This is the final part in a series on getting the most out of your startup board of directors. If you haven’t already, please read Part 1: The Framework, Part 2: The People, and Part 3: The Board Package.
You’ve come so far, my friend! You’ve got yourself in the right headspace about how your board is your not-so-secret weapon, you have the right people on your board, you’ve established a highly functional, productive, and trusting relationship with them, plus you’ve created a killer board package. Now it’s time for… dum dum dummmmm, the meeting. In all honesty, once you’ve done the above things well, the meeting is the easy part.
Who attends board meetings?
Clearly, all of your board members should be in the room, but sometimes a board member misses a meeting. This is okay (but far from ideal) as long as he/she/they have the information on how the company is doing, so they can satisfy their duty of care obligation. If you’ve put together a great board package, that should cover most of it, but you might want to schedule a follow-up with the absentee board member to cover any discussion items from the meeting itself. Know that if you’re missing board members at the meeting, you’ll need a quorum to vote on any official board business, like stock option approvals.
Commonly, your attorney will join to act as board secretary and can make sure that you take proper steps to vote on necessary items. Having your attorney in the room may or may not cost you legal fees (some law firms include this as part of their overall package), but it ensures your board minutes and decisions follow the bylaws of the company and can keep you out of hot water with your broader shareholder group. Trust me, it’s worth the investment to ensure it’s done correctly; don’t be miserly here.
Other individuals in the room might include the CEO’s admin, any official board observers, individuals from your leadership team, or guests of your board directors (like the junior associate at a VC firm who is shadowing the senior partner).
When you add all these people up, it can be quite a lot of individuals – and that can change the dynamic in the room. It doesn’t have to be a bad change, but it is a change nonetheless and *could* push against all that effort you spent creating a trusting and collaborative relationship with your board. When you’re trying to have meaty discussions with relatively unknown people in attendance, some directors might be less forthcoming or some guests might get too opinionated. For instance, a director might be less inclined to voice an opinion about cutting a whole product line if the chief product officer is in the room, or that junior associate might soapbox about using some hot new HR tool and no one in the room wants to interrupt him.
Being sensitive to the dynamics and setting expectations with people far in advance will help minimize any adverse effects. For instance, you might discuss with an investor board member in advance if he/she/they plan to bring anyone along. This opens the dialogue for discussion and allows you to come to agreements in advance, such as yes you can bring one, as long as it’s the same one, and you expect him/her/they to leave the room during the executive session. Or you might share with your executive team that they can sit in for the CEO overview and the KPI discussion only, or maybe you want them in attendance for the discussion around regional expansion. It is great to expose your C-Suite to the board so that there is a relationship, which will foster more trust on both sides, and your leadership team can help you see blind spots or pick up on nuances in the room that you miss. Yet keeping the team in the room for the entire discussion can be counter-productive. Setting expectations of their role and participation before the meeting so that when you thank them they leave on cue if that is what you want. Just have the conversation up front, be explicit about what you expect, what’s okay and what’s not okay, and conversations will be much more productive.
How to run the board meeting
For startup boards, most commonly the CEO runs the meeting as there isn’t usually a chairperson of the board yet. Usually, the CEO calls the meeting to order, will introduce any presenters, ensures the meeting stays on target, and will adjourn the meeting. The board secretary (often the company’s attorney) will take minutes, and either the CEO or the CEO’s admin will record any necessary follow up items or to-dos generated from the meeting.
Virtual vs in-person board meetings
I’m not going to lie here, during COVID, when board meetings went virtual, it was a saving grace. The amount of time I spent traveling just to board meetings, staying in hotels, being away from my family and spending time in transit when I couldn’t be productive – it was a massive drain on my energy, my happiness, and my schedule. Nearly every board member I know was secretly elated that we weren’t allowed to travel for board meetings. Time with my family skyrocketed, my stress levels dropped, my productivity improved because I reclaimed all that transit time to get things done, and my health improved because I could better control my diet, exercise, and sleep. A happy, well-rested, productive board member is great for your business. However, there is no denying that meeting face-to-face is significantly more productive and fosters trust faster. And as we all know, it’s so much easier to let your mind wander when you’re on a zoom call than when in-person. My suggestion here is that if you’re creating your board for the first time, consider hosting the first year in person, so people get to know one another, and then move to alternating in-person and virtual meetings after that. If your board is already established, consider a balance between in-person and virtual meetings (maybe half and half).
How long do board meetings last?
It can vary between companies, but a good amount of time is between 2-3 hours. Any more than 3 hours and you’ll start to lose the attention, concentration, energy, and quality of the people in the room. Any less than 2 hours and you probably aren’t getting to any meaty content and aren’t getting the most out of your board members. In writing this article, I was talking to a CEO who said she had a 6-hour board meeting coming up. SIX HOURS?! The only time this is acceptable is if you’re doing some very long-term strategic planning or if you’re tackling a bloody topic and can’t leave the room until it’s decided – and it should be rare, very very rare.
Board Meeting Cadence & Notification
You should have the next 12 months of board meetings planned out. Almost every person in the board room is busy, they likely book out months in advance, and are likely on multiple boards with a similar schedule as yours. I cannot tell you how many times I’ve had board meetings scheduled for the same day which required rescheduling somewhere. If people have to travel to your board meeting, that means you’ll either have people missing it or dialing in remotely, neither of which is advantageous to you. Book out your board meetings 12 months in advance, and please don’t wait until December to book out the next year’s meeting schedule.
For startup boards, where the company is doing well, It is common for board meetings to be quarterly, however, there are many exceptions to this. I’ve seen some boards meet every 6 weeks or every other month. Sometimes I’ve had board meetings weekly when the company was close to an acquisition, when we were watching cash flow like a hawk, or when something was going on that was life-threatening. Quarterly board meetings are a healthy rhythm; any less than that might be okay with a well-established company where things aren’t changing that often, and any more than that might be exhausting unless massive changes are happening and everyone needs to keep a much closer eye on the situation.
The Board Meeting Agenda
If you’ve read my previous posts in this series, then you’ve already sent out the board package 4-5 days ago, through explicit expectation setting, your board members have already read through the package, you’ve answered many of their questions (saving the meaty ones for the meeting), and you’ve already delivered the agenda for the meeting. Now all that’s left is to HAVE the meeting. Relative to the board package you sent out, your meeting will likely have 7-8 sections. A typical agenda might follow something like this:
- Welcome & Get situated: 5 min // 3:00 – 3:05 pm
- Board Business: 5 min // 3:05 – 3:10 pm
- Follow Up: 5 min // 3:10 – 3:15 pm
- CEO Update: 10 min // 3:15 – 3:25 pm
- The Dashboard & Functional Area Updates: 30 min // 3:25 – 3:55 pm
- Break: 5 min // 3:55 – 4:00 pm
- Strategic Topic #1: 40 min // 4 – 4:40 pm
- Strategic Topic #2: 40 min // 4:40 – 5:20 pm
- Executive & Closed Session: 10 min // 5:20 – 5:30 pm
- Adjourn: 5:30 pm
- Dinner: 6:15 at your restaurant of choice
Please note that it is okay to shorten some sections or let other sections run long to accommodate your objectives. Sometimes you might need more time to finish an important discussion. Don’t set the times or durations in stone, rather use them as guidelines to help keep you on track and achieve all your objectives. I would however push you hard to end the meeting when you say you’re going to end it, and if you’re consistently pushing beyond your scheduled time allotment, that should be a cue that you need to improve your time management and room management skills. I’ve had to drop off board calls because I had another call adjacent and ended up missing important discussions. Time management is a discipline – learn it well and it will serve you well.
Allowing everyone 5 minutes to get settled, engage in pleasantries, and get in the mindset of the board meeting is a great way to kick off the meeting. One of my favorite boards started with the founder having the whole room sit in silence for 3 deep breaths (yes, I’m from Boulder, but it’s effective) and then he’d state the mission and purpose of the company to help focus us on the task at hand. It might sound corny, but it worked wonders to get people out of their individual lives and focus on the company.
This section is anything that might require a formal vote but doesn’t necessarily require a lengthy discussion – for instance, option grant approvals. I like to see this section up front so it gets done without having to schedule a follow-up call because the meeting ran long, but many CEOs put this at the end. Remember to have the vote – your attorney/board secretary will keep track of who voted yay or nay. If you don’t know what kind of decisions are required for a formal board vote, it’s usually listed in your bylaws and your attorney will help identify what they are. It usually involves any decision around equity or cap table, fundraising, M&A, the incurrence of debt over a certain dollar threshold, C-Suite hires (compensation approvals), and more. Please learn what they are now so you don’t inadvertently run afoul of your stakeholders. Also, some of these items can be handled on platforms like Carta (if you use this) where the signatures are collected digitally and ahead of the meeting so that time is not taken up in the live meeting.
This section is uncommon but highly effective, and I’d love to see more founders put this in their meetings. It’s simply a ‘close the loop’ section, where any open items from previous meetings get mentioned here. So for instance, in the previous board meeting, you might have had a strategic discussion on expanding locally vs opening new offices outside of the region, and you might have received some feedback that you should be including your customer acquisition costs in your cost of goods sold. The follow-up section just allows you to circle back with your board and say “after our discussion last meeting, we decided to go deep locally before opening another office outside of CA” and “thank you for the input on including CAC in our COGS – we’ve done some research and agree with you, thus have made that change – so you’ll see a lower gross margin now but that’s because it includes CAC”. I cannot tell you how much this simple act builds trust in your boardroom and radically improves your communication abilities. It’s 5 minutes of your board meeting, do it. You hate it when you have a discussion with a direct report and then have to chase him to find out what happens, so don’t do it to your board. The best time to add elements to your follow-up section is right when the board meeting ends – you’ll add those elements to the agenda for the next board meeting so you won’t lose them.
It is worth re-stating how much this section of the meeting builds trust with the board. Assuming your board has “been around the block” – they know things will not always go well. They know building a great business is really, really hard. Knowing that they have your back and trust your work is critical. Closing the loop consistently is a huge level-up in this regard!Ari Newman
This section is your narrative of the business, it’s your qualitative assessment of how things are going, both good and bad, over and above the quantitative assessment we’re about to hear. This section is your time to help me understand what’s really going on, what you need help with, what you’re afraid of, what you are proud of, and more. I love this section of the board meeting; if I listen to this and only this section, I should have a great idea of how the company is doing and what I can do to help. Be authentic and vulnerable here – do not bullshit or sell a story. One of the best conversations I remember was with a CEO who admitted that while things seemed to be going well, she was struggling personally and shared that she had thoughts of stepping down as CEO. We had a wonderful discussion about what part of the job she loved, and what part she didn’t, and the collective wisdom around the table suggested various paths forward. (In case you’re curious, she decided that hiring a COO was a good move to help move some of the stuff she hated off her plate, and 1 year later, she still wasn’t loving her life, so we supported her plan to offer the COO the CEO role and she moved into a head of product role. That company is now crushing it and everyone is in a much better place, and the founder/CEO is so much happier). My point is if you’ve done the right work in advance, this is the time to be vulnerable and treat your board members like the partners they can be.
The Dashboard and Functional Area Update:
This section is a great opportunity to include members of your executive team, and let them present their respective areas. Each area should have high-level KPIs, over time, progress against any goals, and a discussion on what’s working and not working. For instance, how does your sales funnel look this quarter relative to last quarter? What’s going wrong, and what are your plans for fixing it? Have your sales lead spend 5 minutes on it. For product, how is the product evolving, what do customers think, where they are happy and unhappy, what your roadmap looks like, and how that fits in with the broader market. For people, what does turnover look like? What are your engagement metrics? How are you training and ensuring your people become the best in the industry? For finance, how long is your runway? How has burn changed over time? Show me actuals, over time, and then show me the budget to actuals for this year. Give me the line items so I can ask questions and see relationships between line items – like “no wonder we haven’t hit our sales target yet, you have less than 1% of revenue going towards marketing” – or “you have 20% of revenue going towards marketing and that’s only generated a small pipeline of customers, let’s figure out what’s wrong with the marketing message”. Remember to tie roadmaps and plans back to the company’s strategic goals for the year. What are we doing? Why are we doing it? What are we learning? – All things the board should be in sync on.
Something to understand is that reports are helpful when they show the metrics over time. Our jobs ensure seeing opportunities and problems in advance, so that means understanding the trends of the business. Your executive team (and consequently you) tend to focus on the firefight that is the here and now, and while that’s not bad, you need intentional time to lift your eyes and look at the horizon, rather than at your feet. The board meeting and this dashboard presentation can be a quarterly forcing function to help the team refocus on the trends, both positive and negative. I don’t want to see the information just over last quarter, or even just this year. I want to know what it was 2 years ago and how it looks today. Don’t hide this information even if it’s bad – bring us along on your journey of how you’re going to fix it and if you don’t know, let us help you come up with options.
Investors and board members are pattern-recognition machines. This is a good thing as they see many board decks, reporting packages, and business models constantly. You are looking at one and only one, yours, all the time. Between drinking your own Kool-Aid or not having the wide exposure to other companies per above – part of the value of the board is bringing this broader lens into the room and helping the company. So the “performance over time” data helps clarify the trajectory of the thing and speeds up the ability of the board members to add value. If a board member has to rifle through 4 previous meeting packages to see data over time you are doing it wrong!Ari Newman
It will take some time, but developing a simple dashboard with the right metrics is very hard to do well, but once it’s right, it will allow you, your executive team, and your board to row in the right same direction, focus on the right opportunities, and spot challenges before they become full-blown problems. Then having each of your executive team members present each of their respective areas helps develop relationships and foster better communication and collaboration in the company. If done well, this section doesn’t need to take a long time, many of the easy questions can be answered before the meeting when the deck is sent out, and your exec team gets facetime with your board.
If you have the right people in the room, bringing them strategic discussions can be a huge accelerant to your business, not only through spotting opportunities that you might not see, but also to help you avoid problems that could take months, or worse, could develop into an existential crisis. Here is a non-exhaustive list of strategic discussions I’ve been a part of at the board level, to help give you some ideas of how to leverage this smart group of people assembled around you:
- Whether to expand across geographies or focus on expanding inside a geography.
- Whether to go deep in one customer niche or expand across niches.
- Whether to pivot the product marketing from B2B to B2C.
- It’s working…I think! How to know when to scale.
- It’s not working. To pivot, or sell/shut it down and return capital.
- Deep dive and demo of a new product prior to launch.
- Here are our KPIs – are they the right ones, what are we missing?
- Amidst rapid growth, how to restructure the company’s org chart.
- We have acquisition interest! To sell the business versus grow the business debate.
- In-depth walk-through of the sales process, from first exposure to close.
- Financing strategy – raise a round, from who, and the inclusion of debt as a vehicle.
- High employee turnover – help!
- Upcoming possible partnership with a large customer – how to structure.
- Should I hire a COO
- Is now the right time to hire a CFO over my VP of finance
Furthermore – consider setting a goal for each discussion. I first heard this orientation from Tim Miller, and I’ve adopted and used it ever since. For each topic, rate it as one of the following 3 options:
- For your information only – useful for a deeper understanding of your sales process, product, etc that could help spot holes.
- I’ve decided but I want your input before I act, the goal is to generate a premortem leveraging your experience.
- I don’t know what I’m going to do yet and need more options; the goal is to generate 3 possible options with the positives and negatives of each one.
I love this framework because it reminds the board that you, the CEO, are in charge of operational decisions, but it helps the board feel included and part of the decision, which also means they’ll feel responsible if it doesn’t go well and will help you solve it. I also love it because you’re leveraging the brain trust in the room which includes their network of individuals. So a board member might not have a good suggestion, but they might know someone who would, and talking about it at this level of detail will generate those connections.
If everything is a 1 and you’ve already made all of the decisions with the team, even strategic ones – you are just reporting to your board and you have failed at building collaboration. Be sure to make strategic discussions actual discussions, and be prepared for different opinions.Ari Newman
If you do all of this well, if you’ve established trust, if your communication is thorough and accurate without being overwhelming, if you’re closing the loop and fostering excellent strategic discussions and gathering opinions from your board and really ‘hearing’ them, then your board will trust you and will likely not make decisions that counter yours. Then input from your board becomes ‘just data’ and they trust you to make the right decisions, allowing you to make the final call. But if you don’t do this well, you’ve created an environment where they’re essentially forced to second guess you, micromanage, and want to weigh in on all of it, which becomes a drag on everyone, especially you.
This can be the most valuable, fun, and engaging part of the board meeting. Be careful that you aren’t just doing this for show though, it will read as inauthentic, it will be an enormous waste of everyone’s time, and it will seed resentment and distrust.
Executive & Closed Session:
With this part of the board meeting, you’re creating excellent board hygiene so that when you actually need these sessions, it’s not freaking anyone out, and more importantly, it’s creating space for those conversations to happen in the first place, which can head off problems beforehand. With the executive session, you’ll excuse anyone who doesn’t have a board director title, so all guests, board observers, and more will leave the room, and you the CEO will stay to talk about any topics that might be too sensitive or confidential for other ears. A closed session is where any operational board members (most often the CEO) will leave the room, even if you’re on the board. This can allow the other board members to discuss your performance and/or compensation (scary I know, but do this and you’ll get better quality feedback and will help create a rhythm around the board evaluating pay increases).
For most board meetings, there isn’t anything to talk about, so the guests leave, the remaining look around the table and say “anything to discuss?” and the answer is no. Then the CEO gets up and says “I’ll give you all space to discuss any additional topics”. Usually, there are none, and the meeting is adjourned.
A meeting before the board meeting?
Sometimes, when there is big news (like my co-founder is quitting, or we have a serious acquisition offer, or we just got sued), or when something incredibly sensitive and you aren’t sure how people are going to react, or if there is a particular board member that can be volatile in the board room, it might make sense to get some, or all, of the board members on the phone individually before the meeting to give them a preview of the news. It’s never a good idea to surprise your board with bad news in a group setting – people often need time to process big or bad news, and it’s best to give them that space individually and privately. Plus you’ll want to embrace the chance to talk it through 1:1 with your board to head off any potential problems. This way, no one is surprised when you discuss it in the boardroom and you generally know what everyone will say and how they will act. However, you can take this too far. On one board, the founder was so nervous about how anyone was going to react to anything in the board room, that he previewed everything with each of us all the time – so the board meeting ended up just being a review of the phone call we just had. It was a colossal waste of everyone’s time, especially the CEO’s, and he never got to take full advantage of his board because, by the time the discussion came around, no one participated. We’d already said what we thought and didn’t get the benefit of hearing each other’s debates.
Arguments and debates in the board room?
Many people hate conflict, and in a CEO, this can be a fatal flaw. Conflict in itself isn’t inherently bad. When conflict is about a topic, the opinions that generate the debate can be extremely helpful because it allows you to get as many varying perspectives before making a decision. It can uncover great ideas and hidden threats. However, conflict becomes destructive when the debate dissolves into name-throwing and personal insults. Keeping debates and arguments focused on topics, rather than on people, helps you develop a powerful information engine in your company. But it does take some practice refereeing and getting comfortable with it.
In the boardroom, learn to encourage debate. When everyone agrees, deliberately ask someone to take the opposite stance and argue against it to uncover any biases or withholds. Ask for each person’s opinion, both positive AND negative, before making a decision. But help keep it focused on the topic, rather than the person. “I think this will fail because we don’t have the budget to focus marketing dollars” is a very different argument than “this will fail because it’s a stupid idea”, which is an attack on a person. When you hear an attack on a person, especially if that person is you, learn to take a step above the situation and get curious. “You say that this is a stupid idea, but I’d like to understand why you think it’s stupid.” Most people, when attacked, will go into defense mode which further entrenches them into their opinion. But if you get curious, rather than defensive, you’ll uncover a wealth of information and simultaneously will help train your board to be more thoughtful and precise in their delivery of feedback. If you learn how to encourage, even incite, healthy debate – you’ll win not just in the boardroom, but as a leader of anything you do. This is leadership 5.0, it’s a tremendously powerful skill that is learnable with practice and presence of mind.
Well, you’ve made it. If you’ve read and implemented most or all of these practices, you’re well on your way to building and growing a strong, healthy company. You have the right mindset about what a powerful weapon your board can be, you’ve picked the right people to help you guide your company to success, you’ve built trust and are working with them in the right ways, your documents are lined up, and you’re running healthy, productive board meetings. If you want an even deeper exploration of startup boards, check out the book Startup Boards by my friends Brad & Matt. Good luck and let me know how it goes!