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Mark Suster

Managing Partner, Upfront Ventures

Managing Your Startup Board

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

Shareholders

Board

Executives

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And of course this is the legal & fiduciary

role of a board

Shareholders

Board

Executives

}

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But if you want to be truly effective as a founder you should think more about how YOU manage the BOARD.

Board

Executives

Make your board an extended part of your

executive team: super-connected,

free interns.

"I can always get money. Where else can I get very connected and powerful

people to do work for me?”

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- Founder

Photo by Brittany Simuangco on Unsplash�6

How boards initially see you - it’s a bit like new parents - it’s not adversarial at all

• Unconditional love

• A sense of responsibility

• An important role in “oversight”

• Define their own image by your success

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

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Ultimately it’s up to you to take appropriate risks - but you

must then manage the board

The Continuous Board

A different way to think about managing your board

!9 Photo by Sasha • Stories on Unsplash

Board meetings are how most founders think about board interactions

but they're actually the least valuable part of your board relationship

A great board is a highly-engaged group

who knows your business intimately

If you build trust they’re the only people you can

share most sensitive decisions with

Many founders treat boards as administration functions that solely receive quarterly updates. Let’s call this the “waterfall board.”

Time

Research

Design

Build

Test

Deploy

Waterfall Software Development

User Feedback

Waterfall Board

Q2Q3

Q4

Q1

BOD Update

BOD Update

BOD Update

BOD Update

The “continuous board" approach involves more frequent interactions – call / text / email at any time for quick input to iterate and course correct.

Continuous involvement makes

your board feel knowledgable & take

ownership of decisions

Building a High-Functioning Board

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Each member of a high functioning board…

- Knows each other personally. Has a working relationship where they can resolve differences of opinions

- Truly understands the underlying businesses. Knows strategy, execution & financial metrics

Each member of a high functioning board…

- Knows each other personally. Has a working relationship where they can resolve differences of opinions

- Finds this board assignment important relative to their other time commitments

Each member of a high functioning board…

- Knows each other personally. Has a working relationship where they can resolve differences of opinions

- Truly understands the underlying businesses. Knows strategy, execution & financial metrics

- Doesn’t have incentives that are misaligned with the company, its shareholders or other board members

Each member of a high functioning board…

- Knows each other personally. Has a working relationship where they can resolve differences of opinions

- Truly understands the underlying businesses. Knows strategy, execution & financial metrics

- Finds this board assignment important relative to their other time commitments

- Knows it’s his or her fiduciary obligation to serve interests of the company first & foremost

Each member of a high functioning board…

- Knows each other personally. Has a working relationship where they can resolve differences of opinions

- Truly understands the underlying businesses. Knows strategy, execution & financial metrics

- Finds this board assignment important relative to their other time commitments

- Doesn’t have incentives that are misaligned with the company, its shareholders or other board members

Ultimately it’s in your interest to invest in creating these working

relationships - not just with you but amongst non-exec board members.

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

conflicts.

• Schedule board meals / social time

• Encourage non-exec board sessions

• Help plan non-exec board calls

Building relationships takes effort

Board Members

Source: Mark Suster, Both Sides of the Table

Your board will increase over time and it’s highly likely you won’t retain a board majority (and that’s ok)

Time

Roun

d

Seed • 2 Founders • Maybe Seed

Investor

3 Person

D+ • 1-2 Founders • 3 VC Investors • 2 Independent • 1-2 Board

Observers

7 Person

B • 2 Founders • A + B Investor • 2 Independent

or common

5 Person

Founder Controlled Independent or Investor Controlled

What makes a great Independent Board Director?

A Good Mentor

Industry Experience

Local

Has Skin in the Game

Time to Commit

Startup Experience

An Honest BrokerThere in Good Times & Bad

Diplomatic

Source: Mark Suster, Both Sides of the Table

Board Meetings

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If you ask your board about your logo or brand colors, they will debate it for 30 minutes

…if you do this, that’s on you

Executive Management• Strategy, monthly budgets, hiring / firing, financial results • Sales, marketing, pricing, product, support, HR, finance

It’s your job to “run the company” and not let your board micro-manage operations. It’s your job to keep board meetings “at board level.”

Source: Mark Suster, Both Sides of the Table

Executive Management

Board of Directors

• Strategy, monthly budgets, hiring / firing, financial results • Sales, marketing, pricing, product, support, HR, finance

• Annual budget • Strategy & performance • Fund raising, M&A, audit, executive compensation • Exec team hiring / firing

A board’s role is to provide oversight of the company on behalf of all shareholders.

Source: Mark Suster, Both Sides of the Table

Executive Management

Board of Directors

Investor Governance

• Strategy, monthly budgets, hiring / firing, financial results • Sales, marketing, pricing, product, support, HR, finance

• Annual budget • Strategy & performance • Fund raising, M&A, audit, executive compensation • Exec team hiring / firing

• Fund raising, M&A, debt • Scope and structure of business

Some key decisions also require approval from shareholder groups, beyond board approval.

Source: Mark Suster, Both Sides of the Table

PresentDebate

In thinking about how to run any individual board meeting it’s important that you understand what you’re trying to achieve

Of course each meeting can be a combination of both activities

Inform

Decide

It’s equally important that you know your goal for the meeting. Are you seeking to make major decisions or to align board members?

Not every board meeting requires a big decision to be made

PresentDebate

Inform

Decide

Filibuster

A common mistake is to spend BOD meeting presenting more materials than a group can digest.

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

PresentDebate

Inform

Decide

Advice

PresentDebate

Inform

Decide

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

Approval

• M&A

• Capital Raise

• Annual Budget

• Hire / Fire Critical Executives

There are times when you really need the board engaged in an existential question

PresentDebate

Inform

Decide

Huge, Strategic Decisions

If you have four board meetings a year you can run different playbooks based on the board meeting

Q2 Q3 Q4Q1

• Next Year’s Budget

• Detailed meeting with heavy debate

• Broader exec teams attend / present

• Board lunch / dinner

• Strategy session

• Board only

• Update session / deep dive on business

• Broader exec teams attend / present

Example

Boards. At times your best cheerleaders, coaches, mentors and

disappointed mom & dad.

Remember that board members have personal identity tied up in your

successes & setbacks. They aren’t rooting for failure.

Photo by Brittany Simuangco on Unsplash�41

But even your biggest champions have oversight

responsibilities to encourage what they ultimately believe is right, which isn’t always

what you want to do.

If you proactively communicate with and manage your board you’re much more likely to

stay in sync.

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Mark Suster

Managing Partner, Upfront Ventures

Managing Your Startup Board

Thank You