Managing Your Startup Board

1. !1 Mark Suster Managing Partner, Upfront Ventures Managing Your Startup Board

2. Many entrepreneurs think about boards in the traditional sense as providing “oversight” to their activities. Shareholders Board Executives 2

3. 3 And of course this is the legal & fiduciary role of a board Shareholders Board Executives }

4. 4 But if you want to be truly effective as a founder you should think more about how YOU manage the BOARD. Board Executives Make your board an extended part of your executive team: super-connected, free interns.

5. "I can always get money. Where else can I get very connected and powerful people to do work for me?” !5 - Founder

6. Photo by Brittany Simuangco on Unsplash6 How boards initially see you - it’s a bit like new parents - it’s not adversarial at all • Unconditional love • A sense of responsibility • An important role in “oversight” • Define their own image by your success

7. 7 As you grow what you think you should do & what the board thinks can diverge

8. 8 Ultimately it’s up to you to take appropriate risks - but you must then manage the board

9. The Continuous Board A different way to think about managing your board !9 Photo by Sasha • Stories on Unsplash

10. Board meetings are how most founders think about board interactions but they're actually the least valuable part of your board relationship

11. A great board is a highly-engaged group who knows your business intimately

12. If you build trust they’re the only people you can share most sensitive decisions with

13. Many founders treat boards as administration functions that solely receive quarterly updates. Let’s call this the “waterfall board.” Time Research Design Build Test Deploy Waterfall Software Development User Feedback Waterfall Board Q2 Q3 Q4 Q1 BOD Update BOD Update BOD Update BOD Update

14. The “continuous board" approach involves more frequent interactions – call / text / email at any time for quick input to iterate and course correct. Continuous involvement makes your board feel knowledgable & take ownership of decisions

15. Building a High-Functioning Board !15

16. Each member of a high functioning board… - Knows each other personally. Has a working relationship where they can resolve differences of opinions

17. - Truly understands the underlying businesses. Knows strategy, execution & ﬁnancial metrics Each member of a high functioning board… - Knows each other personally. Has a working relationship where they can resolve differences of opinions

18. - Finds this board assignment important relative to their other time commitments Each member of a high functioning board… - Knows each other personally. Has a working relationship where they can resolve differences of opinions - Truly understands the underlying businesses. Knows strategy, execution & financial metrics

19. - Doesn’t have incentives that are misaligned with the company, its shareholders or other board members Each member of a high functioning board… - Knows each other personally. Has a working relationship where they can resolve differences of opinions - Truly understands the underlying businesses. Knows strategy, execution & financial metrics - Finds this board assignment important relative to their other time commitments

20. - Knows it’s his or her ﬁduciary obligation to serve interests of the company ﬁrst & foremost Each member of a high functioning board… - Knows each other personally. Has a working relationship where they can resolve differences of opinions - Truly understands the underlying businesses. Knows strategy, execution & financial metrics - Finds this board assignment important relative to their other time commitments - Doesn’t have incentives that are misaligned with the company, its shareholders or other board members

21. Ultimately it’s in your interest to invest in creating these working relationships - not just with you but amongst non-exec board members.

22. A board that knows and likes each other is more likely to resolve hard conflicts.

23. • Schedule board meals / social time • Encourage non-exec board sessions • Help plan non-exec board calls Building relationships takes effort

24. Board Members

25. Source: Mark Suster, Both Sides of the Table Your board will increase over time and it’s highly likely you won’t retain a board majority (and that’s ok) Time Round Seed • 2 Founders • Maybe Seed Investor 3 Person D+ • 1-2 Founders • 3 VC Investors • 2 Independent • 1-2 Board Observers 7 Person B • 2 Founders • A + B Investor • 2 Independent or common 5 Person Founder Controlled Independent or Investor Controlled

26. What makes a great Independent Board Director? A Good Mentor Industry Experience Local Has Skin in the Game Time to Commit Startup Experience An Honest BrokerThere in Good Times & Bad Diplomatic Source: Mark Suster, Both Sides of the Table

27. Board Meetings !27

28. Photo by Pineapple Supply Co. on Unsplash If you ask your board about your logo or brand colors, they will debate it for 30 minutes …if you do this, that’s on you

29. Executive Management • Strategy, monthly budgets, hiring / firing, financial results • Sales, marketing, pricing, product, support, HR, finance It’s your job to “run the company” and not let your board micro-manage operations. It’s your job to keep board meetings “at board level.” Source: Mark Suster, Both Sides of the Table

30. Executive Management Board of Directors • Strategy, monthly budgets, hiring / firing, financial results • Sales, marketing, pricing, product, support, HR, finance • Annual budget • Strategy & performance • Fund raising, M&A, audit, executive compensation • Exec team hiring / firing A board’s role is to provide oversight of the company on behalf of all shareholders. Source: Mark Suster, Both Sides of the Table

31. Executive Management Board of Directors Investor Governance • Strategy, monthly budgets, hiring / firing, financial results • Sales, marketing, pricing, product, support, HR, finance • Annual budget • Strategy & performance • Fund raising, M&A, audit, executive compensation • Exec team hiring / firing • Fund raising, M&A, debt • Scope and structure of business Some key decisions also require approval from shareholder groups, beyond board approval. Source: Mark Suster, Both Sides of the Table

32. PresentDebate In thinking about how to run any individual board meeting it’s important that you understand what you’re trying to achieve Of course each meeting can be a combination of both activities

33. Inform Decide It’s equally important that you know your goal for the meeting. Are you seeking to make major decisions or to align board members? Not every board meeting requires a big decision to be made

34. PresentDebate Inform Decide Filibuster A common mistake is to spend BOD meeting presenting more materials than a group can digest.

35. A better use of time is to debate the most strategic topics being weighed by the exec team, tapping your directors’ collective wisdom. PresentDebate Inform Decide Advice

36. PresentDebate Inform Decide There are times where exec teams require decisions and want board sign-off to underline a key move you plan to make. Approval

37. • M&A • Capital Raise • Annual Budget • Hire / Fire Critical Executives There are times when you really need the board engaged in an existential question PresentDebate Inform Decide Huge, Strategic Decisions

38. If you have four board meetings a year you can run different playbooks based on the board meeting Q2 Q3 Q4Q1 • Next Year’s Budget • Detailed meeting with heavy debate • Broader exec teams attend / present • Board lunch / dinner • Strategy session • Board only • Update session / deep dive on business • Broader exec teams attend / present Example

39. Boards. At times your best cheerleaders, coaches, mentors and disappointed mom & dad.

40. Remember that board members have personal identity tied up in your successes & setbacks. They aren’t rooting for failure.

41. Photo by Brittany Simuangco on Unsplash41 But even your biggest champions have oversight responsibilities to encourage what they ultimately believe is right, which isn’t always what you want to do.

42. If you proactively communicate with and manage your board you’re much more likely to stay in sync.

43. !43 Mark Suster Managing Partner, Upfront Ventures Managing Your Startup Board Thank You

Managing Your Startup Board

Managing Your Startup Board

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