4 Steps To Surviving Your Board Meetings
As a startup CEO, you’re probably looking forward to your next board meeting with a similar level of anticipation that is often reserved for dentist appointments. Who doesn’t like getting naked in front of a committee whose sole power is firing you, and spending 2 hours in what is basically an audit followed by a session of unsolicited advice? And while the former is almost exactly true (read your bylaws) and the latter is too often the case, board meetings are an opportunity to get into the habit of keeping your company in order. But doing them right requires:
- Understanding what they’re for and what they’re not.
- Preparation.
- Managing the stage.
What Is A Board For And What Not To Expect
The board’s purpose and what is expected of board members (as opposed to the CEO) was described in my previous post — What You’re Getting Wrong About Startup Boards. Two critical points to remember are:
The Board is NOT Your Boss
You are the boss. The board provides oversight. You have the best view of what’s going on in the market and in the company. You have the best knowledge of the company’s strengths and weaknesses. You are in command. The board wants to see you doing your best work, the board wants to see you operating methodically. If the board thinks you’re not up for the job, the board’s job is to find someone who is. The board’s job is not to manage the company in your stead. The board’s job is not to micro-manage you. At times board members may attempt to do that — it’s a sign that either you’re not doing your job, or you’re not explaining what you’re doing and why. Sometimes it’s a sign that you have bad board members. Send them the link above…
The Board Meeting is NOT the Place & Time to Make Decisions
Some of your board members will be smart, experienced and knowledgable individuals. The kind of people who could really provide feedback and tackle a tough decision with you. They will be of assistance when they are seated comfortably, have the time and inclination to listen to you, get the necessary details, have their questions answered, and then weigh in on the question in a measured fashion, without time constraints, the pressures and interruptions of additional people in the room, or the need to be political. They may even disclose their doubts and conflicts of interests when your relationship and the quality of discourse are really high.
Shut them in a room with 4 other board members, feed them the data in real time and ask them to respond there and then under the watchful eye (and interruptions) of their peers, and see how well they pass the test… Here is a short list of known organizational phenomena in this situation:
Get the point?
Preparing For Your Board Meeting
Everybody knows that you need to prepare for a board meeting. Practically every startup CEO and most executives go into “slide preparation mode”, effectively shutting them down as productive managers for awhile.
There is value in the opportunity to explain to yourself, before you explain to others, what progress was made, what’s going on, and what are the plans. However, the most important preparation for a board meeting involves figuring out what you want to achieve — and then achieving 90% of it before the meeting.
The Board Meeting Is a Play That’s Been Scripted and Rehearsed
Step one is figuring out what you want the outcome of the meeting to be. Except for firing you, most of what the board can do is approve actions — an investment round, a key hire, option grants, executive pay, strategy pivots, hiring a banker etc. Your job is to figure out what you want to do — and what requires the board’s approval or support. Once you know that, you have to think backwards from there to what is the logic for those moves’ approval — those are the narratives you have to convey to the board members. Maybe you need to replace a key executive — you have to show his poor performance. Maybe you want to invest in a better office — demonstrate how important it is for your hiring plan. You have to figure out what you want to sell and how to sell it. In fact, that’s really great homework for your decision-making process too.
The next step is socializing this narrative, and the best way to do it is meeting each of the board members separately before the board meeting, and running them through your presentation. This gives them an opportunity to be their best selves as described above. It also gives you an opportunity to plan around any resistance. If the board member is un-amenable, you can decide between strategies like having someone else influence them prior to to the meeting, doing an even better preparation of data and argumentation in order to lobby them again prior to the meeting, or plan with other board members how to apply pressure during the meeting. You may need legal advice, you may need to bring in additional executives or co-founders — and you don’t need to do all of that in real time with four other people in the room.
On top of that — no one is likely to be surprised at the board meeting. Everyone will know what’s expected of them and what are the others’ positions. At least you can negotiate constructively.
There is nothing the board hates more than surprises.
Running Your Board Meetings
Open and Closed Sessions
The first question is really who is in your board meeting. Typically you should break down the meeting into the “open” and “closed” sessions. The open session includes:
- Executives
- Founders
- Board Members and Observers
- Lawyer
Having your executive team in the room is a great way to foster ownership, provide perspective on why they company is doing what it’s doing, and give them a sense of the career growth opportunity in sticking around. Letting them present their respective responsibilities also reduces some of the load on you (e.g. the sales funnel by the VP of Sales, the engineering deliveries by the VP of Engineering). Of course — you have to review and prepare all of that with them before the meeting, to make sure they are concise, relevant and most importantly — serve your narrative.
However, you should always have a closed session where only the formal Board Members / Observers and your counsel are in the room (sometimes also the CFO).
Sooner or later there will be confidential discussions — sometime about strategic concerns, often about individuals’ performance and compensation. If you don’t adopt an “open session followed by a closed session” system in every meeting, then when you do try to have a closed session you will encounter suspicion and rumors. So make it a habit in every meeting, and people will just get used to it. You can use the closed session time to talk sports or do group meditation. It doesn’t matter.
Managing the Meeting
Unless you have a chairperson, it’s your job to run the meeting. Typically you will start with performance (e.g. Sales or customer acquisition), move through progress vs. the plan, and focus on financial progress — i.e. actual finances vs. the budget. If this is done effectively and in an organized way, and if you’ve prepared your board members beforehand, you will have time to discuss and “decide” on any strategic issues — and go through the administrative stuff, like approving employee stock option grants, executive appointments, amendments to the budget etc.
The presentation is your best tool to keep people on topic and on time. Beyond preparing it, you should make sure to send it at least 24 hours ahead of the meeting and make sure people know they are expected to have reviewed it. In the best case scenario you’ve shared at least a draft of it with board members before your 1-on-1 meetings with them and reviewed it with them, so you’re literally cruising through your slides. This helps with time management and also keeps you in control. Your board members are human and if they feel you’re in control, they will let you lead them. This improves the likelihood of getting through your narrative and getting approval for your plans.
[VC] Money Runs Your World
Finance is often the most important part of the meeting. Your board members typically represent investors. Their two levers are labeled “Fire CEO” and “Give Company More Money”. You want them to be ready to do the latter, either because you’re killing it, and you want them to double down at a higher valuation, or because you’re not, and you want them to bridge you until you do.
All investors are always interested in the questions:
- How much money do you still have?
- How long until it runs out?
- Will they have to put in more?
This is the first and most important thing they report at their VC partnership meetings as this is the critical decision for them — should they bet more on you, and defines their ability to make other decisions — can they use the money still in the fund to invest in others or reserve for you.
Discussing finances can be sensitive. Some of your execs might look for the door if you’re not guaranteed a runway. That’s why many companies leave this to the closed session.
Dot Your I’s and Cross Your T’s
It is critical that board minutes are maintained properly and approved properly. I can tell you horror stories about company’s that failed critical VC / M&A due diligence because of negligence in their early days, of employees and consultants that had to be compensated with cash because there was no record of their option grants when they were supposed to be made (impacting their taxation) etc. The more successful you are, the more likely someone is to come after your deep pockets. The previous post made the point that you should prepare to be sued. In court, you will want to be able to show that the board has deliberated all important issues, but not necessarily the details of deliberation beyond the resolutions made. Board minutes should be concise. Even more than this article. They should be approved before or at the beginning of the next meeting, signed, and filed for posterity.
This post was inspired by a talk given by Jacques Benkoski of USVP and discussions with my friend Prescott Watson of Maniv Mobility. If you like it please Clap — if there are 100 claps I will add a post about “how to deal with problematic board situations.”
I am a serial entrepreneur focused on AI, mobility and travel. I’ve started and sold two companies and did time at a VC, CVC and startup studio. For more about my work with entrepreneurs and investors see http://ngvanguard.com
