The a16z Show - a16z Podcast: How to Lead, Not Manage Your Board

Episode Date: March 26, 2015

As the CEO of a startup your board is a critical tool in helping your company grow; the board is there to make you a better CEO. (Or at least it should be.) But how do you best leverage your board’s expertise -- both during meetings and outside scheduled time -- and what kind of people should fill the precious few slots you have? “Don’t end up with one of those boards with six VCs on it,” says a16z General Partner Scott Weiss. Seems like strange advice coming from a VC, but the point, Weiss says, is to have a balance of people on your board -- especially in the early stages of a company. “For every VC you have, add a CEO -- that’s how you get that outside perspective.” Weiss is joined in this segment of the podcast by former Chairman and CEO of 3Com (and a16z Board Partner) Bill Krause; Box co-founder and CEO Aaron Levie; Zillow CEO Spencer Rascoff; and former CEO and Chairman of NetApp Dan Warmenhoven to discuss the practicalities of building and leading boards over the lifetime of a company -- from early days to prepping for an IPO. Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Maybe we should just start with introductions and to get a sense for board experience, etc. My name is Scott Weiss. I'm a general partner here at A16Z, but prior to that, I was the founder and CEO of a company called Ironport, and I was very specific and directed about building that board, which I'll go into in a little while, and then now I'm on the board of 10 companies here. So maybe we can just kind of do really quickly. Then I can pose a few questions. Sure. So I'm Dan Warmanhoeven. for 15 years or so I was a CEO of NetApp and then continued on as executive chairman for a while. In terms of non-Net App boards, I've probably been on about 10 or 12 roughly over the years.

Most of whom have been private, like stage, you know, Series C, ready to go public. I did that with Redback, Aruba, Palo Alto networks, and a variety of others. And right now I think I'm on five. So I'm Bill Krauss. hang out here occasionally. I was a chairman and CEO of 3Com. Since that time, I've been on a lot of boards. I had to do a research project for the CIA. I've been on 15 public boards from Adobe to Sybase. I've been on about 12 or 13 private boards, most of whom have long since gone. I'm delighted to be here. Cool. Aaron Levy, CEO and co-founder of Box. I've only been on one board for about 10 years now,

and it was almost a public board. And then things got kind of weird, but we expected to be a public board, so I will have that experience, and I will come tell you how it goes. But, you know, have fun stories and lots of great lessons and things to take advantage of over time.

I'm Spencer Raskoff. I'm co-founder and CEO of Zillow. I am currently on four boards, three public, Zillow, trip advisor, and Zulili, and one Possible. public, julip, sorry, one private, julip.

That's great. So I just want to get a raise of hands just so I can get a sense of where we should aim the conversation. Just kind of series A, B, or C companies. I know most of you are CEOs. Can we just get a raise of hand? Series A. Okay, series B and series C or further.

Okay, so like, it's about a third, a third. So I think I would love to, for the Series A and Series B, folks in the room, I think maybe first talking about, like, what are some of the ahas around, like, when we kind of think about early stage boards, what are, I want to give you guys some nuggets to take home around, like, building your board, managing your board. And so I want to get us at the beginning, and maybe through maybe two-thirds of our conversation around, like, what are some of the issues around those early? what are the early things that you did right or wrong. I'll go first and then I'll kind of pass the torch right around. I was just mentioning to Aaron that I always kind of had a rule of thumb, like every time a VC joined my board, I'd add a CEO. And so I ended up with two VCs, as it turned out,

and three CEOs on my board and me and my co-founder, which I thought was a really good mix. And something that's counterintuitive at this stage when you're thinking about like, hey, do I really need, like, now it's just me and one other VC that's typical of the configuration. Like you get your round done and you have a VC on your board and it's you and your co-founder and a VC. And when they kind of agitate and say, hey, do you want to get somebody else in the board? Like I was always like a little bit like, really? What do I need somebody else in the board?

Well, one of the key things that might not hit you is if you have, like, let's say, two VCs and two CEOs on your board, you can stock taking VCs. Like on that third and fourth round, you can just say, hey, listen, I've got my board together. You know, like, and I have two CEOs, I've got two VCs. I really don't need another VC. What I need is a financial expert for going public. And so you don't end up with one of those boards with six VCs on your board if you kind of from the very beginning think about bringing on an external board member. So that would be my nugget on early board putting together. So, Dan.

So I differ a little bit. I've been on three boards at Series A, so I'm an outsider and not a venture capital. But I think any more than one outsider until you get to Series B is maybe too many mouths to feed. Having somebody who's actually been an operating guy, et cetera, I think has got a lot of value. And they also can be a mediary between various venture capital and ways that the CEO can't, right? So, especially as you're getting after Series B or various other issues that show up. But I think more than one, I always think of one per stage. Yeah, that's what I meant.

Like, for any time you add a VC, add a CEO. So I think we're on the same page. Yeah, and I think there's a lot of value of that. And then, you know, I think there ought to be an expectation right up front about how long they're going to stay on after a liquidity event. I mean, if you get acquired, obviously, it's the answer to zero. But assuming you're going public, right, what's their continuation going to be? And the audience started having that discussion a while in advance

so you can start figuring out what the replacement strategy is going to be. Well, so early stage boards, when you have Don Valentine and Dick Kramlick, the founder of NAA on your board, it's hard at anyone else. No airtime? You don't need much more after that. No, but I ditto everything that was said. It's good to get an outside perspective on your board. I read a book called Startup Boards, of which Scott's quoted in frequently,

and he talks about the importance of getting an independent director on early as you can. So I'll pass it. But, like, guys, I want you to, like, add, is there any other nuggets about, like, this phase of the board that you would say? Like, I just kind of threw out that is kind of an important one for me that I want to give these guys. But I want to give them some take home around, like, they're thinking about, like, what is the issues with boards? And by the way, we're going to take questions as well, because I know you guys have a specific question. But if there's, like, one nugget that you would have them take away about building their board or managing their board at the series A or B, what would that be? We don't have to go in line if you guys want to think about it.

Because I know Aaron is, like, jumping off the chair. It's like 10 things I'm going to tell you, dude. So, yeah, I mean, so it has to be at the series A stage. Well, Series A, B, I mean, like, I want to just make sure we direct some of the conversations. So it's two-thirds of the room as Series A-B. like what were you thinking about around that time, right? Great. So basically, so it's really interesting.

So our Series A board, we, I don't know how to reverse engineer this so you could always kind of repeat it, but we were very, very fortunate where our first investor on the board understood something about our business model that we had no context for. So it's an interesting case where we brought some out on the board that wasn't necessarily like if you looked at exactly what we were trying to do as a company, you wouldn't know that that should be the person that would be on the board, but it turned out that his insights into, so we pivoted within the first year into an enterprise software focused company. And it was really because he had an outside context for a space that we weren't focused

on that actually led us to realizing the scale and sort of our, you know, the opportunity to be able to go after. And so I think it's probably an important lesson where, you know, the, obviously we, you sort of later in life when you know and you have more sort of specificity and it's clear what the vision and mission of the company is, that's where more specialization and domain expertise starts to matter a lot because you're doing kind of all these new specialized activities as a company at scale. But early on, that ability to have somebody flexible, somebody who's going to be agile in terms of how they think about your business. potentially provide context for and in ways that you're not necessarily thinking about is, I think, pretty important. Now, that doesn't mean somebody from a completely different sector, but it doesn't have to be that level of sort of the deepest domain expertise on day one.

I think, you know, we were lucky that that end up mattering a lot for our business model. And over time, as we built out the board, adding specialization for the areas that we wanted to really augment our own internal talent around. So, like, adding somebody that has a sales specialty, or finance specialty that's... Yeah, the way we think about it now is we look at sort of what are the major gaps in our strategy that are going to be pretty transformative over some period of time, and who would we want to add that would be able to bring that level of domain experience?

So as an example, two to three years ago, we were really going into the large end of the enterprise, and so the person that we selected to bring on the board was the previous CIO of General Electric. And so that ability to add that kind of impact and visibility to where our business was going ended up being incredibly impactful. And just earlier this year we brought on Padmo Warrior, who is really important to kind of where our technology strategy is going over time as we want to build out our platform. You know, today we think about new areas of our growth and you'd likely see us add people that would be very relevant for that kind of, you know, the areas where we don't necessarily have the internal leadership or the interest. internal visibility completely to be able to bring that somebody onto the board who's going to help us transform the company is really important. I'll come back and underscore something you said because I think you went by pretty fast. I wouldn't focus early on on domain expertise or whatever.

I'd focus on trying to find somebody who's been experienced operating guy or person, woman, and who really can add to the evolution, if you will, of your business model. not so much domain expertise or representing a customer community or anything else. Those come in later. I think you want a more generalist who's got a lot of operating experience up front. Almost like a CEO coach in many ways. Yeah, in many ways. I certainly need to work.

I would guess that most companies, when they ultimately get a product or service to go to market, what they started off creating is not what they wound up shipping. And the same way the business model is not the same. Like you said, you pivoted to a software company or whatever. And you want somebody who's gone through some of those transitions and understands the difference and what it all means. I agree. Yeah, I mean, there's a lot of the same themes. By the time you get to be your C stage, I think you want to start thinking about the board like you're building out of baseball team,

where they're all great athletes, but there are people with slightly different skill sets. And what I didn't really appreciate at the time, I mean, somebody gave me that advice. It's so obvious, right? Like you kind of need a director who's more focused on marketing and maybe somebody who's more focused on sales and maybe someone who's more focused on technology or whatever. But what I didn't really realize about all that was it's not necessarily that they're so expert on that particular field that they're going to move the needle on that particular issue because they're never going to be close enough to the details, for example, to be focused on, you know, oh, you should really be selling your product in this particular way,

and I'm this great person that has this great sales experience, so do it this way. It's more that in the boardroom, it keeps the conversation on that topic much more honest, and it forces the management team to come much more prepared. because they know they can't snow the director on that particular top. Maybe they can snow the other couple of directors because they're, you know, whatever, they're sort of at 10,000 feet or 50,000 feet and they don't really understand the particular area. But at least there's one person in the room that can call bullshit on, you know, that subject area. And that isn't really as important until a little bit later, but it definitely becomes important.

So on our board, you know, there's somebody who's the former head of marketing and then CEO at Expedia. And then, you know, we've got financial acumen, the CEO of Liberty Media, former CFO of Microsoft, and then we've got, you know, the VC kind of earlier stage, you know, person who understands so much about early stage growth companies, and then we've got a real estate guy because we're in the real estate industry, and so we've got different subject areas sort of covered in that way. So I'd like to take it back to the series A, B. For the series A in particular, you know, when you're building your board, probably the first person you're going to add is the venture capitalist. And if you're first person, you're going to add, and if you're

fortunate enough to be able to have choices of who you take money from, think about that. You know, think about the type of venture capitalists that you want to get married to, so to speak, because you're going to be with that person for a long time. So don't think about just the money, think about the person behind the money. And don't just think about the brand of the VC, because once the check clears, that doesn't really matter that much. What matters is who's in the boardroom for the next 10 years. And I've been on other boards with VCs from, with really great brands who were the representative was just sort of annoying and not added it to the conversation and it's, you know, you end up dreading going to those board meetings and

management hates preparing for them and it's just, it's just not good. So think about the person, not the firm. Yeah, I would add, if you have a choice, which, you know, some don't, it's always great to have a choice and do a lot of reference checking, you know, both backdoor and the references that that you get from the board member. I think that's really, really critical. And it's It's not done nearly as much as you. Like if how many of, how many, just a show of hands, how many of you guys, when you got your first VC round, called at least five people that that person had been

on the board? About half. That's good. I think that's really, really important. I want to shift gears a little bit to talk about the board meeting and like kind of what constitutes like a great board meeting. And I'll just set the stage a little bit. I always have this phrase that the board eats whatever you serve them.

And so you are the one that's preparing the meal and putting it in front of them. But, you know, if you put up a slide with a bunch of numbers, they're going to ask you about every single number on that slide, right? So how do you guys think about preparing for a board meeting? Again, kind of thinking about the series A, series B, what are you trying to tee up? What's first, second, third? I'd love to kind of get you guys thinking, riffing on that a little bit. Yeah, just like the question evolving to the board, the question of content and so on, the cadence, etc., of meetings changes over. time, depends on the stage of the company.

Most Series A companies have been on, we meet every month or six weeks. It's a couple hours. It's really focused on how we do it internally, on building the product, hire any engineers, spending the money, whatever it may be, maybe a little update on what's going on the market, but it's mostly internally focused. And then it shifts quite dramatically. I think the ones that are more interesting are as you go to market. What's the strategy for everything from the sales process, marketing process, it's a

That's where the big bucks go to. That's really where the high risk is. And so getting really good data about the customer connections and competitive issues and objections coming back from your target customer or whatever. I mean, that's the meat that you really want the board to understand, right, and to really help you understand, actually, feed it back to it. I just find that other than, I mean, what makes a good meeting great numbers? You know, you're ahead of plan, et cetera.

It rarely happens. I mean, you know, if there wasn't some set of issues to deal with, you wouldn't need a board. You know, I think the key in constructing the meetings, and there's a question of frequency as well, right? How often do you want a meeting, you know, is what do you think the directors want to know and understand? This has nothing to do about you. It says to do about them, right? And audience advocacy is, I think, important to keep in mind. You're going to want to tell them a bunch of things, and your team's going to want to tell them a bunch of things.

And I don't really give a shit most of the time. I want you to tell me the important stuff, right, that we can then go have a serious discussion about. And so I find the best meetings of those which are very succinct around mundane and leave lots of time for the meeting subjects. Well, I'm going to offer three high-level general guidelines. are rules of the road. And then we'll get some practical suggestions. The first is most boards prefer to be led not managed

in the political sense of the word. And boards are just like any other team. You need to spend time developing your board in terms of turning them into a cohesive, collaborative, high-performance team. And you need to do that through shared experiences, the classic dinner before or after, or even one of the fun experiences we had.

we took our directors out go-kart racing and watched Kramlick and Valentine going to each other like they were in bumper cars. That was kind of fun. So first thing is, you know, boards want to be led, not managed. Second is don't bullshit your board. They'll see right through it immediately. You know, practice the notion of under-promising and over-delivering. and in that same vein delivered bad news as quick, if not quicker, than good news.

The third, which leads to the third one. The third one is practice a construct that I used was extremely valuable was, let's go around the table and share your thoughts. That way you get the perspective of every director in terms of their thinking on a subject. And after you've gotten their perspective, summarize what you've heard. Then you get the benefit of not only heard what they had to say, but you build credibility with him because, oh, wow, he really heard what I had to say. So given those sort of three high-level rules of road, back to the more practical stuff,

is in terms of the preparation, one of the things I use to judge the capabilities of the CEO is, can they get their shit together and get the board package out in some reasonable amount of time two to three days in advance? If you get it the night before, and if you can't manage getting the board package out, How the hell they manage the company? The second thing I look at is how thick is it? I mean, if it's that goddamn thick, I mean, practice the three Cs.

It has to be clear, concise, and compelling. If you can't do that, you don't know how to communicate. So, you know, those are some practical things about preparation. And presentations, same thing. I don't want to see a slide with 400 words on it. How about just four or five, I mean, practice the Steve Jobs rule. No PowerPoints. You know, stand up and tell me what you think.

So that's looking at more from the board members point of view. That's great. Pass it on. Yeah. So I mean that kind of covers a lot of it. I guess maybe the only things is it's probably a good way to think about from a content standpoint, probably the less you want feedback is probably a good sign that you need to add more talent to the board.

So if you're just using the board meeting as a way to deliver the latest and the information and it's not a strategic conversation. It's probably a good sign that you want to, you know. Your board sucks. Or you don't want to add more to the bench to change the dialogue and add more kind of conversation. So that's a good kind of way to think backwards from like, you know, the actual

structure of the board. So, you know, for us, it's part updates and delivery and then part sort of strategic conversations around kind of key junctures of the business. I think, and this is something that we started doing a couple years ago, but including executives in obviously sessions of the board meeting, it's a great way to create accountability for other members of the team. And it drives execution, and it really helps expose them to the board and vice versa. That actually ends up being a pretty good kind of gut check on your talent as well.

Because there's, you know, to the extent that you have experienced board members, that's a good avenue to just learn more about. kind of the talent that you're building up and it becomes an easy and early way to identify where maybe people are hitting scale issues on the team. So, you know, leverage your board and that board meeting as a tool to drive, you know, strategy improvement, to drive accountability with executives to obviously educate and communicate the latest in the business. But it can be a pretty useful mechanism just as a kind of cadence of the business if you leverage it like that. So first advice I would have would be, if you have time, I do think it's helpful to join other boards.

Now, it's probably not practical when you're at A, B, or C stage, and you can hack this by sitting in occasionally on other boards. I did that before I started joining other boards, I would find some other company that I found interesting that was not competitive, where either the VC introduced me or I knew the CEO. I would sign an NDA. I'd go to one of their board meetings and just sit there quietly. and then joining these other boards has been really valuable to me in the Zillow board meetings have gotten much better since I've joined a couple other boards. But then some sort of more tactical things. We require decks have to get out or memos or whatever, 48 hours ahead of time, if possible, 72 hours.

But 48 is the absolute latest. We switched about a year ago to a memo system after Bezos and Amazon's model model of kind of no-packing. PowerPoint for one or two meetings in a row. And it was a lot more work, but because I had to sit down and write it pretty much from scratch instead of just pulling slides from internal management decks from other kind of monthly or quarterly meetings that we already had. But it was actually a really, really great exercise for me. It forced me to sit down and develop a narrative and really think about how to describe

how things are going. And we've switched to that model entirely now, and now different people write different sections, and then I kind of edit it. And I really like that model. I wasn't so sure about that switch. It's worked well for us. He's done it twice. We've done it probably three times now, I think.

And so what we do now is it's like a 12 or 14 page single line word doc in PDF. And then there's a deck with way too many slides, like basically culled together from different internal meetings, which I'm sure no directors even browse through. But that's sort of there as the backup to say, look, we also have all this data if you really want. But here's the description of what the heck is going on at the company. And then the other thing, I agree with what Aaron said about having management attendance, I would just be really thoughtful about it because that's currency that you need to think about how to distribute. And once you start inviting executives to board meetings, it's really hard to get them out.

And so including board dinners, there's no good rule of thumb, but you'd just be really thoughtful. Don't do anything casually. When you're running into a meeting and someone says, hey, can I go to the board meeting tomorrow? Don't just answer like, you know, on a whim. like, you know, really think about who's going to what and why, and how do I explain that to this other person? Because you would be shocked at how, you know, seriously people take this. And then there are two good best practices that I have from other boards.

We actually don't do this all that well at Zillow, but we should and probably will, based on this conversation. The first is, you know, every board meeting has an exec session without the CEO towards the end. You know, we save 20, 30 minutes at the end, kick the CEO out. board talks it out the CEO. And a lot of boards do that. Zillow actually does that. But what this one other board does is then we bring the CEO back.

And one of the directors, while the CEO, that was kind of nominated to sort of playback for the CEO what the discussion was while they were out of the room. And it's usually that last half hour once the CEO comes back is the best discussion of the whole time. And so I found that to be really helpful. And then... I wanted to stop you on that.

Yeah, sure. Because with every board I'm on after a period of time, I try to convince the CEO that it's a good idea. Because when I first walk in, it's normally like, what? You're going to be talking about me when I'm not here? But the implied reason to do this is you guys aren't talking about me. There's no side conversations that I don't know about. The implication is you fuckers aren't getting together for dinner outside and talking about me and my company. Like you have this time after every board meeting to talk and kind of have this together,

then you bring me in and tell me what's going on. So there's not any conspiring outside of the board meeting, which I think is one of the big reasons to do that. In addition to, like, when the directors have to get together, like there is an issue, it's not an odd thing that you're freaking out about, right? Like it's just something that happens at a normal cadence. So sorry, I feel really strongly about that, and I think that everybody should have it. Can I take a tangent on that real quick? Since a lot of those issues are performance-related, it's really awkward to have one of the CEO's direct reports in the room.

You find a lot of board structures that start off with a CEO and a technical founder or whatever, a co-founder. Get them off. Get them off. You can't have a really candid conversation about the performance of the CEO with one of this, the board that's participated. It just doesn't work. Totally agree. Yeah, and we have a problem there, which is our COO is also our GC, and she's the secretary, so she's supposed to take notes. So we kick her out.

Throw around. We have somebody else. So, yes, totally agree. So another best practice that another Monom of Boards does is every, you know, maybe twice, maybe three times a year, so not every board meeting. Put up an exec org chart and the CEO goes through with a very open narrative on each of their directs and with the board. You know, pros, strengths, weaknesses, you know, succession planning, like brutally candid

about each of their directs with the board. And not all my boards do that, but I do like that. I have a lot of things of when board meetings go badly, why, but I'll, I'll let you ask the questions. No, no, please, if you, let's, why don't we start with that? Like, because I think there's a, the continuum of great board meaning to horrible board meeting is great board meaning, and I don't mean like regardless of the numbers. Like, obviously, I have a lot of great board meetings and the numbers are going up to the right. But, but, like, great, like, you know you're in a good board meaning, which you know you're in a horrible board meeting is, you know, You're completely transparent, you're completely honest, and you're talking about the critical issues of the business, and you look at your board members at people that care and are smart and are going to help you, right?

Like, that's the energy that goes into the board meeting. The other board, the kind of the dark board meeting is, you know, I'm hiding a monkey. They're trying to find the monkey. You know, like, and it's like the whole thing is like a dog and pony show. It's rehearsed. Like we spend a lot of time preparing for the board meeting because we don't want to screw anything up. We don't want to like, like, kind of like make sure that the lacquer is on everything. Like those are the two, like you know you're having a bad, like, and also the, I look forward to board meetings versus I can't stand board meetings.

You know, those are also the two opposite ends of that extreme. Like the board meeting I look forward to is like I'm going through a lot of crap. I need some help. Like, and these people are going to really help me as opposed to, you know, I've got a lot of things and the board is going to be at my ass. You know, like this is not fun and I'm dreading it. And the other thing that I think is really important about the good part of board meetings is that it's a time to get the whole team to get their shit together. Like, you know, the board meeting is a focal point for everybody like, damn it, you know, like, I've got a board meeting in a month. Like, you've got to get this done.

You know, like there's a, there's like a general like anvil that, like, or not anvil, it's like it's like it's a part of like. And what you were saying is a progress report. And it's a sync, like, how are you doing on the goals? What did you say you were going to do? Did you do it? You know, that type of thing. So why don't you go through the kind of bad board meeting? Go ahead.

Some bad things. I hate when I have to dial into a board call, and I hate when people are on the phone. I just think it, you know, we all know they're only half paying attention. We all know that, you know, it's hard for them to hear and papers are shuffling and whatever. And that's usually, you know, I usually can write that person off from the board meeting if they're not there in person. So that's bad. The biggest sign of a bad board meeting is one where there's a lot of surprises. Like if you've got bad news to share, for example, you want to share it ahead of time,

and you want to make sure that bad news should travel faster than good news and that it's out there before the board meeting, so there's no big a haas at the board meeting. And the flip side of that is just to be succinct about what makes a good board meeting. A good board meeting is one where there's an active and lively discussion about some important strategic issues, and you're getting, as a CEO, you're getting good input and advice from other people about how to deal with these two or three big issues. It's not about reporting and regurgitating what the numbers are like. It's a discussion about something that you're having a hard time with.

Well, so. I know you guys are anxious to ask questions. Why don't we just turn it over to you guys and we'll get some questions going? Yeah. So this is, I think, more series A and maybe even bigger boards you go with this. You start out and you have like a really small board and then you start with one investor and then you have another investor. Then like the lawyer shows up, then the lawyer brings the other lawyer and then the principal

shows up, then the outside director or second outside director. you go from this really intimate conversation to like no conversation about the... What's the ideal size of board? You know, once you're public, I would guess, it's probably about eight, CEO, plus seven others. I mean, you've got to have financial experts and comp committees and all the rest of that stuff. But any more than eight, I mean, it's just too many. And, you know, I think the question...

You know, like, you know, the sort of assisted the principal... Yeah, we've... From the day we took our A round from benchmark in TCB, we said, no, you know, only the partner. Just the partner. Yeah. You know, and no, you know, I mean, yes. So when I showed up the first time at the first Zooli board meeting, there were literally 30 people there or something,

because it was a hot company, about to go public. Everyone was there with their observer seat and their assistant, their associate, and their secretary, and whatever, and it was just like, it was a worst board meeting. And we couldn't talk about anything. I didn't even know who everyone was. And they cleaned house, and, you know, now it's a really well-run board. If there are, you know, the only compromise, I guess,

is if there are people that need to be, like, I don't know, There's one board on where they don't have an in-house GC, and so a lawyer from some, you know, I don't know, Wilsonson Senior, or wherever, some expensive law firm, somebody sits there for six hours at $500 an hour or whatever and takes notes and typing away, whatever. And it attracts from the intimacy of the conversation. And what I keep meaning to suggest the CEO is then just dial that person in. And they'll put us on mute. We won't even remember that they're there. If we need them there for the cameras or whatever, then let them be in by phone.

And I think that's a decent way to get people out of the room at least if they have to be involved somehow. I was less, like it wasn't that big of a deal if somebody brought somebody else occasionally because the board members were so strong. Like they would sit quietly and listen. Rare that they would actually open their mouth. However, I have run into situations now where you try to get like a customer on your board. where they want an observer seat if they do a strategic round, somebody like, you know, I won't name any names. But sometimes that can alter what you say in the board meeting.

You know, like the product's kind of screwing up or something's going wrong. You're not going to want to have that kind of a frank conversation at the board when you have a customer there. And so then you have that, you have to wait and have that conversation in the closed session, which is kind of a pain in the ass. So, like I think, like a junior partner that somebody that's somebody that, is trying to mentor, as long as they're kind of quiet and listening. I was kind of, you know, I let that slide. But I was very careful about letting customers dial in and that type of thing that came on later at Strategics.

I did with one, I mean, one of RVCs has kind of a model of like no junior people, so it wasn't an issue. The other one has junior people, and that's sort of part of their model. And so basically it took. It takes more time, but I dealt with the junior person a lot more offline. So it's like, look, I'll commit to talk to you, you know, whatever, four, six, eight times a year, like offline. We'll send you all the board materials and whatever. Because it is important for that person to be plugged in because the partner gets leverage from that person.

And so I do kind of want them to know what's up, but I didn't necessarily want them in the board meeting itself. So it's another way to solve it. So let me go, well, before we get to the questions, let me go quickly down the list. frequency. Situational, earlier stage, more frequent, later stage, less frequent. Generally, either every other month for Series A, once a quarter as you get into Series C, but very situational in terms of the frequency. Next question is, well, okay, well, what's the length, oh, and relative to frequency, back to Spencer's point, no dial-ins. You know, board members have to show, My number one criteria for a board member joining the board number to start is he has to be willing to show up and do good work.

If you don't show up, I don't need you. So frequency once a month, once a quarter later stage. What's the length of the board meeting? Two hours minimum, four hours maximum. And that's, again, situational depending on what you have on the agenda, which leads to the agenda. What does the agenda look like? The agenda usually, the way I think about good board meetings, it has three parts to it, like a good play. You know, the first part is sort of what I'll call

administrivia and operational updates. And, you know, that's 30, 45 minutes, something like that. And count on the fact that your board members have read the material that you've sent out. Bad more meetings when I sit there and listen to somebody standing up there reading every word on every slide. It's just bad. So in terms of the agenda,

first part is the administrivia and the operational updates. The second part is where you get to the real meet of the meeting, where you get to the strategy, and that's where you get to discuss the issues that are on your mind. That's where you get the advice from your board members. And by the way, if you have an issue that you're struggling with, don't come in with a blank sheet of paper. You know, come in with your point of view

and then ask your board members for advice and go around the table and get their thoughts and then repeat back what you think you heard. Okay? And then the last part of the agenda we've already talked about, where you have a private session with the board meetings and then have a CEO come back. Okay, so that's the agenda. So then you get into the prep, and I think we covered the other things,

the preparation and the presentation material. They pass it to somebody else. I want to make sure we get to these questions. I do want to, like, I like the content. I really appreciate the, I typically start board meetings, and I like having board meetings start with the CEO only and the board members. and the first slide is highlights and issues. And so the highlights are,

give me the three, four things that went really well or that you want to highlight to us, and here are the three or four things that we got problems with. And sometimes you'll spend an hour in that first bit of the session, but it helps frame the conversation, and then when you, you know,

like the issues are what you spend most of the board meeting talking about. Like I believe the administrator of you could get sent out before the board meeting, and the board members are used, you know, they can read through all that and have questions, but I want to talk about the most of the board meeting is the issues, you know, and I want to bring in, like if the sales issue, I want the salesperson there, and let's drill into it. Here's my best understanding of what we should do, but I want to give.

But anyway, like that, that, to me is a different cadence, and I just wanted to add that in. Well, the only thing I would add to that, to me, what's helpful is a board member, set the minister of you aside. I agree with you about that. But in terms of the operational updates, frequently that can set up. the context for the issues that you're going to, in fact, the operational update should be short, clear, concise, compelling, and set the stage for the issues that you really want to get to. Okay.

I did find, and not that, you know, counter-equit bill said, our meetings always went better when either I as a CEO or CEOs who are in meetings or I'm a director, spend the first 10 or 15 minutes doing what you said. And I think they can even frame the meeting, right? If here's the issues you're going to hear, here's what's not fully baked, here's, you know, where I'd like your input. Absolutely. And kind of give them the roadmap to what's going to happen, as well as situational analysis, right? And I found out to be very, very viable.

So I would encourage all you do that. I encourage every board I'm on to start the meeting that way. It's a private meeting. It's a closed-door session. It's a CEO report. What it's labeled as is no materials in advance. It's all verbal. And what are their activities should you expect a board member to do outside of the board meeting?

So maybe, you know what I mean? Like what are the interview executives, that type of thing? So that's a good broad question. Yeah, I mean, I'll just start out there. So, because I was first time CEO, if we don't count the other things that failed miserably that I did. But so basically, you know, I think that I initially felt a tremendous. tremendous amount of pressure that like the board had to be the way that that like that was like the way that you would learn about growing the business and building up the

company because because like theoretically that that's the only thing really above you and and then there's a lot of pressure like who would you add on the board like because that you're really like making a bet on on like one person that that you think you're going to learn from for a really long period of time and I would totally separate like the ways that that you're going to learn and be able to grow as a as a CEO from the role and responsibility of the board So I just inverted the entire model, which is like, we've never done a board search. What we've done is built advisors around the company, gotten close to lots of people.

I personally engaged with, you know, 50 or so CEOs that have been through very similar problems over, you know, similar areas of technology or different areas of technology, rather. And then as you build those relationships, it becomes obvious, like, who is somebody you think you can learn from over a really long period of time? period of time and then for other people where you just need tactical advice that around a situation you're dealing with you want to have a cadre of people that that can help with that that might provide completely different perspectives because even actually if you listen to probably our answers of these things there's you know different answers for every single

question and I think that's just the reality is every situation is different every company is different so so you'd rather actually be able to have you know an order of magnitude more people that can help you solve problems and make decisions than just the board of directors because there's going to always be different, you know, points of view and perspectives that are going to help you grow and help you build up. So the board is much more of the, you know, just a strategic function, I think, and then obviously making decisions around, you know, budget and, you know, how you're going to kind of grow the company or whatever. But it doesn't have to be the sole way that, you know, you grow your own leadership and scale.

Yeah. Let me just add on to that. The board is not there to help you be successful. The board is there to help the company be successful. You are expendable. Just keep that in mind. The amount of time you should spend on your personal development in a board meeting is zero. And if you want to latch on to a director and get lots of advice, that's great, but do that outside the meeting.

If you want to get there a critique and how am I doing, that's great, but do that outside the meeting. And the meeting is not about you. It's about the company. By the way, there will be a follow-up meeting on how to structure your control of the company, which we asked for this panel. I totally agree though, as kind of Machiavelliate and, you know, as that sounds. I totally agree that, you know, if you are so self-aware that you know that you want to, you know, use this, you're lucky enough to have these panel of experts to help you become better, you know,

good for you for realizing that, and you should absolutely use as much of their time offline as possible that they'll give to you. But I don't think that the meeting is, I mean, also for a practical standpoint, the meetings are short. It's kind of awkward in that group setting. They're infrequent. It's like not a great place to do that. And in terms of what's expected outside of the board meeting or whatever, I mean, before you join a board,

before you invite somebody onto your board, you should definitely set expectations of what's appropriate. I'd say the general, I mean, I don't know, I would expect any of my directors to be available to do pretty much anything that we asked in order to help make the company successful. Practically speaking, it's not all that much. outside of board meetings, at least in our case. But there are other situations where it's a lot more often than that.

Yeah, just to pick up on that, in terms of what you expect from a board member, when I join a board, I join the board with the expectation, I'm 24 by 7. Now, I can't be instantaneously 24 by 7. But if, well, a specific example today, I can't give you the circumstances, but critical issue, board members sent me an email this morning. I had a lot of stuff to do today, and I made time to meet with that board member this afternoon. So you should, if you don't set the expectation that, you know,

when you need help, you need help. And if the board member is not prepared to do that, well, then maybe you ought to think twice about it. I do believe that you should have, there's not coaching going on on the board meeting per se, but I think it's great to have both, you know, a VC that's had operational experience. obviously we build this whole firm on that premise, and to have a CEO on your board that can be kind of a de facto coach. And I think, especially Series A, Series B,

you want to have enough contact with those folks outside of the board meeting. So you get to a comfort level where, you know, like, as I was growing up as a young CEO, I wanted to be comfortable enough with them that I could ask them the stupid questions about like, well, hey, I'm trying to close this guy, how do I do this? I would also recommend that there are things that you don't want to share with board members that you'd want to have a mentor or a CEO coach that you can ask those stupid questions with.

So I think there's a range of questions that I feel totally comfortable and want the board members to be on the hook for. But then there's some others that I'm like that where I kind of need to bear my soul a little bit where I think, you know, I don't want them to think that I'm that weak. You know, like there's a, I have asked those questions to like a CEO coach that I would never ask a board member. member, you know? Yeah. And so, I mean, it sounds like Aaron's built a personal network of CEOs, so have I, that I use for that sort of thing.

I'm in YPO, which is a pretty common or EO or whatever. There are lots of these different organizations, which is another good place to find that network where you can talk about, I mean, an obvious thing is your own comp negotiation. Right. Like, you know, you can't, you don't want to discuss that with your board, you're kind of sometimes on the other side of the table, and so you need somebody to help you figure out to advocate for yourself sometimes and you know you can't find that from your board you'll find that from your peers or from other organizations how important

do you think it is to have a stage a life situational I mean people with large company experience can be helpful because they know what they is I mean show me a CEO who doesn't want to build a big company and I'll show you a CEO there's not going to be a CEO very long but you know so all of you want to build a big company so having a CEO on your board that's that's either built a big company or been in a big company, helps you understand what the answer looks like when you get to be big and all the things you don't want to do

and the things you do want to do. On the other hand, when you're small, big company bureaucracy is not very much help. So having the perspective of someone who, I mean, if the ideal situation is somebody that's been in it, who started a company and built it into a big company because they've seen the whole movie. I think it's pretty important.

I'm thinking back to 2008 when the world came to an end, the directors that were most helpful to us working through that were the VCs that had a lot of early stage experience and had seen a lot of other companies die. It wasn't the marquee Fortune 500 CEOs who are on our board who have big names that everybody's heard of. I mean, I guess the VCs are big names also, people have heard of them too, but you know what I mean? It's people who have seen the earlier stage stuff that were more valuable there than the later stage. So I do think it's pretty helpful. How do you guys think about ongoing board communication? Yeah, I wrote a monthly board update letter.

Right. At the early stage, a monthly update board letter. Now, on the flip side, looking at it from the other side, a board that I'm on sends out this big, thick binder every month. And I keep asking the CEO, are you sure you want to go through all this pain? How about you? I love reading your letter. That's the summary letter, but, you know, but they want to do it. because it's the discipline of having to put everything together and doing it.

But I think a letter, a monthly letter from the CEO is very helpful. Both for, equally for you as the CEO, because it forces you, I think Spencer may have said, or Aaron may have said, but it forces you to put your thoughts together in a cohesive way. I'll take credit for that, thanks. It's hard, though. I mean, I wish I had, I wish I made the time to do a monthly communication. I don't. I don't, do you?

Well, the, is that an appropriate? every time I tell you. Go ahead. I would say that the one, the, you can actually find lots of ways to leverage communication you're already doing. So like we send a company all hands note monthly and that this sort of lays up the strategy or whatever. Just literally forwarding that to the board of FYI here's the latest or maybe at a strategic

juncture. Like that counts as communication. So it's the exact way to, I mean, you know, any way that you can get more leverage out out of the content or the communication you're already producing, you know, the board is another constituent that you need to communicate to. And I would also add that companies do too few communications to all internally anyway. One of the things that we used to do, any time that I would go on a sales trip, on the plane ride back, I would write out notes from the road.

And it was just my perspective. I'd talk about every interaction I had with customers, and I'd send it out to the entire company and I'd also send it to my board. And so it was just, it's a, you know, constantly thumping, you know, the company with things that you're, you know, like, or when I'd go and meet with a Gartner analyst and, you know, like here was the, the back and forth, sent it to the entire company. And, you know, and I would try to spread out that, that love with the, I'd get my executives to do that as well. It's just, you know, emails to all is just a great channel to keep everybody on the same page. And we'd also, like, go through the board slides of the whole company after

after every board meeting and talk about what was talked about in the board meeting so that there's like a great bit of transparency there. But I totally agree on leveraging the communications that you normally have. One thing you might want to consider is delegating it. In the early stage, in that app, we did a monthly business review as an executive team

with the board meetings are quarterly. And so the CFO had their responsibility to kind of document what went on in the monthly business review, pick a few highlights, slides, and he did the commentary, cover letter, and send it. out. That's great. Not everything has to land on your desk.

Okay. Well, hey, thanks to the panelists. I appreciate you guys using the time. I really appreciate the turnout. I hope you guys got something out.