Thread by @dunkhippo33

Friday tweet thread about Board Seats.

What are they? Why should you care? Who should have them? How to think about all this as a founder?

thx @zsilvs303 for the suggestion!

Read on >>

1) Whether you realize it or not, your startup has a Board. It's likely just you (and your co-founder).

Your Board is a group of people who oversee governance of the company and look out for the shareholders of your company.

2) When your Board is just you, you're not only the management team running the day-to-day, but you are also the governance of the management team.

This is fine in the beginning, because you also probably own the whole co.

3) However, as you increase the number of shareholders at the startup -- adding employees and/or investors, expanding who's on the Board is good practice, because they will have your shareholders' interests as a whole at heart.

4) Regardless of who is on your Board, technically you're supposed to be having Board mtgs on a regular cadence. But when it's just me, myself, and I, often founders don't do that.

But even if it's just you, I think it's still good practice to do Board mtgs.

5) What should you talk about at the mtg?

-quick recap of the status of the co
-discuss top issues at hand
-strategize for near term

This is good practice to do at your company even if it's just you and setting aside regular cadence to do so is impt. It's easy to get too busy.

6) If you have other ppl in the mtg, you should create a concrete agenda and share info AHEAD of time so ppl can come prepared and make the most of the mtg time.

7) What powers does your Board have?

They act on behalf of shareholders and can voice concerns they hear from shareholders. They can also fire you as CEO! (They are technically YOUR BOSS)

8) This is why picking your Board carefully is impt. Who should be on your Board?

Only people you trust.

At seed, unless you have a lead investor who is putting in 50%+ of the capital, it is not standard to accept angels or smaller VCs onto your Board.

9) This is why many seed-stage companies do not have external Board members.

If an angel group (or indiv angel) asks for a Board seat at this stage and is NOT putting in most of the money, you should not feel pressured to bring that person onto your Board.

10) At the series A, though, basically ALL series A firms will want at least 1 Board seat.

Typical Board compositions at the A may be 3 seats -- you (as CEO) + 2 major investors.

11) Or it could be 5 -- you + your co-founder, 2 major investors, and 1 third party (typically selected by the lead with your approval)

Whatever the composition is, you want to be able to trust EVERYONE on the Board.

12) This is why more than the name of your series A firm and its reputation, you should care about your SPECIFIC point of contact (and presumably Board member) at the firm you are working with.

13) If you don't know that person super well, it's impt to backchannel and do ref checks.

Talk to founders that that person has worked with closely. What was it like to work w/ that person during BAD TIMES? Try to talk to a founder whose co didn't go well.

14) My biz partner @ericbahn likes to ask these qs of references:

A) What would you grade this person on a scale of 1-10 (10 as best)? And why?

B) What would it take to get that person to a 10?

The answers to B are illuminating.

15) Lastly, a lot of ppl really groan about having a Board, but if you have the RIGHT Board, they can REALLY be additive -- help you grow the company and yourself by opening doors and providing great strategic advice.