Managing Your Startup Board

PRESENTATION | Mark Suster, Managing Partner, Upfront Ventures

Managing Your Startup Board Mark Suster Managing Partner, Upfront Ventures !1

Many entrepreneurs think about boards in the traditional sense as providing “oversight” to their activities. Shareholders Board Executives 2

Shareholders And of course this is Board the legal & fiduciary } role of a board Executives 3

But if you want to be truly effective as a founder you should think more about how YOU manage the BOARD. Board Make your board an extended part of your executive team: super-connected, Executives free interns. 4

"I can always get money. Where else can I get very connected and powerful people to do work for me?” - Founder !5

How boards initially see you - it’s a bit like new parents - it’s not adversarial at all • An important role in • Unconditional love “oversight” • A sense of responsibility • Define their own image by your success 6 Photo by Brittany Simuangco on Unsplash

As you grow what you think you should do & what the board thinks can diverge 7

Ultimately it’s up to you to take appropriate risks - but you must then manage the board 8

The Continuous Board A different way to think about managing your board !9 Photo by Sasha • Stories on Unsplash

Board meetings are how most founders think about board interactions but they're actually the least valuable part of your board relationship

A great board is a highly-engaged group who knows your business intimately

If you build trust they’re the only people you can share most sensitive decisions with

Many founders treat boards as administration functions that solely receive quarterly updates. Let’s call this the “waterfall board.” Q1 BOD Q2 Waterfall Update Q3 BOD Board Update Q4 BOD Update BOD Time Update Research Design Waterfall Build Software Test Development Deploy User Feedback

The “continuous board" approach involves more frequent interactions – call / text / email at any time for quick input to iterate and course correct. Continuous involvement makes your board feel knowledgable & take ownership of decisions

Building a High-Functioning Board !15

Each member of a high functioning board… - Knows each other personally. Has a working relationship where they can resolve differences of opinions

Each member of a high functioning board… - Knows each other personally. Has a working relationship where they can resolve differences of opinions - Truly understands the underlying businesses. Knows strategy, execution & financial metrics - Finds this board assignment important relative to their other time commitments - Doesn’t have incentives that are misaligned with the company, its shareholders or other board members

Ultimately it’s in your interest to invest in creating these working relationships - not just with you but amongst non-exec board members.

A board that knows and likes each other is more likely to resolve hard conflicts.

Building relationships takes effort • Schedule board meals / social time • Encourage non-exec board sessions • Help plan non-exec board calls

Board Members

Your board will increase over time and it’s highly likely you won’t retain a board majority (and that’s ok) Founder Controlled Independent or Investor Controlled Round D+ • 1-2 Founders • 3 VC Investors • 2 Independent B • 1-2 Board • 2 Founders Observers • A + B Investor 7 Person • 2 Independent Seed or common • 2 Founders 5 Person • Maybe Seed Investor 3 Person Time Source: Mark Suster, Both Sides of the Table

What makes a great Independent Board Director? Local Time to Commit Industry Experience Startup Experience A Good Mentor Has Skin in the Game There in Good Times & Bad An Honest Broker Diplomatic Source: Mark Suster, Both Sides of the Table

Board Meetings !27

If you ask your board about your logo or brand colors, they will debate it for 30 minutes …if you do this, that’s on you Phot o by Pineapple Supply Co. on Unsplash

It’s your job to “run the company” and not let your board micro-manage operations. It’s your job to keep board meetings “at board level.” Executive Management • Strategy, monthly budgets, hiring / firing, financial results • Sales, marketing, pricing, product, support, HR, finance Source: Mark Suster, Both Sides of the Table

A board’s role is to provide oversight of the company on behalf of all shareholders. Board of Directors • Annual budget • Strategy & performance • Fund raising, M&A, audit, executive compensation • Exec team hiring / firing Executive Management • Strategy, monthly budgets, hiring / firing, financial results • Sales, marketing, pricing, product, support, HR, finance Source: Mark Suster, Both Sides of the Table

Some key decisions also require approval from shareholder groups, beyond board approval. Investor Governance • Fund raising, M&A, debt • Scope and structure of business Board of Directors • Annual budget • Strategy & performance • Fund raising, M&A, audit, executive compensation • Exec team hiring / firing Executive Management • Strategy, monthly budgets, hiring / firing, financial results • Sales, marketing, pricing, product, support, HR, finance Source: Mark Suster, Both Sides of the Table

In thinking about how to run any individual board meeting it’s important that you understand what you’re trying to achieve Debate Present Of course each meeting can be a combination of both activities

It’s equally important that you know your goal for the meeting. Are you seeking to make major decisions or to align board members? Inform Not every board meeting requires a big decision to be made Decide

A common mistake is to spend BOD meeting presenting more materials than a group can digest. Inform Filibuster Debate Present Decide

A better use of time is to debate the most strategic topics being weighed by the exec team, tapping your directors’ collective wisdom. Inform Advice Debate Present Decide

There are times where exec teams require decisions and want board sign-off to underline a key move you plan to make. Inform Debate Present Approval Decide

There are times when you really need the board engaged in an existential question Inform Debate Present Huge, Strategic • M&A Decisions • Capital Raise • Annual Budget • Hire / Fire Critical Executives Decide

If you have four board meetings a year you can run different playbooks based on the board meeting Example Q1 Q2 Q3 Q4 • Broader exec teams • Strategy session • Update session / • Next Year’s Budget attend / present deep dive on • Board only business • Detailed meeting with • Board lunch / dinner heavy debate • Broader exec teams attend / present

Boards. At times your best cheerleaders, coaches, mentors and disappointed mom & dad.

Remember that board members have personal identity tied up in your successes & setbacks. They aren’t rooting for failure.

But even your biggest champions have oversight responsibilities to encourage what they ultimately believe is right, which isn’t always what you want to do. 41 Photo by Brittany Simuangco on Unsplash

If you proactively communicate with and manage your board you’re much more likely to stay in sync.

Managing Your Startup Board Thank You Mark Suster Managing Partner, Upfront Ventures !43