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Over the past two years I’ve been struggling mightily with the dynamics of “classical VC funded board of directors” and how these boards work. When I hear a VC say “I’m an active board member” it gives me the same nauseous feeling I get when someone says “I’m a value added investor.” I’ve been on some awesome boards, some terrible boards, and everything in between. Today, I refuse to be on a shitty or dysfunctional board and I’m proud that every board I’m on is one that I’d consider to be effective, although they all operate in different ways.
I’ve experimented with a bunch of different approaches across a lot of boards and have been thinking hard about this lately. I’m working on a book called Startup Boards with Mahendra Ramsinghani and have done some interviews about this topic lately, including a chaotic one the other day with James Geshwiler on the Frank Peters Show.
My long term friend Matt Blumberg (Return Path CEO) and I were going back and forth about his recently board meeting (which ironically I missed) and he wrote some kind words about me and his other board members (Fred Wilson – USV, Greg Sands – Sutter Hill, Scott Weiss – A16Z, and Scott Petry – Authentic8.) I asked him if he’d write a guest post about what makes an awesome board member. He was willing – it follows.
I’ve written a bunch of posts over the years about how I manage my Board at Return Path. And I think part of having awesome Board members is managing them well – giving transparent information, well organized, with enough lead time before a meeting; running great and engaging meetings; mixing social time with business time; and being a Board member yourself at some other organization so you see the other side of the equation. All those topics are covered in more detail in the following posts: Why I Love My Board, Part II, The Good, The Board, and The Ugly, and Powerpointless.
But by far the best way to make sure you have an awesome board is to start by having awesome Board members. I’ve had about 15 Board members over the years, some far better than others. Here are my top 5 things that make an awesome Board member, and my interview/vetting process for Board members.
Top 5 things that make an awesome Board member:
- They are prepared and keep commitments: They show up to all meetings. They show up on time and don’t leave early. They do their homework. The are fully present and don’t do email during meetings.
- They speak their minds: They have no fear of bringing up an uncomfortable topic during a meeting, even if it impacts someone in the room. They do not come up to you after a meeting and tell you what they really think. I had a Board member once tell my entire management team that he thought I needed to be better at firing executives more quickly!
- They build independent relationships: They get to know each other and see each other outside of your meetings. They get to know individuals on your management team and talk to them on occasion as well. None of this communication goes through you.
- They are resource rich: I’ve had some directors who are one-trick or two-trick ponies with their advice. After their third or fourth meeting, they have nothing new to add. Board members should be able to pull from years of experience and adapt that experience to your situations on a flexible and dynamic basis.
- They are strategically engaged but operationally distant: This may vary by stage of company and the needs of your own team, but I find that even Board members who are talented operators have a hard time parachuting into any given situation and being super useful. Getting their operational help requires a lot of regular engagement on a specific issue or area. But they must be strategically engaged and understand the fundamental dynamics and drivers of your business – economics, competition, ecosystem, and the like.
My interview/vetting process for Board members:
- Take the process as seriously as you take building your executive team – both in terms of your time and in terms of how you think about the overall composition of the Board, not just a given Board member.
- Source broadly, get a lot of referrals from disparate sources, reach high.
- Interview many people, always face to face and usually multiple times for finalists. Also for finalists, have a few other Board members conduct interviews as well.
- Check references thoroughly and across a few different vectors.
- Have a finalist or two attend a Board meeting so you and they can examine the fit firsthand. Give the prospective Board member extra time to read materials and offer your time to answer questions before the meeting. You’ll get a good first-hand sense of a lot of the above Top 5 items this way.
- Have no fear of rejecting them. Even if you like them. Even if they are a stretch and someone you consider to be a business hero or mentor. Even after you’ve already put them on the Board (and yes, even if they’re a VC). This is your inner circle, and getting this group right is one of the most important things you can do for your company.
I asked my exec team for their own take on what makes an awesome Board member. Here are some quick snippets from them where they didn’t overlap with mine:
- Ethical and high integrity in their own jobs and lives
- Comes with an opinion
- Thinking about what will happen next in the business and getting management to think ahead
- Call out your blind spots
- Remembering to thank you and calling out what’s right
- Role modeling for your expectations of your own management team
- Do your prep, show up, be fully engaged, be brilliant/transparent/critical/constructive and creative. Then get out of our way
- Offer tough love…Unfettered, constructive guidance – not just what we want to hear
- Pattern matching: they have an ability to map a situation we have to a problem/solution at other companies that they’ve been involved in – we learn from their experience…but ability and willingness to do more than just pattern matching. To really get into the essence of the issues and help give strategic guidance and suggestions
- Ability to down 2 Shake Shack milkshakes in one sitting
- Colorful and unique metaphors
Disclaimer – I run a private company. While I’m sure a lot of these things are true for other types of organizations (public companies, non-profits, associations, etc.), the answers may vary. And even within the realm of private companies, you need to have a Board that fits your style as a CEO and your company’s culture. That said, the formula above has worked well for me, and if nothing else, is somewhat time tested at this point!
I’ve had a string of great board meetings lately. They all had several similar attributes.
There were no powerpoint slides: While each company has a substantive monthly reporting package, this was decoupled from the board meeting. I got my taste of financials, metrics, qualitative stuff, and whatever else the CEO wanted me to see on a monthly basis. But I read this independent of the board meeting (which wasn’t on a monthly cadence) and asked questions in reaction to getting the monthly reporting package rather than taking up air time in a board meeting.
The agenda was a simple set of bullet points: In several of these meetings it was written on the whiteboard at the beginning of the meeting. The topics covered were substantive but focused and were “in the moment” of importance, rather than some regurgitated monthly agenda that someone mindlessly edited from the previous meeting and then printed out.
Everyone involved was fully engaged: In several cases there were people on the phone or on videoconference, but they paid attention. And when they didn’t, we didn’t pay any attention to them.
Each topic was a discussion: There was no “reporting out”. The issue was framed by whomever started the discussion and then we went after it. There was no time limit. When people drifted off course (including me), someone (not always the same person) interrupted and pulled us back on course. We drove to answers, and – when we didn’t have consensus, ended up with a range out answers for the CEO to choose from (where we’d support whatever he chose.)
We got closure on each topic: There was no ambiguity. Even when we didn’t end up at a single answer, it was clear who (usually the CEO) owned the decision with an expectation that he would make it.
There was no bullshit: I don’t recall much “noise” – the “signal” in all of these meetings was very high.
The meetings didn’t expand to fill available time: The length ranged from 30 minutes to about four hours. But when we were done, we were done.
Everyone had a positive / constructive attitude, even when dealing with difficult issues: These were not happy, fluffy, mellow, no-conflict meetings. There was plenty of disagreement. There were arguments. But everyone approached them from perspective of solving a problem and getting to an answer.
We had a fun dinner either the night before the meeting or the evening after the meeting: Bottom line – we like hanging out with each other.
I’ve got another board dinner / meeting combo with a CEO who runs great board meetings (and – not surprisingly – a great business). While I’m sure I’ll figure out how to subject myself to more mind-numbing meetings that I don’t want to participate in, I feel like I’m turning a corner and have some impact on changing the board meetings I’m involved in for the better.
I’ve been on a number of board calls this month while I’ve been in Paris. About half of them have been via Skype; the other half have been standard audio conferencing. I’ve also had a bunch of other meetings, discussions, and pitches via Skype.
The quality of the meeting and interaction – when all attendees are in person or via videoconference (in my case Skype on my laptop) – was 10x better than the ones via audio conference only.
I’ve been vacillating between a “physical attendance at all board meetings” approach or “video conference at all board meetings approach” to life. It’s impossible for me to physically attend all board meetings, but there’s no reason why I can’t attend by video conference. I’m now encouraging everyone I work with – as well as everyone that has a board meeting – to have a physical + video conference approach. It is so much better than having people on audio conference.
In several of the meetings, we simply set up Skype on a laptop and put the laptop at the end of the table. It’s a simple, low cost (free) solution, that works awesomely well. In one case, there was more than one person on Skype. Rather than try to do a Skype three-way (which works well also), the company simply set up two laptops with a separate Skype session on each. Skype audio seemed to work just fine in all cases but one, so we did an audio conference for voice and Skype for video.
While there will always be adhoc conference calls on short notice for boards that need to ratify something, for any meeting over an hour, or any scheduled meeting, putting the effort into getting everyone either physically there or on video makes a huge difference.
I know it sounds trite, but it’s remarkable how much better – even in a one on one conversation – the discussion is when it’s video instead of just audio. The calls are higher impact, body language is apparent, and people pay full attention rather than “minimally acceptable attention + email”.
We’ve been waiting for and talking about video conferencing for a long time. I think it’s really ready this time.
I had a board update call recently that inspired me to write the first of my Reinventing the Board Meeting posts.
The call was for a company that is doing great, is extremely well managed, and extraordinarily transparent. Two days before the call a very detailed update package was sent around to the board. It covered the operating characteristics of the business extensively and in a format that is consistent with all of the other reports. It was clear and unambiguous.
The company does a very nice job with the board update call. They don’t force the board to sit through a page by page discussion of the package. Instead, there’s a short overview for each section followed by any Q&A that board members have. This is a pretty good approach. After about an hour of this we spent another 30 minutes on a handful of governance and board related issues. Overall, the call lasted two hours.
When I reflect on the call, we didn’t cover any strategic issues, nor did we discuss anything that would materially impact the company. In addition, there was nothing discussed that couldn’t be handled in email back and forth or flagged for a deeper discussion at the next board meeting.
This board meeting update call is an artifact and is typical of the many board update calls I’ve been doing since I joined my first board (other than my own company) in 1994. I don’t even want to think of the number of hours of my life (which is probably cumulatively measured in years at this point) hanging on the end of the phone trying to stay intellectually engaged in a board update call.
I’ve come to believe that the board update call is worthless. There tend to be three parts – all which are easily separable:
- Business Update: At the minimum, this can be a monthly report that goes out to the full board. Assuming that all of the board members can read and are capable of writing an email, any questions can be surfaced via email. The best companies I’m involved in actually do this weekly and, if you follow Steve Blank’s “Boardroom as Bits” hypothesis, you can turn this into real time info where the board is incorporated into the information stream of the company.
- Business / Strategy Issues: For whatever reason, the vast majority of board update calls don’t have a deep discussion on any substantive issues. They are often flagged along with a shallow conversation but then deferred either to the next in person board meeting, left for interactions between individual board members and the CEO, or dropped on the floor and quickly forgotten.
- Legal / Governance Issues: Inevitably there are minutes to approve, options to approve, and other legal / governance issues to deal with. These almost always can be handled at the next in-person board meeting or by a UWC (“unanimous written consent” sent around by email.)
There were a dozen people on the call I was on including management team members. That’s a full person day of time spent on something that didn’t need to happen. Expensive.
CEO’s – reconsider how you are doing this. And to my fellow board members – challenge the CEOs and the boards you are on to engage in a more effective, continuous way. And to the CEO for every board I’m on – I’m happy to work with you to abolish the board meeting update call if you’d like.
I hate board meetings. I probably have 100 per year which means I’ve gone to well over 1,500 of the past 15 years (I’m sure the number is much higher). The vast majority are excruciatingly inefficient – three to four hours that could be handled in 45 minutes. And even then, it’s unclear that the information covered was particularly useful to the entrepreneurs and management, who are the ones the board meetings should be useful for in the first place. And they don’t merely waste three hours – they burn a day in advance “getting ready” and who knows how much time after following up on random things generated by me and my fellow board members. Toss in travel (since we invest all over the country, I lose a lot of time to traveling) and it just sucks.
Recently, Steve Blank, one of the founders of the Lean Startup concept, wrote two provocative posts about board meetings. Both are really good – go read them – I’ll wait:
Now, I’m lucky. I’ve been railing about board meetings for a while and a number of CEOs of the companies that I’m an investor in have dramatically upped their game around board meetings. I have a handful of single slide board meetings inspired by the early board meetings we had at Zynga. Almost all send out their materials in advance and spend no time in the actual meeting going through them and instead focus on the discussion. And others simply focus the meeting on a handful of specific questions.
Regardless, when I reflect on the amount of my time that I spend in board meetings that I think is generally worthless, I’ve decided I’m going to completely change how I approach this. The tempo is all wrong (I don’t need monthly board meetings for anything as I spend much more real time interacting with the entrepreneurs I’ve invested in). The focus is all wrong (I can read the financials in a few minutes – I don’t need to sit through an extended discussion of them). The discussion context is inefficient (I’m as much a problem as a victim here as I’m sure my other board members get tired of listening to me bloviate.)
It’s time to reinvent the private company board meeting. I’m going to give it a shot.