StartupCFO : Mark MacLeod

VCs attend lots of board meetings. The vast majority of them are sub-par experiences. That goes both ways. The entrepreneurs spend a lot of time preparing for them and don’t get much return on that time investment. And VCs don’t end up contributing a lot and don’t get much return for their time investment either (especially true when they have to travel to said meetings).

This is a shame and a waste of a precious opportunity. The right board can have a huge impact on a startup’s performance by offering an expert perspective on the issues facing the management team, exposing their network of relationships, and helping the CEO develop and grow as a leader.

So, if you’re not getting the impact you should from your board then read on.

People First

In Jim Collin’s seminal book “From Good to Great” his first step for making companies great is to get the right people on the bus. Even before figuring out what a company should do, get the right people around the table. The same is true for your board.

Now, it’s true, you don’t often have a choice – or so it seems. If you have raised angel or VC capital, then you will have investor reps on your board. The choice you have is to make sure you are raising money from people that will make excellent, engaged board members. Not just gunning for the best term sheet.

Do your homework. Reference check people thoroughly. Entrepreneurs will always be completely honest with fellow entrepreneurs. There’s no excuse for not knowing who you’re going to be working with on the investor side.

The ideal early stage investor-centric board for me would be:

Seed Stage – 3 person board: Founding CEO, co-founder, engaged angel who will act as a mentor and champion to the founding CEO.

Series A and up – 5 person board: The above + one VC + an industry expert that *you* nominate.

Some folks advocate a three person board at Series A. As a rule, smaller boards are better, but if it means giving up your co-founder or your angel mentor then that might be a high price.

Mindset Matters

With the right board assembled, you need to approach them with the right mindset. While it’s true that management is accountable to the board, it’s your company. I have seen far too many founders reporting to the board as if they are looking for permission or acceptance of what’s going on. That’s entirely the wrong attitude. The board should be there to give you leverage and guidance and to push you to be better as a CEO. They are not an approval layer. Yes, sometimes a board needs to put the reigns on some things, like slowing down hiring. But that’s just good governance.

Your mindset as a founder should be to push as hard as you can to achieve your vision and make the board work hard to make it easier for you to achieve that vision.

Tactical Tips

Finally, with the right team and mindset, here are some practices that I have seen work well.

Build relationships: Break bread with your board. Have dinner the night before.

Don’t read: The best way to put your board members to sleep is to present a deck they have already seen. Send the deck out in advance and make it clear you won’t be going through it. Therefore, board members should read it in advance and come prepared.

By the way, here is my recommended model board package.

Be selfish: Going back to my earlier point about mindset, the board should be there *for* you, not the other way around. The best board meetings go as follows:

CEO: OK, you’ve all read the board package. I’m happy to entertain any questions, but here’s what’s on my mind….”

If you kick a meeting of like this and immediately enlist your talented directors in helping you think through the biggest issues on your mind, then you will have a completely engaged board. They live for this kind of impact. Draw them in. Get them working for you. Give them homework.

Board meetings should be something you and your board look forward to. They should be high impact, high bandwidth discussions that significantly move the ball forward each and every time you meet.