Running the Investor Board

Read for the first-time founders

There is always the first time.

You put the ink on the agreements for your first investment into your company and your investor just asks you: “When do we do the first board meeting?”

While you are working the schedule, it may happen that your mind is swirling: “Board meeting. Hmm. What the heck am I supposed to do?”.

There are many posts on running the board, at the end of this letter there are few selected to broaden your understanding of:

• Why do I have the Board Member/Investor?
• What is the purpose of the Board Meeting?
• What to do before, at, and after the Board Meeting?
• What makes the Board Meeting great and enjoyable?
• Or to the contrary, what makes it incredibly annoying?

[1] Why do I have the Board Member/Investor?

We believe, first and foremost, it is a person to help YOU navigate, and only in the second order of importance is to monitor the state of investment. With this in mind, the Board Member is YOUR RESOURCE & BUDDY (not your watchdog or even worse: your whip).

How shall I think of the Board Member as a “resource & buddy”?

Why #1: To unstuck myself. It is normal that you will encounter situations, business conundrums, dilemmas, roadblocks on the way to build your business. Many will be for the first time. And you will wonder what to do, what is the right decision to make. There is a very high chance there are people who ve been in such situations before… and your board member can introduce them to you, or even may have its own experience with such situations itself.

Why #2: Not to self-limit my questions. The range of such themes has no boundaries. You shall always feel freedom to approach your Board Member with any “I AM STUCK” situation. And it can range very broadly from operational to strategic ones. In our experience, dependent on the stage of business, your colleagues (first time founders) get stuck in diverse topics including (but by far not limited to):

• Tools that are best fit to use (for marketing, for sales, for customer support,…)
• Hiring do’s & dont’s
• Market-fit challenges (right customer, right USP, right pricing etc)
• Actionable target setting (clear objectives, right targets, simplicity)
• Successful crisis management
• Effective team operating model (right meetings, access, decisions)
• Right acquisition machine and go-to-market strategies
• Impactful fundraising (right equity story, proper plan, introductions to potential investors,…)

It is one of our guiding principles in KAYA: “Your questions are our questions” — we don’t undermine, downplay or dismiss our founders’ questions. We go hard to have the input — whether ourselves or via right introductions — but it may happen we will not be in position to help with everything, regardless how much we wish to be able to. In such a case, we will tell you openly.

[2] What is the purpose of the Board Meeting?

Now moving from a Single Board Member situation to a Meeting with multiple Board Members (may not be the case in the first days, but overtime you are likely to get more Board Members).

This shift to “Multiple” creates a NEW QUESTION FOR YOU: “How shall I use the Board Meeting to help me most, while educating board members on business progress, handling diversity of views, and observing the decisions reserved to the Board are properly discussed and executed”.

Board Meeting shall be a place where the time is spent on:

Purpose #1: Celebrating achievements. Board members are people too :-). They love to hear about successes. Share those loud and proud. Spark the energy.

Purpose #2: Building clarity of way forward (through challenges and opportunities). The Board Meeting is not a place to read the reports (we all can read), it is the meeting to openly discuss the challenges and opportunities to improve the value of business (sometimes also to prevent hurting the value of business), YOU shall focus on formulating challenges/opportunities to unstuck what you need to.

Note: sometimes, founders mistake this section for a catwalk. Meaning: instead of focusing on getting access to more insights, they focus on showing they can solve themselves. That’s fine and appreciated, but we already know the founder is highly talented, we do not need the catwalk. So, we prefer either it goes to “celebration” section or shall be taken off the board discussion completely.

Purpose #3: Formulating extra help (outside the board meeting). If the discussion hits on a complex issue worth digging into, focus only on formulating the problem and means to solve it (who are the right people, how shall we approach it), avoid an expedition to solve it on spot within the Board Meeting (unlikely to yield) :-).

Purpose #4: Aligning on resource allocation. In early stages of business building, your plans (not mentioning budgets) can change more often and with higher deviation, you may discover new directions to take in building product market fit or doing customer acquisition. Many of these will require the changes in how you allocate capital and people. Whenever this happens in a material way, bring it up with your board. Not only for aligning and avoiding surprises like dramatic changes in your runway, but you may also learn about more options to execute on your new ideas.

Purpose #5: Making decisions reserved to the Board. These are typically (i) reserved matters/approvals written in the shareholders agreement such as ESOP, outside-the-normal-course expenditures, senior hires, etc etc.

Purpose #6: Coordination of the fundraising. This one is probably the most obvious. Who else close to you than your investors will know other investors, what is required to be prepared for the next series of fundraising. Involve your Board well ahead of time in helping along the process of fundraising and keep them closely updated as market talks more than you think.

Stating the obvious: Board meetings are designed to discuss only what matters, therefore there is no need to push yourself to develop an agenda for every area above. If there is nothing to discuss, it is better to use time elsewhere :-).

[3] What to do before, at, and after the Board Meeting

Before the Board Meeting, …

1. Schedule BMs for the full year. Experienced founders schedule board meetings for the entire year, so they save the headache of finding the slot that fits all every time, once the board meeting becomes more crowded.
2. Create the Board Document. Word of caution: this takes time, especially for the first time. What shall such document contain?

• Management Summary: share Highlights, Lowlights, and Priorities/Focus.
• Performance Overview (starting with core KPIs, with further insight into growth KPIs, product/engagement KPIs, unit economics KPIs, and company financials, plus link to detailed gsheets/excel)
• Update on company building (hiring and org development, product launches and roadmap priorities, M&A hitlist)
• “Unstuck/Build Clarity” discussion topics: Formulated as questions to “unstuck”/”build clarity”. With your supporting data, analyses, and existing thoughts.
• Housekeeping: Decisions needed from the Board with attached proposal

Send the Board Document timely. Best practice is to do so 2+ days before the meeting, poor practice is sending it a few hours before the meeting.

At the Board Meeting, …

The good news is that by the time the meeting starts you are already 95% done if you did your preparation homeworks well.

1. You run the show. Until you choose to have a Chairman, it is your meeting and you are the moderator, you have to think who shall take the notes (in early days it is you again), you keep an eye on time, so you don’t get surprised by hearing: “I am sorry but I ll have to jump the board call in 3 minutes as we were scheduled till 4pm, which is now.”.
2. You get more, when you ask. Remember? This meeting is — first and foremost — to help you. If you talk all the time about the things you know, when will you use the board time to help you get unstuck and build clarity?
3. Give a targeted exposure to your team. It is invaluable to hear your direct reports to talk about priorities and achievements in their area of focus. It is also invaluable to learn the views and thoughts of board members on your team. And last but not least, you may be surprised how your team answers when not asked by you, but the board. BUT once their topic is consummated, release them from the meeting.
4. Summarize in your own words. There’s nothing childish about it, regardless how scholastically it may sound. In discussions with many views, summarizing (what you are taking away) may bring you a real surprise what additional input this generates :-).

Last but not least: Think of meals/food for the board, seriously. If it is a long in-person meeting or going over the lunchtime, meals matter :-). Empty stomachs judge differently (a good read on judgment while hungry).

After the Board Meeting, …

…the best practice we see repeatedly is to send to all board members:

1. Meeting notes. To keep this one simple, the notes are OK as bullets summarizing key statements of discussions (S), key tasks agreed (T), and key decisions (D) made in the meeting. This is rarely more than 10 bullet points, so you’ll be done with it in less than 30 minutes. Do it right after the Board Meeting (tip: reserve that time in your calendar). This little time you spend will create a huge alignment value with your Board and will save you lots of time, as you eliminate many follow-on discussions on what were the take-aways from the board meeting.
2. All presented documents. If you forget to do it, be sure that there will always be at least one board member asking for it (it’s just an annoyance for them to remind you, as you should do it without being asked).

[4] What makes the Board Meeting great and enjoyable?

Scheduled well ahead of time. You will be surprised how ok it is for the Board Members to plan the meetings for the entire calendar year, how welcome it is, and in contrary how painful it will be, if scheduling is left till the last minute.

Right flow of the meeting. There are many ways to structure the meetings. We have enjoyed meetings with this flow over others:

• Get the energy right. Start with highlights and achievements.
• Comment on Xs behind key performance numbers. Observe this section is focused and on merit, and does not slip into the drill-down expeditions of every corner of your business.
• Discuss “Unstuck me” or “Help me with clarity” topics.
• Take home questions that strike YOU as pointing into relevant gaps in your business.
• Address questions raised prior to the meeting.
• Finish with housekeeping (decisions reserved to the Board)

Invitees from the team just for the right discussion. This smoothly takes away the kind of awkwardness in the room arising from “Ooosh, I can’t just speak about this.” because the audience is wrong. It is your job to observe this.

Active moderation that prevents the discussion from slipping. That’s for a separate memo. There are lots of good reads about facilitating effective meetings (try to put into Google search e.g., “facilitating effective meetings”).

Helping energy, liking mood, open mind. Probably doesn’t need more color. If the world sucks in your mind, the meeting will follow the pattern.

[5] What makes the Board Meeting incredibly annoying?

Selling, not solving. You are done with fundraising. While we understand that the board is your closest pocket of more money (if needed), it gets very annoying to have a feeling “I am being constantly sold to” instead of using the time to work on the business advancements. We like to practice “radical honesty in an appreciative manner”.

Lagging indicators dominate the discussion (over leading ones). We like to distinguish between two types of discussions: one about lagging indicators¹ (in a traveller’s terminology: “road travelled”), and the other about leading indicators² (“road ahead”) and priority actions linked to them. If you are unsure what is leading and what is lagging… engage your Board Members on the topic.

We believe in… spending time on leading indicators (e.g., NPS, DAU, churn) gives you more insights.

The lagging ones (e.g, Revs, %Gwt) are important as markers of what you achieved. But… if the discussion about them gets lengthy, just remember: you are simply learning too little at that moment. And that’s annoying.

Exhausting drill-down expeditions into every corner of your business. Sometimes board members may come with a pre-set mind about the problem and then relentlessly engage on a journey to “let’s diagnose now, all together”. They may have a point, but it does not belong to the board meeting. It needs to be taken outside the board meeting (if more people are interested, it is ok to discuss in a separate workshop).

Hijacking for low-value discussions. You may experience moments when suddenly a board member will embark on questions or topics which will not make you address the most burning business points, and are rather “tweaks” or process/form related ones (e.g., can we add this KPI or that KPI to the report, can we change the format of …?, we are missing these documents in our files,…). It is critical that “tweaks” and “processy” points do not take precious time away from the more critical discussions. Take a note/offer to resolve outside the board meeting, and bring the discussion back to the merit.

Random walks. It can happen from time to time that the discussions get to the point: “why are we discussing it?”. These can eat lots of time and produce close to nil takeaways. It does not hurt to ask “Why are we on this topic?”. It can do magic.

No upfront agenda and none or last-minute pre-reading material. You need two to tango. So does preparation. Guess no additional comments are needed on this one :-)

Talkshow over the “Merit-of-Point’’. Being to-the-point is tough but priceless, as it protects us from stopping to listen. If you land with a talkative Board Member or it is you, it is worth giving or receiving appreciative feedback. Btw same goes for the documents. I like Churchill’s plea for brevity during World War II (here).

Not appreciative tone. We value radical honesty as it drives progress but the way it is delivered matters equally a lot. Unappreciative tone is just annoying in both delivering the thought as well as in receiving the thought. Addressing the tone (even if you need to do it again, and again) is a very important part of making the Board Meeting enjoyable.

Stating the obvious: All members of the Board, including YOU, are in charge to act against the annoying meetings. Every meeting.

Last but not least… sometimes, the annoying experience is just irreparable until some board member leaves the board. Solvable (that’s for a standalone article), but better to get it right in the first place. Surely it is one of those points you shall have your conviction when choosing your investors during the fundraising.

I hope you enjoyed the read. As you live through your first board meetings and grow your experience, I’d be happy to hear your thoughts. You can connect with me on email or LinkedIn.

Footnote

¹ Lagging indicators are typically those you could compare to looking from the car through the rearview at the road you have traveled. Those are mostly outcomes of performance such as Revenues, GxVs, Customer Base...

² Leading indicators are typically those you could compare to looking from the car through the windshield at the road ahead of you. Those are prevailingly drivers of growth (e.g., gross ads or ARPU), and of resilience (churn/NRR or margins) but that's for another post :-).