a16z Podcast - a16z Podcast: Public or Private? Finding the Right Board Seat

Episode Date: March 25, 2015

Getting a board seat isn't just about adding value, but also about what value you take from it for your career. But why do it? When? How? And should you focus on a public or private company? To answer these questions and share their perspectives, this segment of the a16z Podcast features three current board directors and veteran executives: Amy Bohutinsky, CMO of the Zillow Group and a board director at Hotel Tonight and Avvo; Dawn Lepore, former Chair and CEO of Drugstore.com and a board director at AOL, Real Networks, and Coupons.com; and Michelle Wilson, former Amazon general counsel and a board member at Zendesk.

Welcome to the A16Z podcast. I'm Michael Copeland, and we are here in front of Elliott Bay in Seattle, Washington, at the Zillow headquarters. This is another segment in our boards series with us to help talk about all things boards. Private and public are Don LaPoor, former chairman and CEO of Drugstore.com. She sits on the boards today of AOL, Real Networks, and Coupons.com, has been on a lot of other boards, including eBay and Walmart. is Amy Batinsky, CMO of the Zillow Group here in Seattle, and she is our host. She sits on two private boards, Hotels Tonight, and Avo. And our final guest today is Michelle Wilson. She's a long-time SVP at Amazon and General Counsel, and sits on the board of a Zendesk down in the Bay Area. Welcome to you all. Thanks for having to be here. So let's talk about boards, and I want to start with the sort of difference between private boards and public. First off, let me just back way up. Why

do it. Why did you choose to join a board the first time out? Don, maybe let's start with you. So I spent 21 years at Charles Schwab, and I felt that since I was growing up inside the company, I needed to get some, just learn some things outside of the people that I interacted with every day. I wanted to learn about new industries. I wanted interactions with other people, especially CEOs. You just learn a tremendous amount. And that was part of my own kind of development. So I worked really hard. It took a long time. I networked for a long time. Got on my first public board in probably about 1997, 1998. And it's just been an incredible, just an incredible experience. And when I was considered for the drugstore.com job, I really felt like I had learned so

much from watching other CEOs, and I was able to apply that right away when I went into the drugstore job. So I think it's tremendous for development, for your career, for getting perspective, for learning by watching other CEOs, I just think it's a tremendous experience. Amy and Michelle, I want you guys to answer this too. I know, you know, the obvious thing from the board side is like, look, I want Amy and Michelle on my board because I know what I can get from them. But again, when you're thinking about your first board seat, and Amy, let's start with you, what, not to be too crass, but what's in it for you? That's a great question. Because a couple years ago, I had mentors of mine starting to say, you really should start looking at boards.

And other than the resume builder, my first question was why, right? And if I'm going to take time outside of my demanding day job, what is in it for me? What I heard and what I've learned is that it's tremendous learning on how other companies are operated. And as Don said, how other CEOs not just run their companies, but communicate to the board. board. I've been at Zillow almost 10 years now. My executive experience has been with the same team for the last 10 years and the same board. And just what I've learned in just the last year since joining these two boards has, I think, really made me a much better executive, a much better communicator and has sort of opened me up to other styles of management,

other styles of operating a company that I didn't have exposure to before then. And let me just probe a little bit on the question of when folks came to you and said, look, Amy, you really should consider joining a board. Where were you in your career and why do you think they started, you know, applying pressure if that's the right word? So I'm a chief marketing officer. All of my career has been in the marketing field, but I've been lucky enough to be able to be a part of Zillow as we've grown it from nothing to a, you know, 2,000-plus person company. So I've had some operational experience in that. It's a time in my career where I need more of that, right? Where I need to start thinking, what does my career look like the next decade?

And do I take that outside of the marketing realm and how would I do that? So for me, it's a pretty critical learning period to understand as an executive, how do I branch out beyond just sort of my area of expertise? Well, I agree with what Don and Amy said. It's just a huge development opportunity and learning opportunity. But the other thing for me is I really like building things and helping to build things. I find it super energizing and being on a board is just a really highly leveraged way to use your time and help some younger companies and help contribute in ways and bring experiences that maybe the management team can't.

One of the things that's interesting, that's a theme, if you grow up in a functional area, I was CIO of Schwab. I grew up in technology. I think it's a wonderful way to broaden yourself. I mean, it's hard to break out of your functional area and become a more general executive. and being on a board is a great way to do it. So that's one thing. And the second thing is that I do think it's a great way to give back. If you've had great mentors along the way, as you said, it's just wonderful to give back and help another company.

Does it have to be, let's talk about public versus private boards for a minute here. How do you view the differences between private and public boards? And is there any kind of reason to think that if this is my first board I should be aiming for public because that's more public? You know, private is the way to go. Do you have opinions on that? So what I would say is they are different. And if you want to be on public boards, you need to get your first public board.

Now, that can be by going on a private board that goes public. But if you really want to be on public boards, long term, at some point, you need to be on a public board, because they are different. You need that experience. In my experience, the private boards, they're smaller, usually. Many times you're helping the CEO scale,

you're helping the company scale, public boards, usually they've already scaled and they're really looking at maybe taking it to the next level. There's a little more governance on a public board than private board, although private boards are getting more focused on governance because it's a healthy way to run a company just to be prepared for what happens when you go public. So I have found the private boards a little more informal than the public boards. The public boards are a little more structured with process, although that varies too based on the board. So I don't think one is better than the other. I think they're both great experiences.

And I don't know what you guys think. So the last couple of years, I was actively looking for board opportunities and was telling people within my network that. And I had a number come to me, and some were public and some were private. Ultimately, I made my decisions based on connection with the CEO and the rest of the board.

What I felt I could learn from the opportunity and what I felt I could offer to the existing mix of people. And I personally tried not to kind of sway public or private, but just find what I thought would be the right fit for me. If I'm going to spend these hours outside of my day job, where would it be fulfilling and where do I think I could learn something to take my career to another level? Michelle, you were on Zendesk when it was private and now it's gone public,

so you must have a sort of very interesting perspective. And I don't know when that happened to the like, okay, now we need to revamp the board. I mean, certainly some investors will fall off typically when, when the company goes public, but what has your experience been at Zendesk in that transition? Well, just in general, putting aside Zendesk for a minute, companies do tend to transition their board around the time they go public, hopefully a year or two so the directors can get up to speed, they need to add independent directors. There are a bunch of regulatory requirements.

You have to have three independent people on audit, a couple of people on other committees. So you really do have this need for independent directors for the first time. Beyond that, companies are such a wide range. I mean, you have a huge range of private, companies from, you know, little tiny two-people startups to very mature private companies that could be public if they wanted to. Similarly with public companies, you have companies that are just public, you know, all the way to the very biggest companies in the world, and the processes and experience, I think, is very different. Zendesk is at my favorite stage, which is the growth stage, and it was fun to work with the company as it was putting in

all of the mechanics of being a public company, and at the same time it was continuing to grow the business. Michelle, let's focus on your experience right now for a little bit. You are a general counsel, presumably you're a lawyer. Yes. So what role do you play on the Zendesk board? And how do you kind of see, you know, if we're thinking about there are slots on boards, what are those slots and how do they get filled?

Yeah, so to speak about me in particular, so I think of myself as a business person first and a lawyer second at this point. I've been doing it for so long and had such a broad, at Amazon for so long across so many different businesses that in the context of a board meeting I'm interacting in a business role. You know, sometimes I'll see a small legal issue or something and raise it or address it, but it really is a broad, broad business role. And Zendos has a great general counsel, too. So there's really not a lot for me to do on the legal side. And I think, again, part of, we talked about this already, but part of being on a board is really

broadening yourself beyond whatever that basic functional area is and getting that broader experience and contributing in a broader way. There's no slots. Like, I don't think of slots, right? To your point, you can't be a one topic board member. That just doesn't work, and you're not contributing to the board. So I think every company is different, and you've probably found that with Zendesk, right?

I mean, some need different skill sets, but it's not a slot for a lawyer, a slot for a technician, a slot for a marketing person. I don't think very many boards operate that way. So, I mean, it sounds like the message is you come in with your sort of own personal expertise broad or narrow or otherwise, but you need to be willing to kind of jump in and think broadly about all sorts of things.

Absolutely. And even for, there are some spots like public companies board need, you need to have a financial expert. Yes, that's true. But even that financial expert needs to be able to contribute very broadly across all issues. Right. Amy, you are on your first two boards. What's been surprising as a board member?

So you've presented to, you know, hundreds of board meetings, I'm sure, from the other side. Now that you're on a board, what's been surprising to you? Well, it's been interesting, certainly, to see and learn the different ways that various CEOs communicate with their board. And the different ways that boards spend the time together. Comparing that to Zillow's board, which I'm very familiar with. And these two, there are some of them

that the entire time is spent giving an update on the business. And then there's very little time at the end for the board to actually give feedback and talk about bigger. There are some that materials are sent in advance, we read it all, and then we spend the whole time talking about big picture issues. And I think I've learned a lot about what works best in board meetings and I've been able to give feedback to the CEOs at the boards that I'm on. So that's been really, I think, interesting and enlightening to me. But also the various roles that different board members play.

On one of the boards, I'm the first independent director. an op person who's an operator today in a room full of VC. So I think there's an interesting juxtaposition and everybody has a different perspective. And that's been something that's been, you know, really interesting to learn as well. Don, you have the most experience around this boardroom table. What are some of the obstacles that you think first-time board members, or maybe not even first-time, but experience board members face? And what do you need to be prepared to sort of get through?

and maybe it's finding your own board presence and personality, or you think you know what you're doing, and maybe you do, but maybe you don't. You don't really. First of all, every board's different, as everybody has said. And so you have to figure out what's the culture of the board, what are the norms of the board. It was interesting when I was interviewing for the Walmart board, somebody asked me the best question I've ever been asked in an interview, and I actually use it.

They said, do you have enough self-confidence to not talk? And I thought it was a very wonderful question because a board meetings can go awry if somebody wants to hear themselves talk. And so you need to know that you don't always have to say something. So I think that's – and I always tell people when they're new on a board do a lot of listening. I mean, do a lot of listening. Although once again on my Walmart board, the first board meeting, I listened. I took lots of notes and we got to the end of the meeting. And the chairman said, okay, now it's time for each board member to spend 10 minutes talking about their perspective. And I thought, oh, my God, I'm brand new. I don't have a

perspective. Thankfully, I'd taken a lot of notes. So you have to be prepared when somebody calls on you as well. But it's like starting a job. You have to treat it like starting a job. It's important. Is that one of the things like take a lot of notes? I mean, is that we were talking about the other day about minutes and how important those are. But I mean, are there certain things that really help you be a better board member? If you don't know the business, for me, I like to learn about the business and it helps me stay focused and learn about the business. everybody's different and you know boards are different in terms of how much note-taking they want or don't want and how the materials are presented every board is a little different but so it depends on how you learn and how you engage actually I think one thing that's been a learning process for me is for both the boards I'm on as a CMO I could jump in and say here's how you should run these areas of marketing but as a board member I'm gonna be much more effective if I just ask questions and listen yeah and that was something when

I've joined both boards, I wasn't quite sure at the beginning what role I should play and it's something I've learned, right? Ask the questions, connect them with people, empower them to figure out the right solutions for them, but don't jump in and tell them how to do it. Right, because it's your job to be CMO for the Zillow group, but it's not your job to be CMO for these other two companies. Interesting. Michelle, what works for you? So I think you need to be super, super passionate about the company, the people, and its products. And I think you need to do your homework between meetings. Like if there's a product, you'd better be using it and understand it.

If it's a product you can use. You'd better be using competitors' products. You'd better be reading everything about that company. You'd better be reading everything about competitors. If you have questions, you need to be talking to management about it. You can't really do it, I think, at the meetings. You have to participate in the meetings, obviously. But so much of it is just what you do between meetings, really making sure you understand what's

going on and you're up to speed and can contribute. What's been a surprise for you in terms of like, wow, I didn't know that this is the way it worked being on a board? You know, I have been in the boardroom my whole career starting when I was a lawyer at Perkins Cooey and various sizes of companies, and then the whole time I was at Amazon, you know, every board and committee meeting. So to me it was a really natural role. The hardest thing for me has been that even though I understand the board recruiting process and I was in charge of a lot of it at Amazon, working really closely with the outside directors, I just, it is a long process and it's really in fits and starts and a lot of times there's

imperfect information blow back to the candidate. And I like to drive things and so I've just had to force myself to be really patient. One of the things about being on a board is that it's this sort of chicken and egg problem. You know, people who are on boards get invited to be on other boards, but how do you break through that? And, you know, Don, you probably help folks, you know, all of you do this process. you know, what do you, what works well? And what would you advise? So I don't know that there's any one thing that works well. I think there's a variety of things. Network, network, network.

Everybody says that I networked for about 20 months before I got my first board. And I was working with a colleague at Schwab who had been a CEO previously and then came into Schwab to run a big division. And she was the one. She got calls for boards all the time. And one came that sounded like it was a good fit for me, and she recommended me. And so that's the way it goes. You need to let a lot of people know you're looking, and they'll keep their ears open, hopefully. And you have to not nag them, but you

have to kind of just remind them periodically that you're looking. Many times they'll say, what are you looking for? In my case, I didn't really, I didn't have any specific thing I was looking for. It was more a general place where I could leverage my technology expertise at that point. So I do think networking works very well.

For private boards, obviously the relationships with the venture capitalists work well, relationships with the CEOs. I also think you can be an advisor, you can be an angel investor, you can get to know the team and show your value over time, and that can leave to a board seat. So I think that's another way. The other thing I think is helpful in addition to just all the general networking, letting everybody you know, helping them understand that you're interested in a board is if you have an idea of what you want to do and you can really try to learn more about getting onto those companies, what I did when I started. is I picked five companies that I thought were just super interesting where I thought I could really add value but also really learn. And I decided I wanted to try to get an introduction

to each of those firms. And I did, which was great. But I ended up not getting any of those board seats as part of that process I got on the Zendes board. Can I ask something, you know, when you say you wanted to pick companies at where you could add value, how sort of honest do you need to be with yourself about that? I mean, I sort of think, oh, I could go on the board of, you know, GE and I would add value. You have to be really honest. You really do. I mean, for one thing, I hear people say, well, I'm on lots of nonprofit boards, so therefore

I can do a public or private, you know, corporate board. They're nothing like each other, nothing at all. As far as I'm concerned, doing nonprofits, which are great things to do, that's not going to prepare you for a board. And you have to be honest. So, you know, if you're a marketing person or a technology person, does the company need that expertise, right? I mean, you're not going to go to a company that doesn't have a brand and has never

marketed and never wants to market. That's not going to be a good fit. I'm not going to go to a company. Now I've been a CEO. But before, I wasn't going to go to a company that thought technology was the evil of all evils. That's not going to work. So you have to be really honest about what you bring to the table.

And you can't just say, I want to be on a board because it's good for me. You have to say, what can I add to the company? How can I be helpful? I've scaled things or whatever it is. Amy, CMO, that role, and a company is obviously very vital. But it hasn't been, it's sort of a non-traditional role at many boards, but not today. Like more and more people are looking for people like you to help them.

Why do you think that is, you know, certainly in the technology world, but maybe more broadly? Well, I think certainly for private companies and earlier stage venture-funded companies, nailing the marketing and the growth is going to be essential to whatever they want their next stage to be. So I think it's an easier sell sometimes for private companies. Where I've been contacted on public companies, though, it's often something where the marketing isn't working, right? Or they have a new competitive set. So I think from a skill standpoint, I hear people a lot who are looking for a marketing background. And often a marketing background like mine, which has a lot of non-traditional marketing, non-spend marketing in it.

But what I've also found, though, is just from the operator standpoint, yes, I'm a kind of a functional marketer, but I've been a part of a team that built Zillow from the beginning, right? So on one of the companies where I'm on the board, for example, I just joined the comp committee, and, you know, what I can offer there as far as organizational structure to this and putting more structure to how we handle performance reviews and comps, I think, is really relevant and isn't just market. focused it's operator focused let me ask you guys this and you can name names you don't have to but what has been the best board you've served on or to put it another way kind of some of the best board meetings and why like what what was it about this board or this like session or this intense period that works so well I can't name I that would be inappropriate for me to name names I mean I've enjoyed all the boards that I've been on but the meetings I find most in

enjoyable are the ones that are dealing with strategy, the ones where you're not just having a presentation, which sometimes is necessary, and I understand that, but the ones where you're actually engaging around the strategy, those are very interesting. And where the CEO really uses the board very strategically, and I've been lucky enough to work with many, many CEOs who use their boards very strategically, and that's really fun. It's, you feel like you're making a contribution, and, you know, you're learning a lot at the same time. Everybody wants to make a difference. You want to walk away from a board meeting, feeling like, wow, I contributed. I made a difference to me. And sometimes that's what makes a good board meeting as well. If you could, let me just

poke on that a little bit. If you could tell CEOs how to use their boards well, what would you tell them? Well, I do think that, first of all, I would say be transparent, transparent, transparent, and I learned a lot from all the boards I was on, but one of the earliest boards I was on was eBay, and I was on there for 13 years, and so I watched both Meg and John, and they were both incredibly transparent with their board. They didn't hide anything and they didn't bring just finish things. They would bring things, I'm thinking about this. What do you guys think? Or I'm, you know, kind of mulling about the competitive set. What do you think about it? And first of all, I think that really engages your board members. But

being transparent is really important because people can't help you if they don't know what the issues are, right? And you don't want to just package things for a board. And not very few people do that now, but that's something that I really took to heart when I started running drugstore. I was completely transparent with my board. They saw the good, the bad, and the ugly all the time. And I think the best board meetings also are those where the time is used to talk strategy, to discuss and answer big questions, versus to walk through every area of the business and give an update. So it's not 300 slide PowerPoint presentation? I mean, it can be. I don't think sometimes that's the best use of time. I would rather be sent that

ahead of time. Have time to absorb that and not go through every single slide. Rather, have the CEO say, you know, here's five questions that are top of mind for me. You've now seen how the business is doing. Here's the big things that keep me up at night. Let's discuss. Right. Michelle. I think that's, I agree with both Don and Amy. I think that the best board meetings are the ones where the directors really get to contribute, and that means you've done And I think of it as compliance work, but your business updates efficiently with written updates in advance and quicker discussions. And then if the CEO can bring a hard problem that the board can really contribute on, especially if you know about the problem in advance and can think about it.

I think that's really valuable. So that's your advice for CEOs, too, to best use their boards? I think so. You have to fulfill the kind of updating requirements, but you really ought to save time to get input on strategy and hard problems. Presumably, you put smart people on your board, so you should use that expertise. I also think exposure to the team is good, and it's different in a small company or a big company, but seeing the CEO's direct report, seeing them in action, getting to know them, building relationships with them, I think that's also very positive.

What drives you bananas about being on board sometimes? And let's get back to Amy. You talk about, like, if I'm going to do this with all the vast extra time you have, How much time is it? I don't know if driving me bananas is the right term, but there are challenges to it when you have a demanding day job, that there are weeks when you have time to devote to it and weeks when you don't, and often something big or urgent happens on those weeks when you really don't have the time, right? So figuring out how to balance that, how to be a good board member to be available for the CEO and other board members,

but also balance that with your current challenges and your job and things you sometimes can't plan for. It's hard. I think the answer on your time commitment question, I think it's an important question because it really varies, especially for public company boards. I think you can be sailing along and spending really not very much time, but if something big happens, you're going to have to focus on it, and you're going to have to focus on it now. And so when you take a board seat, you need to be prepared to make that commitment

and to understand that it's a very, variable time commitment. And one thing for first-time board members, too, is securing the support of your own boss or CEO or board members that you'll be spending time away or traveling away from your job for this sort of thing, and making sure they're supportive and can help you in this. Let's switch gears a little bit. We are in Seattle, and we are looking out over Elliott Bay. What's the Seattle tech scene like these days? You know, I came up from the Bay Area, which there's a tech scene down there, certainly. Amazon, Microsoft, Zillow, what is the Northwest sort of doing a good job at right now, and how are things changing? There's lots of exciting young companies here. Now, I think it's getting much, much more vibrant, and I think we're going to see even more over the next five to ten years.

There's a great angel investing network. I've been doing some advising and a little bit of investing, and I've been very impressed. with the quality of the CEOs that I'm seeing, the quality of the ideas. And I've seen a big change in the 10 years I've been in Seattle. It's much more vibrant. There's much more going on now. I think it's pretty exciting. I think there is, there's an interesting parallel to the, I guess, personality of Seattleites

versus the Bay Area that you can see in a lot of the companies here. Seattleites are a little less ego-driven, a little less apt to talk about themselves and you see this in companies in good ways and bad ways so in in bad ways what I see sometimes with with startups in early-stage companies is they don't go into this saying you know I'm going to rule the world and build the biggest thing I can and everyone's going to know about it they come into it saying you know we have a really good idea and we're going to play around this and see what happens but sometimes that can hurt companies in not setting their

ambitions or taking big enough swings or investing in things like PR and marketing early on On the good side of it, I find that tech workers in Seattle are loyal. We don't have the types of problems that our Bay Area office has and others have of people every 18 months to two years looking for the next thing that's going to pay them more. And I think that pays off in the companies we build here in Seattle and that we're able to get people who are loyalists who believe in the dream and who stick around to see it happen don't just kind of easily hop to the next thing.

I think that's great. More companies are seeing that now, though, and seeing the tech talent here, and we have plenty of prominent Bay Area names opening offices up here, which now makes the job market more competitive. I agree, Amy, but it's interesting. People said that to me years ago. In the Bay Area, people want to change the world up here. They want to have a single or a double, that kind of thing. I've seen a real change in the last few years. I'm seeing CEOs who are kind of dreaming big and founders. So I do think it's, I agree. I agree with you, Seattle has a very different personality than the Bay Area, very different. And I agree with everything you said about the personality. But I am seeing a little bit of a change.

And I do think the tech market is getting more competitive up here than it was. We definitely have more, I'd say, mid-stage success stories than we did a decade ago. A decade ago, it used to be early-stage startups and Microsoft, Amazon, and the big guys. Now in the middle, you've got the Zillow and, and completely. concur and other companies that have, you know, seen successful IPOs that have seen successful sales that are building, you know, bigger workforces and bigger brand recognition. And I think that's sort of kind of spreading out and exciting everyone. I mean, Seattle also has another swath of non-tech companies that are doing incredibly well

as well. Yes. Michelle, you were saying... Well, I think another positive change over the last five to ten years is I think there's a much broader base of seed and angel investors. which is really helpful for the younger companies. I think it's a lot easier to get funding here now than it used to be. I mean, hopefully it's going to get easier still, but it's definitely getting better.

There's a great Angel Network here, I think. It's really grown up in the last five to ten years. And that's a function of success at companies like Microsoft and Amazon and Zillot. Partly, yeah. I will say that having grown up here and then looking at South Lake Union where Amazon's building things and where Paul Allen owned kind of that, I mean, Seattle looks like it's changing more than any city in the I will say that. It's changed a lot.

It has changed a lot. And in good ways, too. So, well, I want to thank you guys all so much. Don, Amy, and Michelle. This has been great, and I really appreciate it. Thanks for having us. Thanks for having us.