Editor’s Note: Each week, Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at email@example.com.
Q. We are now completing our first priced round (an equity round with an agreed-upon pre-money valuation) and will have a small but formal board. I’m a first-time founder, and my new board member is very experienced. Do you have any advice for setting a productive and positive board culture from the start, and particularly tips for the first few board meetings?
-Founder and CEO of a seed stage company in the insurance space
This all starts with good intentions. The good news is, based on the way you structured your question, I believe you do have the best intentions. Now, we have to make sure that your new board member understands that as well. That means making sure that board members know you welcome their interaction and help, while also understanding it’s your responsibility to actually run the day-to-day business.
Given that you have a very experienced board member, you might ask them what they have found to be their most satisfactory board experiences and why. But be forewarned this does come with some risk. Depending on the board member, this can backfire and he or she may end up prescribing how you run the board.
In order to counter that, it makes sense for you to prepare a list of how you would suggest the board interactions go. For example, you are committed to having:
- open and transparent dialogue
- regular updates outside of the board meetings
- periodic one-on-one meetings
- no surprises
- discussion about when to expand the board
I would set expectations that presentations should be read in advance, and that you expect more discussion on topics than just “death by PowerPoint.” Agree to get materials to board members a few days in advance of the meeting and then live up to it.
It’s important to point out that board members get to know you and experience your leadership skills exhibited through board meetings, so they may (rightly or wrongly) extrapolate how you perform in other areas of your company based on how you perform in the board room.
Therefore, showcasing effective leadership during these meetings is very important. A successful meeting starts with alignment between the board members and you. In the beginning, ideally these meetings can be like deep one-on-ones with a little time carved out for legal formalities (approving stock, minutes, and other formalities that need to be discussed). These meetings will go much more smoothly if you have agreement with the board in advance on frequency and length of meetings, agenda, and management participation.
As your company gets bigger, these meetings become more formal and require an adjustment. As a side note, the longer you can stay small and intimate with your board, the better–but this is not possible forever. As you go through round after round of financing, you are often adding a board member at each round and changing the overall board dynamic.
When you are a big public company, you will have lots of regulatory and compliance activity to contend with, and you will need special committees (such as audit, compensation, nominating, and governance to name a few), in addition to general board topics. Board and committee meetings at big companies are often two full day events (or longer) and include a dinner as well. Themes and topics for board meetings are often baked in well in advance. For example, it may be determined that strategy will be covered in the July board meeting and the next year’s budget will be approved in the January board meeting. Meetings and dates are scheduled at least a year, if not longer, in advance because it requires coordinating between many very busy board members and advisers.
(If you are freaking out, now is the time to take a deep breath, the good news is that you are years away from that kind of setup, but I wanted you to understand that if you go public, that is where you are headed.)
In the meantime, it’s important to note that your board will grow and that it will always require active management. A few simple rules to make things easier for everyone:
- Set up the meetings well in advance.
- Make sure board members know whether it is okay to attend telephonically or not (I just experienced a board meeting that the CEO changed to telephonic at the last minute, and one of the board members had cut a European trip short to make it back in person).
- Send out a proposed agenda a week or two in advance and solicit input for any topics the board wants to cover.
- Make sure all materials get out in advance (at least two days before the meeting). Board members are usually busy, but want to do a good job. When you don’t give them time to do their jobs well, they get cranky.
- Leave time for an executive session with the full board, and with just outside board members.
- Save time at the end of the board meeting for board members to give you feedback.
The relationship you have with your board member is like any relationship, it should be built on consideration and respect and that should never be squandered.