Board Meetings or Bored Meetings? Founders, It's Up to You
Board Meetings or Bored Meetings? Founders, It's Up to You
Board Meetings 101: How to maximize the value from your Board of Directors (#32)
Every startup needs to hold board meetings.
The question is whether you use your board meetings effectively or not. I’ve been in a few board meetings that were snooze fests. 🥱
There are two things you need to accomplish in a board meeting:
Manage the company’s governance
Dive into strategic issues & challenges
Many founders use board meetings to give a comprehensive update on the state of the business. Don’t. It’s a waste of time.
You do need to present a detailed update, but it should be done ~48 hours in advance when you send a deck to the board members. They’re expected to go through it and come with questions or feedback. If all you’re doing is going through the deck, without any time for discussion, you’re missing out.
Creating a Productive Board Meeting by OnlyCFO
This is an epic post about board meetings. You should go read it. I’m sharing an excerpt below, entitled “My First Board Meeting:”
I was nervous and didn’t know what to expect when I attended my first board meeting. We had prepared a 100+ slide deck and everyone was well-rehearsed.
We managed to get through the whole deck within 2.5 hours. There wasn’t a single question from the Board. In fact, they only said about 10 words in total - “makes sense”, “great”, “good job”, etc. When we left the boardroom, the management team proceeded to give each other high fives and tell each other how great it went.
My initial reaction was different:
What did we just accomplish? All we did was present the same facts that were in the pre-read material…this meeting could have been an email.
The reason there were no questions/discussions is because there was no time! People were exhausted after 2.5 hours of presentation and just wanted to go home.
The board meeting was broken and unproductive.
Board Structures
Early on, the Board is just the founders. Once you’ve raised capital, investors will join the Board. The more money you raise (from different investors), the more board members you’ll add. In some cases, earlier investors may give up their seat, so the board doesn’t get bloated.
You want to maintain a small board for as long as possible. It’s easier to manage. The typical structure is: you + an investor + an independent.
If you have co-founders, they may also be on the board, although if there are 3+ co-founders, there will probably only be 2 board seats available.
The independent is an important board member.
They don’t have a vested interest in the business (although you might compensate them for participating on the Board, in a similar way to a startup advisor). They’re primarily there as a domain expert + supporter. For early stage founders, my recommendation is to bring on an independent that’s “in your corner.” You want someone that will back and support you above all else.
Preparing an Agenda
Along with the comprehensive update you send in advance, you also need to send an agenda. The agenda is usually straightforward unless there are very important or significant issues to discuss.
For very early stage startups, the agenda is going to be lightweight. As the startup scales and matures, the agenda gets more detailed.
→ Here’s a simple Board Meeting agenda template you can use.
You should edit as you see fit, but the general structure is fairly standard.
1. Kick-off the meeting: This feels a bit formal, but it’s the right way to do things. If it’s the first board meeting, you may need to appoint a Chair. In an early stage company this isn’t a big deal, the board is probably ~3-4 people. Later on this makes a bigger difference. You should also appoint a Secretary, who will take notes. You may ask an observer to do this, because they’re less involved and don’t have decision-making power. Other things you need to do:
Approve the agenda
Approve the minutes from the previous meeting
Ask if there are any conflicts
2. CEO’s summary: A high level overview of what’s going well and not going well. This sets the tone for the meeting, and highlights the things that you want to dig into.
3. Department updates: In an early stage startup you may not have formal departments, but you will want to cover the key components of the business: Financials, Product, Marketing/Sales, Ops/HR. As the CEO/founder you can decide which of these you want to dig into more, and the Board itself may want to deep dive into any of these areas.
Note: You may also bring your leadership team in to present. As the company grows this is a good practice. It gives your team exposure to the Board, and vice versa.
4. Old business: There may be some things that were discussed in the last board meeting that need to come up. If there were specific action items that came out of the previous board meeting, it’s a good idea to have them on the agenda.
5. Company needs: Board meetings can feel a bit like wandering the desert. A lot of ground is covered. You can use this part of the agenda to focus on 1 or 2 specific items where you want input from the Board. This may come up naturally throughout the meeting, but if not, having a specific section in the agenda will keep people focused.
6. Other business: The agenda doesn’t have to be followed precisely. Leave time for any additional discussions that you or the Board want to have.
7. Board resolutions: Board resolutions are a more formal part of the board meeting, where the Board is agreeing to specific things. A board resolution is how board decisions are recorded and tracked. Examples include: selling shares of the company, hiring or letting go a significant amount of employees, bringing on senior leadership, salary changes, issuing options, etc. Any major decision made by the Board could warrant a board resolution.
If you’re not sure whether or not something should be on the agenda, ask. You can ask your investors or a more experienced founder. Everything discussed in a board meeting gets documented in some way, so there may be some topics you’d like to discuss in a less formal setting.
Getting into the Governance Groove
Governance matters. The board has a fiduciary responsibility to do what’s in the best interests of the company. So practicing the right company governance is a good idea.
Do things by the book—approve agendas and minutes, create board resolutions when necessary, record minutes, etc. This can feel overly formal and stuffy, but that’s not the goal. The goal is to ensure the company is being run properly and the appropriate documentation is in place. When you go to raise capital or get acquired, investors and buyers may ask to see board meeting minutes and board resolutions. All of that material will live in your data room. If it’s disorganized or non-existent it’s a bad sign.
If you’re not sure how to run these more formal aspects of the board meeting, ask. Your early investors should be willing to help, and you can also talk to other founders with more experience.
I know governance feels like unnecessary overhead, but it can help you get familiarized with future expectations as you grow the business. Your next investors won’t want to work with a CEO that hasn’t run proper board meetings. It’s not a ton of effort to do things properly and set up the right governance from the outset.
You’re the Boss, not the Board
The Board isn’t there to run the company, that’s your job as CEO.
The Board should react to your strategic decisions and provide feedback, but they’re not in charge. They can’t make the decisions for you, all they can do is influence and guide. They’re there to hold you accountable.
You may go to the Board with open-ended questions, but your job is to collect feedback, synthesize it and then decide what makes the most sense for the business.
In my experience, first time founders rely too much on the Board for direction and approval. That’s a dangerous game. Your board members are more experienced, with a healthy ego, and they can commandeer things quickly if you don’t remain in charge. Losing control of the Board sucks.
Shawn Abbott, Partner at iNovia Capital has an awesome post on running proper board meetings:
A board of directors first and most important job is the CEO. The board is directly and solely responsible for hiring, evaluating, managing — and if necessary, replacing the CEO. This gives rise to a raft of issues which are both poorly understood and dealt with by many boards. Helping the CEO architect, recruit, retain, reflect on, evaluate, and develop their executive team is an integral part of the board’s role. Taken together, these functions should constitute the largest portion of time spent as a board member.
One of the key points in the paragraph above is that the Board can replace the CEO. It happens more often than you might realize. Remember: the Board has a fiduciary responsibility to the company, and it’s supposed to do what’s in the best interest of the company at all times. In some cases that may mean replacing the CEO.
Managing Your Board
The work you put into managing your Board may focus on board meetings, but there’s more to it than that.
No surprises allowed: You don’t want to surprise Board members in formal board meetings. That won’t go well. If there are major decisions or challenges coming, you should meet with board members individually before.
Build a strong relationship with board members: After the formal meeting, go out for dinner / meet the board members casually. You need to build a strong relationship with the board. This is an opportunity to relax, get to know one another and connect. You can also bring executive leadership.
Follow up after board meetings: Every board meeting should end with action items. Make sure you send a follow-up to board members detailing what was agreed on and what you’re planning to do next. The worst is when there’s a board meeting and silence after…
A Few Additional Things to Consider
Here are a few other thoughts on running successful board meetings:
Meeting minutes are not meant to be super detailed: During the meeting you’ll have a Secretary capturing all the details of the meeting. But the official meeting minutes (which are subsequently approved in the next board meeting) should be high-level. For example, the meeting minutes might say, “The Board discussed the product roadmap and key features to prioritize.” You don’t include every detail of what was discussed or decided. Why? Because the meeting minutes become available to future investors or acquirers, and you don’t necessarily want all of your dirty laundry shared.
Decide whether or not observers can participate: Boards often have observers attend board meetings (usually from your investors) who aren’t on the Board and can’t vote on anything. In some cases I’ve seen observers get very involved, in others they’re quiet. You have to decide how you want to run your meetings. I don’t mind observers asking questions, but I don’t like it when they try to steal the show.
Board meetings get longer as a company grows: When you first start a company, your board meetings are mostly formalities. Again, I like the idea of setting up some basic governance structure, it’s good practice. Once you raise capital and have an investor on your board, plus you may add an independent, you’re going to spend more time. I’ve seen some very basic boards go through a meeting in 1 hour, but generally I prefer 2-3+ hours to really dig in.
In-camera sessions are important: The in-camera session is when the CEO/founder and all observers leave, and the only people left are the board members. This is an opportunity for the board members to discuss how the CEO is doing. If the board is 3 people (i.e. 2 founders + 1 investor) this isn’t going to happen, but as soon as there are a couple non-founder board members, it’s good practice.
Investor and board member are separate jobs: I’m taking this right from Shawn Abbott’s post because I think it’s so important, and I’ve seen this challenge multiple times: “A great VC board member is able to leave their investor hat at the door and understands the fiduciary responsibilities of being a board member. A board member is responsible to the corporation, which is sometimes at odds with an individual investor’s interests. In any event, it can be confusing to a CEO if an investor board member isn’t clear about which hat is being worn at a given time. I have developed a habit of being very clear that I’m coming to the board meeting as a board member. If a conversation comes up, for example, “would the fund I represent invest in an upcoming round?”, I’ll defer that to a separate time and place. We recently had this happen in a board, where I suggested we schedule an investor call to ensure the CEO had a clear understanding of where key investors stood. In another situation, I felt it useful to appoint one of my partners to speak on behalf of my firm regarding our investor interests so as to not be in conflict as a board member. Respectfully identifying potential conflicts of interest enables the right conversation to happen.”
Board meetings aren’t an annoying, formal exercise for you as the CEO/founder to regurgitate a giant update about what happened in the past.
They’re an opportunity to discuss the future, share your strategy, ask for guidance and input (while making sure you’re making the decisions), and to maintain a level of quality governance over the company.
Use board meetings to help you build a better company.
If they’re not accomplishing that, something is wrong. And you need to address it quickly. It’s an awful experience to have a few bored meetings (I mean board meetings!) in a row that aren’t useful. The board members lose interest and are going through the motions. You’re sweating a big update each quarter only to find no one seems to really care. Board meetings are a key opportunity for you to actively engage with people that are there to see you succeed and want to help.