Building a Board: What I Wish I Had Known

I’ve sat on several boards of various industries, including my own at CircleUp where I’ve been chairman for ten years. Some of these boards have been incredibly effective and some have been dysfunctional. Some have shifted both to and from effectiveness as specific members were added or removed, or group dynamics improved or got worse. Here are some things I wish I’d known when building my own board. With the help of some fantastic board members — including Rory, Matt, Andy, Dan, Scott and Karen — these are the observations I made along the way. 

Board Construction- An odd or even number of board members doesn’t matter for a startup. In 15 years working with startups, I’ve never seen something come down to a true vote. What does matter is having a board that’s too big, so make sure to think carefully before adding additional members or observers. Board members take time to manage, and when conflicts or questions arise, each additional person adds complexity to the matter. Consider asking board members to step down after 1-3 years, or consider not granting permanent seats (this is an effective approach). Few CEOs have the luxury of cherry picking who is on the board, but if you are in that position, I recommend focusing hard on contenders who bring diversity and operating experience along with shared values and a belief in the overall mission. Diversity will enrich the conversation — and if you don’t believe that then try having dinner with 4 VCs who focus on the same space, are at the same point in their careers and have similar backgrounds. You *want* there to be a variety of opinions at the board. It makes for better dialogue, and hearing a number of perspectives will improve both your performance and that of your team. You also need to make sure the board will function well as a group, like a professional sports team. Have they worked on boards together before? What are their beliefs about the roles and responsibilities of the board? What are their views on the vision and mission of the company?

Board votes- Early on I was very concerned about being outvoted by the board. I had never seen it happen on other boards when I was a growth equity investor, but I had an irrational fear that was driven by dramatizations in movies — not real life. I pushed to have supervotes for me and my co-founder. In hindsight, I think that was a mistake. Over the course of 40+ board meetings at our fintech startup, we’ve literally never had a vote that wasn’t unanimous. Did we sometimes have spirited debate? Absolutely, and I think that’s very healthy. But it didn’t come down to a true vote. Can something important sometimes come down to votes? Yes — but I wouldn’t recommend falling on your sword for this. Better in my view to limit the size of the board. 

Independent Board Members- While CEO I was fortunate to work with two fantastic independent board members — Scott and Karen. When I am CEO again I will work hard to bring in at least one independent early on and ensure we always have independent members on the board thereafter. I find they enrich the discussion because they typically bring a diversity of perspectives. Also important: great independents are willing to stand up and disagree with others — both VCs and founders. (Often VCs will have to sit on several boards together and so, viewing it as a repeated game, they aim to avoid conflict with each other.) In today’s founder friendly market many VCs are scared to challenge the founder – I think that’s unhealthy. In terms of background, look for independents who are peer CEOs or a few years ahead of your company and have experience sitting in your seat. Recruiting takes time but I’ve found it is definitely worth the investment. If you can get two independents, I think that’s better — Fred Wilson makes a similar point here.

Communication Outside of Board Meetings- For startups I found a monthly email to the full board outlining financials and performance against KPIs to be a helpful way of keeping members updated. In addition, I liked to have at least one hour-long call 1:1 with each board member in between meetings (typically more, but that was the minimum). If you find yourself struggling to want to have those calls, that’s probably an indication the relationship has gone sideways or the board member isn’t adding value. Or maybe that you aren’t doing a great job of incorporating feedback. These issues should be confronted directly. 

Board Meetings- Pre-series A, I think six board meetings a year is productive. The company is moving quickly and waiting three months in between is often too long. After Series A (maybe B depending upon the co), I’ve found four to be more appropriate. Often the best conversations take place at dinner, either the night before or on the night of the meeting. Try to create space for board dinners, whether at a quiet restaurant or at the office. Get board decks out at least 72 hours ahead of time. Your board is busy and will need time to digest the deck. Similarly, if a board member comes unprepared you should have a frank conversation with that person and address it head on. Per comment above, make sure you talk with each board member 1:1 in between meetings. In terms of agenda, I’ve found different boards and CEOs have different styles, but a few commonalities for well-executed board meetings are as follows:

-Any board logistics or approvals
Your GC or COO can typically help stay on top of necessary approvals or other board business. 

-State of the company
High-level summary (typically one page or 3-5 minutes) about the company’s performance. 

-Quick review of KPIs
These should have been in the board deck sent 72 hours prior to meeting and reviewed by all. If the board doesn’t have questions it is often ok to just move on from this section without discussing it live.

-One to two strategic topics to discuss
Later-stage boards can maybe do three but I’ve found that hard for earlier-stage companies. Letting the functional lead (not you) at the company lead these discussions helps provide visibility for the board and empowers that leader. Consider inviting other teammates that are relevant to the conversation to give them exposure — it’s great for career development. 

-Board-only discussion
The above topics will typically involve other senior team members that can contribute or benefit from the discussion. Leave time for the CEO and board to have a discussion without others in the room. Typically aim for 30-45 minutes in order to give board members a chance to follow up on perhaps more sensitive topics. 

-Non-CEO time
Create 10-20 minutes for the board to talk without you in the meeting. The goal is to discuss your performance and provide feedback. The chairman, or another designated board member, can provide the feedback either in front of the board or as a follow up. Feedback is good — it will make you better.

Share your 360s and Pulse surveys- I’ve found that transparency and openness helps build trust, particularly with experienced board members. We did 360 degree reviews every year and pulse surveys more than once a year. We would typically share my and my co-founders’ 360s along with the pulse surveys, unedited, with the board. (We would also share the results with the full company.) It helps the board to understand what’s working for you and your team and to identify any areas that need additional support.

Listening to the Board- For many — be they first time CEOs, people who lack a growth mindset, or those that have insecurity about their job — listening to feedback from the board can be scary and intimidating when the comments aren’t aligned with their world view. It is hard, but try to get past the difficult feelings and listen to the actual content of the board’s feedback. I found that even the most difficult and poorly-worded messages often held grains of truth that ended up pushing both me and the company to be better. 

Dealing with Difficult Board Members- Most of the board members I’ve worked with in my career have been fantastic — hard working, high integrity and smart. I’ve had one notable exception. I won’t go into detail about it here other than to reflect on how I wish I had dealt with it at the time. First, it is a reminder to do your own due diligence on board members. My experience wasn’t unique, and had I done research I would have discovered that many CEOs had similar challenges with this board member. While the super-fast fundraising rounds sound sexy, there is a potential downside that can last for years especially if there is misalignment in values, mission, vision or strategy

An independent board member can be helpful when dealing with a difficult investor. So can a management coach and a CEO support group you trust and whose members are willing to be vulnerable. Other investors might help but are often conflicted because — as mentioned — for them it is a repeated game. Talk with the board member directly. Try to resolve the issue. But if problems, particularly those related to communication, persist, consider trying to remove the board member. 

Handling a Fractured Board- Chemistry matters and should be considered up front when you think about adding board members. Having shared values and belief in a shared mission will help limit disagreements, but inevitably they will occur. Don’t be afraid to ask for the help of more experienced board members, or independents on your board, to resolve conflicts. Focus first on where you agree (eg. values, mission or vision) until you identify where you don’t agree (eg. strategy or tactics). Consider whether the fracture is the result of a lack of communication or a component of the trust equation that you can address. Also never forget that “breaking bread” (having a meal) together has been shown to really help group dynamics. 

There is a lot written about board dynamics. Elad Gil’s High Growth Handbook has a terrific section, and Fred Wilson, a16z and others have also written extensively about the topic. A management coach that has deep startup experience along with a CEO support group can be invaluable as you consider building and interacting with your board.