Running efficient board meetings — a guide for early stage startups

I just came from the Venture Crush SF event where I participated in a roundtable discussion on the subject ‘Board Meeting Tactics’ led by Patrick Chung from Xfund, Eric Feng from Kleiner Perkins and Jodi Sherman from Aligned Partners. As this is a very important topic that I usually get a lot of questions about, I decided to write down my thoughts from the roundtable discussion a few hours ago while I have them fresh in my mind, i.e. I’ll probably improve it during the next few days

Selecting the board

Everything starts when you, as the founder, composing the board. A good size is 3–7 people, and you need to select them carefully. The board could in theory, make it or break it, for your company, and you are responsible to select a board you can leverage for maximum value creation. The board usually consist of 1–2 founders, 1–3 representatives from investors and 1–2 external board members with specific domain expertise or deep domain network. It is important that you do your due diligence of each potential board member, even the investor representative, to ensure that you will be able to trust their advice as well as work efficiently together with the other board members. The same thing goes with board observers — when you accept a board observer, you should treat the evaluation process of that individual in the same manner as if she or he will become a real board member.

Setting up the structure

I usually have board meetings 1–3 times per quarter depending on the stage, need and desire from the startup. The most common question I usually get is about the agenda and slide deck. My general rule of thumb is to focus on decisions, spend 80% of the time during the physical meeting discussing decision like strategy decisions, major directions for the product, new hires, how the board can help etc.

But the agenda need to contain a brief update as well, I usually recommend to divide it into [1] a brief update (usually KPIs, follow up on decisions made at the last board meeting and a general update) [2]“the good” (the positive stuff like new successful product releases, new customers, new hires, new partners), [3] “the bad” (the challenges like bugs in the product, people that had to be fired etc) and [4] “the ugly” (the really nasty stuff like you lost a major customer, one of your co-founders resigned etc. — all startups encounter nasty stuff along their journeys, no matter how successful they are in the end). [5] At this point you’ve most likely discussed potential solutions to “the bad” and “the ugly” already, but you probably have more decision points you have to go through, like updating the strategy, updated product roadmap, new hires, fundraising timing etc.

KPIs

Besides the agenda, “what KPIs/Metrics to track and present to the board” is probably the second most common discussion. My guideline is that the KPIs the board should be interested should be a subset of the KPIs you use to ensure control of your operations. It is very individual for each company but usually KPIs including users (MAU, DAU, retention etc.), usage (time spent, transaction volume etc.) and growth (user accounting etc.) — per country, per platform, compared to different time periods etc. Too complex to cover in this post but I’ll write a blog about this later.

Setting the tone

One thing I really try to achieve in all boards I’m participating in is to build a genuine relationship with the founder(s). I can’t stress enough how important it is that the founders and board members build a relationship where they feel that they can trust each other, and really can talk about all nasty stuff. It always feels better to talk about the good stuff but, it is even more important to talk about the nasty stuff so everyone can help to solve them as fast as possible. If you don’t feel that you can talk with your board about everything, then, something is wrong.

As Patrick Chung from Xfund expressed it:

The board members should trust each other and allow an open conversation — not only the founders towards the investors etc. but also among the investor etc. The mindset of the entrepreneurs shall not be to white-wash the story, but instead, focus the discussion on how to solve the issue. The same goes for the investors, their mindset should not be to throw dart, instead make an effort to understand how they can help the entrepreneur

Running efficient board meetings

A challenge is that you want the smartest people to join your board — but the smartest people are often some of the busiest. However, the most dangerous thing is when smart people comes with smart advice, and ideas is when they don’t have any context of the discussion you are having, i.e. they have not been updated because you haven’t sent enough background material OR they haven’t taken the time to read the background material. This usually lead to advice and ideas that sound really smart at first glance but later shows that they were far from ideal. Best practices for being able to run efficient meetings are:

• Send board meeting background material about a week before the meeting (note: see below — not same deck as for the meeting )
• Have a dinner with the board the day before — take the opportunity to invite 2–3 external people like new management team members or major customers
• Have a no phones / computer policy to eliminate the risk of people losing their focus in multitasking
• Don’t use the deck you send out as background material for the meeting — make a deck that spends 20% on updates and 80% focus on key questions (this way you will also notice who prepared for the meeting and not)
• Make sure that someone takes notes on decision, so that you can follow up after the board meeting, as well as on the next board meeting

In-between board meeting communication

• Something we do at Creandum, especially together with Creandum’s consumer companies, is setting up a real-time dashboard where the board have access to all operational KPIs/Metrics in real-time — this allows us to always go in and check KPIs, as well as slicing and dicing (per country, per platform, comparing to different time periods etc.), and get full transparency on the company’s progress, without taking time from the entrepreneur
• Bi-weekly/monthly e-mail updates — usually similar agenda to the board meeting in itself, but briefer/more summarised info and very important to keep the exact same heading structure to make it easy for the board to orient themselves in the update, as well as compare to previous weeks
• Informal lunches/dinners/Skype sessions with board members to continuously inform about important events, as well as extracting as much value from the board as possible — this will also reduce the need for spending time on updates during the board meeting
• Another advice is to send out updates and background material in DocSend so you can track who reads the material — if you see that a board member is not spending any time on the material and that it also becomes obvious during the board meetings in itself, you should talk to the person and evaluate if you can find a board member that have more passion/time to prioritize for your company

This is just the first version with my initial thoughts as I had the discussion fresh in mind, will update it further during the coming days