those clowns never think anything I do is a good idea” or “Who cares what the VCs think.”

Answers like these reveal some pretty bad internal trust issues at the highest levels of the company. This is fatal if left untreated. You’re married to these board directors, so as the leader, it’s on you to figure out a way to make it work. Here’s a simple formula:

Schedule explicit getting-to-know-you time when they join the board. The late stages of a fundraise are ideal for this, as you’re in “sell mode” with each other anyway. Go to a basketball game, do dinner with the families, or just grab brunch. One VC gave me a tour of his wife’s wine-making operation. (Despite the world’s clearest buying signals, he did not end up giving me a term sheet.) Lots of things can work here. Just make it authentic to you. 

Take a walk or a lunch every 2-4 weeks. No need for an agenda, though a text in advance with what’s on your mind is a nice touch. The goal is to chat through strategic questions or just the challenge of the day, in an informal setting separate from the formal cadences. This builds the relationships and gives you both a window into how each of you thinks about the important questions. Over time, this casual meeting becomes the real place where you think through the major business issues together.

Call right away when there’s bad news. The day a key exec gives notice. The day your top customer tells you they’re churning. The day you look at the dashboard, look at your VP Sales avoiding eye contact and realize, shit, we’re going to miss this quarter. These are awful days. One of the things that makes them awful is that you’ve gotta pick up the phone and call board members and explain the situation. My process was to text as soon as I had the realization: “hey, can we talk at eod? not a crisis.” Now you have until the end of the day to think through what you’re going to do about it, which is what you must be ready to talk about when you get on the call.

Send a thoughtful email when there’s good news. Celebratory texts are cool. But follow up with an email about what it means. Connect it to the long-term goals and add context. With both good news and bad, your goal is to smooth it out and be an even-keeled leader in these moments. 

Send a “flash report” on the first day of the month / quarter. Always literally on the first. Not the second. Yes, even on Sundays. Yes, on New Year’s Day. This way they always get it straight. There’s no ducking, there’s no hiding, there’s no “what does it mean that the close took longer this quarter?” Whether it’s good, bad or ugly, they know in their bones that they’ll get it on the first. This is such a stress reliever and trust builder. It’s okay that the numbers will move a little as finance closes the books. Set expectations that this is just a quick straight-from-Salesforce view.

At venture stage, do 8 board meetings per year. At growth stage do 4. “Growth Stage” can begin anywhere in the Series B/C timeframe. You’ll feel it. It’s when the company is a growth machine with a formula. When investors invest based on the data room, not the pitch. In the venture stage, make the EOQ board meetings about sales and marketing, and the mid-quarter board meetings about product. I’ll be honest: I never quite got to a high-quality board conversation about product. But making sure the product fits the market is what we’re all doing here, and as long as that’s a critical question for the company, it should be a regular topic of conversation at the highest levels.

Once you have 2ish VC directors, add an independent director or two. I never did this at Periscope, and then when I got to the Sisense board room, the independent directors were the most thoughtful board members by a mile. The best independent directors are CEOs of big prospective or current customers, or CEOs of big successful companies in adjacent industries. They will think through the strategic questions with you, not just the financial questions. 

Send the board deck, with complete financials, a full 72 hours before the board meeting. People should have time to read and understand the materials, and send any questions in advance. You should then make sure the experts on those questions are in the meeting. The flip side is that you should expect everyone’s already digested the materials. When you show a financial slide, you can just say, “I know you all read this already. Sally had a question on Gross Margin so we added a slide there. Any other questions?”

Just drive the board meeting from a deck. Yeah it’s long and dry. I’ve tried the creative ideas around docs instead of decks, or just doing it from a whiteboard (?!). They don’t work for me. The board deck is tried and true, and gets everyone on the same page. As you get bigger, let your team present and shine during the main meeting. They’ll take it very seriously and you can use the prep process to drive exec team alignment. Resist the urge to talk before and after your team does. This just makes you look like an insecure leader. You hired them, ramped them up and prepped them for the meeting. Now you live with the results.

After the meeting, do a closed session. Let the non-management directors chat among themselves for a few minutes and then reconvene just the board members, without guests from your team or theirs. This will be where they give you the Real Talk feedback they weren’t sure they could say in front of your team. It’ll also be a good forum to talk openly as the major partners in the business about what’s going well and poorly, now that you've just wrapped up a deep dive.

Silicon Valley is a small community, and you’d be surprised how much trust and personal relationships can swing outcomes. Sure, if your business is growing 10X / year, everyone will forgive a mediocre board process. And if the business is flatlining, you won’t get more funding just because you’re a good person. But we live almost all our lives between those two extremes. The feeling that you are a trusted and transparent steward of their capital really does help your partners push through an unpopular bridge round or go to bat for you with a next round investor who’s waffling.

Your board members won’t be your best friends. They spend a maddening amount of time debating the definition of CAC and what goes in COGS, and yet have a surprisingly shallow understanding of the product and the customer. That’s okay. They have a meaningful ownership position in the business and they live or die with the success of the enterprise just like you do. That earns them a seat at the table. You’ll need these relationships in key moments, and guess what? Their soft signals during a fundraise, their experience with good and bad IPOs, their knowledge of obscure-yet-critical M&A deal terms are going to be make-or-break at key moments. They’re your partners now. It’s on you to make that real.