CEO Mastery Series: Leveraging Board Member Support — The Team Many Founders Forget
Advice for managing investor and board relationships from Andre Haddad, CEO of Turo
From finding product-market fit to putting out customer fires, entrepreneurs have their hands pretty full. It can be tempting to juggle every crisis and initiative yourself, but many founders have help right in front of them — their board members — says Andre Haddad, CEO of Turo, a peer-to-peer car rental service that’s been called the “Airbnb for cars” with over seven million users worldwide.
Haddad understands the importance of a good board well, both as a CEO with a board to manage and as a board member himself, of the startup Prezi. He previously spent a decade as an eBay product and operations executive, including serving as CEO of Shopping.com, and has also held roles at Booz Allen Hamilton and Procter & Gamble. At Spero’s CEO Summit, Haddad spoke to a group of promising early-stage entrepreneurs and shared his top tips for managing investor and board relationships. Below, he breaks down how to approach a fundraising round, including how to think about choosing investors and important pitch principles that set you up for success. Haddad also shares tips for getting the most out of your board and maintaining strong relationships with each member.
A CEO’s Job №1
Believe it or not, product-market fit or scaling a company isn’t your biggest priority. They’re incredibly important, but none of those things can happen without first cementing your company’s continued existence. “CEO stands for Cash Extraction Officer,” Haddad says. “This is your job №1. If you run out of cash, none of the rest matters. I really encourage you to think hard about this. It’s a notion you can easily forget because you’re trying to build a company, a team, a product.”
Even given Turo’s scale, Haddad still spends 20–25% of his time on investor relationships. “There are several investors not on our board but who are important supporters of the company. Always be talking to investors to build those relationships over time so you can get a sense for who’s the right investor for the company at what stage,” he says. “At Turo, I was initially thinking that I’d go out to talk to investors because I needed to raise some money. As it turns out, the worst way to raise money is when you’re running out of money. It’s when you have a lot of cash that somebody wants to give you more money. Think about that and try really hard to build a roadmap for your fundraising. It’s the same as a product roadmap and a team roadmap.”
Board member’s contributions aren’t just about money. It’s continuous contributions over time.
Fundraising Wisely
Now that your priorities are straight, Haddad dives into building that fundraising roadmap. Here’s what he’s learned in his years as an entrepreneur:
Choose your investors wisely. “There are always stories of dysfunctional boards that don’t have great relationships with the founders or investors. Choose carefully from the beginning. It’s not just about the dollars or financial terms or valuations or the name. Board relationships will last a long time,” Haddad says. Some of Turo’s board members have been with the company for nearly eight years. “That’s longer than almost any employee.”
Additional tips for making smart board picks:
- Conduct background checks. The team at Turo conducted due diligence on every investor who gave them a term sheet. They asked for references from the investor, but also back-channeled additional references not offered by the firm. “I called people I knew well enough to tell me the truth, even if it was a challenging truth. This was very important to us. It’s similar to bringing someone onto your team. You have to find the relationship and the fit with your company. Create the right process to evaluate whether or not a person will join your board,” Haddad says.
- Find fit with your long-term vision. When choosing between offers, the team struggled with one decision in particular. “Ultimately we went with the person who shared our vision for the future, who was really passionate about our product. As it turns out, he was instrumental in helping us raise the next round, bringing in nearly three-fourths of the dollars,” Haddad says. “Think about that impact, and think beyond basic financial terms and what happens beyond that first engagement.”
Don’t over-promise in your pitch. “Don’t make crazy promises in your pitch. You’re obviously trying to sell the company and you want to raise capital, you want to be projecting confidence and showing charts that go up and to the right. There’s a natural friction between doing that and going too extreme. If you over-promise, you get off to the wrong start with a new investor. You don’t want them to join the board and then realize there’s a huge disconnect between what you said and the actual reality,” Haddad says.
Build a cycle of high performance. “Of course, pivots are different from over-promises. Pitching realistically gets you off to a good start with an investor who joined your board, but also builds credibility for you as a CEO. While the vision can change down the line, you still need to have a strong relationship with your investors,” Haddad says. “If a plan you promised to an investor is going to be tweaked, then the trust that you’ve built allows you to do things with investors you wouldn’t be able to otherwise.”
We obsess over the lifetime value of our customers. What’s the lifetime value of your board members?
Making The Most Of Board Members
So now you’ve successfully fundraised and created a board with investors who trust you. Now, it’s about leveraging those board members and maintaining your relationship with them. Haddad relies on the following tactics:
Convene your board at regularly scheduled intervals. Stick to a regular cadence of meetings. Sometimes that may be every two months, sometimes every six weeks. Turo has done different cycles and now does quarterly meetings, plus one more in early December to talk about the following year’s goals and revisit the company’s three-year plan. “We’re very disciplined about the rhythm. Take that pitch you made to get their investment and turn it into quarterly updates and monthly updates,” Haddad says.
Send regular investor updates accordingly. Haddad highly recommends you invest money and time in analytics and data visualization through a tool like Domo or Looker. “We’ve given our board direct access to their dashboards. They have a direct line of sight into KPIs and performance in key areas on a daily and even hourly basis,” Haddad says. “We’ve created a lot of transparency with our board members. Again, it’s about trust. You don’t want to start a board meeting with a surprise piece of information. Why wait for a meeting to say you’re behind on sales or hiring? That breaks the trust you’ve worked so hard to build.”
Hold annual performance reviews. Turo uses 360 feedback programs. “People think that it’s for big companies and that you need an HR department to do it. It doesn’t sound very exciting. I completely disagree with that. As the CEO of a company, you need to ensure early on that there’s a culture of transparency of performance on the team,” Haddad says. “This means you should be reviewed as well, and board members should participate in those reviews. If your employees are concerned about anonymity, try an anonymous suggestion box that a third party scrubs for data.”
Rotate board members on CEO 360-review duty. “Ask directly for help. We decided one of our board members would take turns leading the feedback. We rotate roles every year so that it’s not the same person always running it. It doesn’t have to be a heavy lift. We have an email template that the board member sends to all of my direct reports. They can connect with anyone in the company and ask, what are the things Andre is doing well? What are the things he’s not doing so well? What should he start doing today?” Haddad says. “They’re very basic questions, but it created a new level of transparency, both among employees and board members. It created a whole new level of trust and confidence in me from the board.”
Create an annual plan for each board member. Andre is very direct with his board members. “Think creatively about what that board member can do for you. Give them a project and hold them accountable. I say to them, ‘You will be helping us with our independent board member hire. Over the next quarter I’d like you to present five candidates for that seat. Tell us what criteria you want us to think about for the hire,’” Haddad says. “It’s both a relief for me to shoulder less of the work, and a value-add in terms of getting to tap into this person’s network.”
I won’t get feedback if I don’t build a process to receive it.
In Conclusion
To be a successful CEO, you must invest in building a good support network. Remember that directors are on your board because they have something of value to add as you grow the company — don’t let that value go to waste! Every CEO’s top priority is maintaining cash flow for the company. Never forget that, and plan accordingly by continuously building relationships with investors. Your fundraising button is never completely off. Choose investors carefully and conduct background checks on anyone you accept money from and especially anyone you add to the board. Once you’ve built a strong board, create radical trust and transparency with members by staying in constant, honest communication. Maintain those relationships so that you have buy-in and support when times get tough. Finally, give your board members jobs and accountability, whether that’s conducting a 360 review of you, the CEO, or helping with a strategic plan for a new line of business.
These principles and approaches have worked well for Haddad. He frequently hears investor feedback that Turo has met a higher bar for management and communication compared to investors’ other portfolio companies. “Your job as a CEO is to get your board members to work for you. Anyone who’s going to be at your board meeting is going to be a part of your team,” Haddad says. “If they’re going to be on your board, they need to deserve a seat on your board.”
Watch the full keynote presentation by Andrew Haddad below.
