Thread by @EvergreenMEP

Startup boards can be transformational if built and managed properly. They can be destructive and a massive time and energy suck if not.

Here’s a 🧵 on how to build and manage a board for maximum leverage and benefit. 👇🏽

Understand their role.
There are usually two types of boards that a startup may have: Fiduciary or Advisory. If you have taken outside capital, your board is fiduciary.

(This thread largely deals with funded startup boards.)

A board has three overriding responsibilities:

✅ Hire the CEO (and maybe CFO)

✅Corporate governance (budgets, capital investments, equity grants, etc)

✅ Change the CEO if it becomes necessary

But, you should expect more:

✅ Sales support for large deals requiring credibility to back up your staying power (esp important in enterprise deals)

✅ Fundraising support for next round capital

✅ Recruiting support for top talent and leadership

(More on why you should never stop fundraising in a future thread.)

✅ M&A support to find potential acquisitions and DD if necessary

✅ Strategic insight into long term growth of the business

👇🏽

Choose your members wisely.

Too many founders put little thought into member selection by picking friends they trust, business associates with little value to add or other employees creating a feedback loop.

Consider:

✅ Who has built a company to a level I aspire? This means OPERATED, not just invested in it.

✅ Who will challenge me to go outside of my experience and comfort zone? (I once had a board member convince me to acquire a company 4x our size then helped me do it.)

✅ Who knows the people I need to know?

Occasionally a weak VC firm will try and saddle you with new associates with no operating experience.

Don’t agree.

Ensure when negotiating the term sheet, you agree on board members with real experience, not a HarvStan MBA, freshly made Patagonia vest and an Excel login.

Even if not venture backed, the member selection principles apply.

👇🏽
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Independent members matter

An independent board member is not aligned to company management or investors. Often they bring industry experience or some unique background.

Find one.

When the interests of the founder/management diverge (they will), an they can break the log jam and provide an impartial voice.

If negotiating a term sheet, insist on one. Good VC’s will embrace the governance.

If they push back, consider it a major red flag.

👇🏽

Own the agenda.

An effective board meeting should never be a bunch of reporting. Send me the financial, sales, renewal reports in advance. I can read and ask questions.

If built properly, the combined value of time and experience of the board is enormous.

Use it wisely. Reciting reports is not using it wisely.

Here is a sample 90 min agenda:

- 15 mins - CEO high level of what’s going well and not

- 15 mins - Q&A on pre-distributed reports

- 45 mins - deep dive topic on strategic topic

- 15 mins -CEO requests of board with who, what, when

(E.g. need someone to call a key potential partner, meet with a new VP Sales candidate, etc).

Consider a meeting cadence of 30 min monthly operating review that includes previous month financial close, sales metrics/pipeline, customer renewal metrics/pipeline.

Then 90-180 min bi-monthly or quarterly meetings.

👇🏽

Educate
Remember board members are not in your business daily. They also likely serve on several boards. Constant education is required.

In your communications, constantly reinforce your positioning, your target customer and the primary macro trends in your space.

Constant education ensures you are top of mind in their everyday lives. This means referrals, insight, etc.

👇🏽

Align on strategy

Subtle shifts in operations of a company compound over time and can create significant changes in strategy. They seem obvious to management but confusing to a board.

Formal alignment is critical. Great boards do this annually.

Consider an annual full day board retreat where the strategy and key milestones are agreed upon. In your board reports, send this strategy doc with key milestones and any changes being contemplated.

(This provides a great topic for future board mtg deep dives.)

Boards can providing amazing leverage or be a giant waste of time.

In summary, to build and run a great board:

✅ Understand the role of the board

✅ Demand great members

✅ Construct a strategic agenda

✅ Educate members constantly

✅ Align and communicate strategy

For more like this on #startups and the #FoundersJourney, please follow me @EvergreenMEP.

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