I recently did a talk on creating and navigating your first board of directors with friend and colleague Tim Miller, the CEO and Founder of Rally Software which was acquired by CA in 2015. We spoke to a group of Techstars founders that were thinking about creating their first board, or optimizing the board they already had. I sit on several boards, some highly functional and some dysfunctional, while Tim Miller has both had to manage his own board AND sits on others’ boards. We both pulled best practices together and I thought I would share them with you here. Before I dig in, for anyone interested in the topic, there’s a great book published by Brad Feld & Matt Blumberg called Startup Boards. This book was incredibly helpful to me as I navigated my own role as a board member, and it’s a great resource for founders too.

Special shoutout to my friend Ari Newman, Managing Partner at Massive who served as an editor, contributor, and sounding board for this series.

I’ve divided this into a series of 4 blog posts:

At Techstars, through our accelerator programs, we work with close to 400 companies a year across 5 continents.  Through Startup Weekend and Startup Week, – the numbers are in the thousands of companies.  But yet we can’t help them all.

However when two of our mentors told me they were writing a book on the topic, I got excited – because content does scale.  Every company could be helped by their book.

The book is The Startup Playbook, and the two mentors are Rajat Bhargava and Will Herman.  Between the two of them, they’ve run almost 15 companies, with 6 exits, 2 IPOs, dozens of investments – they’ve seen close to ‘it all’.

They’ve tried to encapsulate their learnings into a book that starts from even before the seed of an idea. It starts by asking the question of whether a startup is right for you. Then, it drops into building out an idea, assembling a team, raising money, and the on-going execution.

It’s a refreshing book that sides with entrepreneurs and shares that perspective. If you are a founder or on a startup team, I highly recommend you grab a copy*. You might walk away with some new insights that will change the trajectory of your business.  On sale this week only for $.99 at Amazon!

*Disclaimer for the cynics out there: I do not get affiliate sales from this – I just think Raj & Will’s book is THAT GOOD.

If you’re an entrepreneur looking to raise capital – understanding the terms in venture deals is critical.  Having legal counsel is important, however it’s your startup, so you’re ultimately responsible for the outcome of any deal.  Given VCs and investors have a lot of practice because they do many deals a year, you generally will be outgunned because you just don’t have the same level of experience.

Brad Feld & Jason Mendelson helped level the playing field when they published the book Venture Deals.  But if you want to practice – if you want to really turn information into knowledge, then take the Venture Deals course (it’s free!).  You’ll build a team and work on elements of a venture deal with your teammates.  The course runs about 6 weeks long and starts on May 14th.  It’s great for both the novice and experienced entrepreneur (and investor) – I took the class last time and will be auditing it again just as a refresher!

Thanks to Brad & Jason for creating the content, and thanks to Techstars, Kauffman Fellows, & NovoEd for providing the resources necessary to make this course free and available to the general public.

Last week I had a conversation with one of my portfolio companies, one I hadn’t spoken to in a while.  He wasn’t great at communicating over time, and honestly, neither was I.

When I asked him how it was going, he broke down in tears and unleashed a torrent of issues on me.  The biggest issue was the death of a loved one which was traumatizing to him, causing him to evaluate his own life, and he decided that being the CEO of his company wasn’t where his heart was anymore.  But there were a series of other issues that had been going on for a while, including some operational mistakes, and some fighting with one of his other key investors.

We spent a long time talking about possible solutions for the businesses (hiring a new CEO, sell the business, etc).  We also spent a lot of time digging into why he felt that his heart wasn’t in it – he felt that he was in over his head (most entrepreneurs I know feel this way).  We talked about possible solutions for him, individually to find peace.  By the end of our conversation, he expressed remorse for not coming to me sooner.  He was afraid of how I would judge him.  Yet he was relieved when all I did was support him.  I gave him some guidance on how to talk to the investor he was fighting with – which was just being honest, open, and vulnerable.  This founder left my office, and headed straight for that investor’s office to have that difficult conversation, the result being the investor is now trying to help the CEO navigate this tough time.  The CEO turned an antagonistic relationship around.

I see this behavior happen often, where CEOs are afraid to come to their investors.  Maybe they’re afraid of being judged, or what the investor will say, or developing tension and friction in the relationship.  But any experienced early-stage investor will tell you that bad stuff can, and will, happen to your company.  We don’t think the world is perfect.  In fact, many angel investors get involved just so they can help entrepreneurs figure out problems.  But hiding issues, glossing over them, and not communicating with your investors about what’s working (so we can celebrate with you!) and what’s not working (so we can help you figure out how to solve it) is detrimental to your startup.  We’re on the same team as you, we want what’s best for your startup.   If you find yourself in an antagonistic relationship with one of your investors, you should be asking yourself a) in what way am I contributing to this relationship being antagonistic, and b) did I do enough homework on this investor to know if they have a pattern of bad behavior with an entrepreneur.  Notice that both the subjects there are you, the CEO.  Not the investor.

The earlier we’re brought into the circle of trust, the earlier we can help fix what’s wrong.  Being honest, open, authentic, and vulnerable with your investors is an advanced skill that every entrepreneur should learn.   Communicating regularly with your investors about the highs and lows is a reflection of how open you’re being.  It could just mean the difference between the success and failure of your startup.

My friend John Bliss just shared with me this great study by DocSend on what they learned by studying 200 startups that successfully raised capital.  The info in it is great, everything from sample decks to # of investors you need to contact to where to focus efforts.  There are a few areas I disagree with (mainly the structure of the deck), but they are minor and overall agree with the items in here.

If you’re looking to fundraise at the seed or series a level, check it out!