Startup Boards

Amid all the hustle and bustle of a startup, the board is often overlooked in the beginning, but never for too long as the company grows. The board is the primary instrument for VCs to control a company during later fundraises especially, and it is often the steering wheel for important events in the company: whether to sell, whether to fire management, etc. Yet at all stages it primarily exists serve the company’s stakeholders and the company at large, and this book outlines the ways that the board can be built and used to serve as strategic sounding board for the company. Although mainly for startups after the seed round of funding when most gain their first non-founder board member, and most applicable to startups in the series B, C, or later rounds, the book is extremely comprehensive and detailed and full of anecdotes and bits of wisdom from founders, VCs, and board members who’ve been members of tens of boards and overseen hundreds of companies. It was a good starting point for me to begin thinking of ways to best use and build the board before my startup’s first valuated fundraising round.

Two of the most important things I got from the book was that a good board meeting should be focused on strategic advice and not reporting, and that there should never be any surprises at well-run board meetings. The book describes many founders who see the board as people they have to report to, and so they spend hours of time reporting about the startup and going too deep into the operations of the company. The antidote would be to create board materials summarizing briefs, disseminate a week or a few days earlier, and then spend just 30 minutes reporting, with the rest of the time allocated for strategic decisions on which areas the company should lean into or lean back from on a high level. The wisdom from the non-founder members can come into play in these discussions and they should let the founders know of similar situations in the past they’ve seen and let the discussion drive from there. Throughout these discussions though, there should be no surprises in terms of big decisions being made. Votes in board meetings are purely formalities since any important decision – sale of the company, options awards for management – should be communicated and lobbied beforehand, and board members counted on to vote in some way. If votes are contentious, then that spells trouble for the company some way or another since it shows there was a non-resolved conflict between some factions, perhaps opposing factions within management, or often management versus investors, both of which will cause great damage if the sides can’t compromise.