Feedback from Management to Board Members
Most of the content on running productive Board meetings is written from the perspective of venture capital investors presented as best…
Most of the content on running productive Board meetings is written from the perspective of venture capital investors presented as best practices and advice to CEOs.
This post is written from the perspective of a non-founder member of the Leadership Team. I offer a few thoughts to Board members representing venture capital firms who are on the Boards of founder-led businesses. By way of background, I have participated in numerous Board meetings and calls, first as an investor and more recently as a CFO in multiple venture-backed companies.
Showing Up Matters — Founders and CEOs chose you to invest in their business because they believed you would provide a lot more than just capital — your input, advice and feedback matters. Please attend all the meetings, at least by phone and preferably in person. Joining on time is really important as CEOs make a lot of effort to sculpt an agenda with specific, time-limited slots for each topic to be covered.
So Does Being Engaged Fully — We know you are all super busy and inbox-zero is a goal of yours. But please, outside of scheduled breaks in Board meetings, don’t answer e-mails or be otherwise busy on your phones. The Leadership Team notices. An unengaged Board member sends a negative signal to management about their belief in the future of the business. Experienced Leadership Teams desperately want to see engaged Board members, whether pleased or disappointed by developments in the business. Indifference or lack of engagement is the worst signal to management about the investors commitment to and belief in the business.
Engage the Full Leadership Team — Yes, founders are the King or the Queen. They are typically sizable owners in the business alongside the investors and, as such, deserve special treatment. And, yes, they had the original business idea which is important. Yet, as you well know, it takes a team to build a great business. Often many Leadership Team members receive short shrift from the Board. To avoid that, I recommend a dinner with the full Leadership Team allowing conversation outside the pressure of the formal Board meeting. At that meal, try not to discuss the specific business challenges in detail, but rather focus on more generic professional topics or getting to know the non-founder leaders better. This foundation of trust will make the Board meetings more effective, the quality of information you get better and more timely, both at future Board meetings and on an ad-hoc basis if requested.
Come Prepared with Questions — The Leadership Team has spent a lot of time putting together the slides and other materials for the Board meeting. We assume you’ve read the materials and have questions and thoughts. Please ask proactively. Having the Leadership Team walk through the presentation, slide by slide, is a really poor use of everyone’s time. It is far more useful to discuss in greater detail items you believe are important to future success, merit direct feedback (such as prior agreed goals being exceeded or missed materially) or anything unclear. When management walks through the deck in detail, they assume Board members have not spent the time to read it in advance of the meeting and think through it. That just feels bad.
Provide Clear Feedback and Hold Us Accountable — The Leadership Team you have assembled are professional managers. We can handle and want feedback — positive and constructive. So please don’t reserve all constructive feedback for the Executive Session, when you talk privately with the CEO. You may think you are being “nice”, but actually the message gets filtered or lost. We want the opportunity to hear directly from you what we can and should do better.
Remember Survivorship Bias — When offering advice on how the company should be able to scale revenues or manage customer acquisition costs, based on what you witnessed at another portfolio company, please remember survivorship bias. For every portfolio company that successfully executed a growth or expense management strategy, based on the mix of investment returns distributed across the average venture fund, there are probably two or three that tried and failed. So, while we love getting connected to peer operators to get advice, it might actually be more useful to connect us with your portfolio company leaders who tried and failed — there is often more to be learned from failure than success.
Product Demos Are An Opiate — Product discussions — roadmaps, wireframes, demos etc. — while super exciting to see are not a great use of time in a Board meeting. Yes, product always matters in building a great business. And, product demos are way more interesting than numbers or strategy. But, when the company is past the Series A raise (unless a pivot is underway or there are other special circumstances), success is more likely to be determined by things such as high employee engagement, culture, hiring, retention, go-to-market strategy, understanding market changes and fundraising. We suggest you ask portfolio companies to hold separate meetings (maybe 2x / year) which can be dial-in calls for a product deep dive. When portfolio companies spend a lot of time in Board meeting on product (unless companies are pre Series A), it signals that there isn’t a ton of other good news to discuss or the portfolio company leader is unable to leverage the breadth of skills of the Board members.
Let’s Really Be Aligned on Costs — Most investors pay their own way to attend Board meetings. But about 25% still ask for expense reimbursements for their trips. A cross country flight in first class, a night at the Four Seasons (or other 5 Star hotel), and other assorted expenses add up quickly. Each quarterly Board meeting expense reimbursement request is enough to fund the annual raise for one junior employee. We’re pretty confident that your management fee income will cover the expenses incurred to attend Board meetings. When Board members tell management teams to manage costs carefully including cutting back on investments to achieve break-even sooner, that input is taken seriously. Sending a portfolio company a $5000+ invoice to reimburse for each Board meeting attended feels totally misaligned