How to build a best-in-class Board of Directors
Advice for early stage founders from fellow founders and Blackbird Operating Partner Robyn Denholm.
A good board of directors can play a crucial role in the success of an early stage startup. In a time of rapid growth, a good board can support the founder and leadership team to make the right decisions, help them focus on the most important jobs to be done, and provide connections, context and perspective to tackle the challenges they’re facing.
“At the simplest level, the board exists to make sure the management is doing their job,” says Blackbird Operating Partner Robyn Denholm. “In early stage companies, that means really trying to help the company be successful”.
If you’re an early stage founder or CEO, how can you create a best-in-class board of directors, and use your board effectively? Read on for advice from Blackbird founders and leaders on both sides of the (board) table...
1. Cultivate a well-balanced group that is the right size for your business stage
A strong board starts with the right composition of experience and backgrounds, says Robyn. She encourages founders to view board composition as a key criteria to “augment the skills that you have around the table” through your board.
“The way I think about diversity is around diversity of thought. If you’ve got people around the table that think the same, that have the same discipline, same background, you’re not going to have a stimulated discussion”.
“You want the ability for people to really probe the strategy, help you think through things and stress test some of the ideas that you and the team have” says Robyn. “If you think about the board that way, it changes the perception of who you’re bringing in. You want the board to be an extension of the executive team, and a group you can go to and ask [for] advice and help with the many challenges you’ll have as an early stage founder”.
Lexer co-founder and CEO Dave Whittle agrees on the importance of diversity for a useful combination of experience and advice, adding that finding the “right amount of hands” for the business stage is critical. “[Right now], our board is three co-founders and two major investors, because no one cares more than those invested in our future.”
2. Build from a foundation of trust
Building a trusted relationship comes from full transparency between parties. “Both parties have to align on mission and vision, but they [also] have to have two-way communication that can demonstrate a level of trust,” says Khyati. “At Applied, one of our core values is ‘trust is our foundation’ and this is reflected in our board relations.”
The permanency of directors is important to consider when building your board relationships, says Eucalyptus co-founder Alexey Mitko. “You look for individuals experienced and capable enough to provide know-how about approach, risk and business thinking, and willing enough to commit the time as well as shoulder the responsibility”.
“It's easy when it's easy, but when it's hard things really fall back to the fundamental level of trust and respect that exists” says Rory. “It's really important for me to connect personally with the board, and for that person to also value the personal connection”.
3. Don’t conflate advisors with board directors
While it’s important to cultivate a board that can supplement your executive team, it’s also important that you’re clear on whether the skills and experience you’re supplementing require an advisor, a board member or internal team to support.
“[Board members and advisors] are completely different things, with a different level of responsibility” says Alexey. “Advisors provide insight into an area, but usually the usefulness of advisors is limited to 12-18 months. After the initial set of insights, the organisation develops and catches up to be able to then tackle the next set of challenges (perhaps with the next set of advisors)”.
Rory recommends advisors for solving particular problems or “unsticking an area of the business”, whereas board members are joining on the mission and should be “a long running part of the team through the ups and downs”.
“One thing that I like about advisory boards is that we can look beyond our investors and bring in [a] diversity of perspectives,” says Khyati. “That helps us discuss and spar on tactical issues when needed. I also use advisors as 1-1 coaching time on the myriad of issues that are faced by exec teams both at professional and personal level”.
4. Share information with your board, not data
Robyn likens the board director experience to going to a two hour movie where you only see five minutes of the movie every fifteen minutes, then need to explain the plot, characters and themes in detail at the end of the film. “The board isn’t there day in and out at the company so I encourage the CEO to prioritise the things that are important in terms of what’s happening, context, what’s coming up that is important, and what do you want to go through with us.”
You’d be forgiven for wanting to plug your board with data, but a hundred page deck the directors need to go through before the board meeting is not helpful. Instead, Robyn recommends a one page report from the CEO shared in advance of the board meeting on what things you’re pleased about in the time since the previous meeting and what’s keeping you up at night, followed by a short presentation on key metrics. “You’ve already set up the strategy of the company and the board understands that, so product, people and [financial] performance are the key metrics in tracking that strategy,” she says. “Simple is hard, but if you’re telling the story right, you should be able to do that with 3-4 slides.”
If you have a completely new set of metrics for the board meeting, then there’s also something wrong, Robyn says. “It should be an extension of what you’re looking at already in the day to day - you have the strategy, co-create the KPIs with the management and board because they’re the things you’re holding yourself accountable to.”
“As the organisation grows and changes, so does the format of the board meetings” says Alexey. “You need to adjust to make sure you make the most of what the board experience is there to do - provide their insight and expertise or to highlight the gaps you might not be seeing.”
5. Grow your board cadence with your business
Getting a strong, complementary board of directors for your startup is important, but founders and directors agree that the work doesn’t stop there.
The board makeup should also evolve over time, says Khyati. “Just as building from 0-1M needs different bets when compared to building for 1-10M, board members need different perspectives and expertise at different stages of the startup lifecycle”.
And if you’re looking for a tip on whether your board meetings are functioning well, Khyati says it’s simple: are the meetings a joy to do or not?
Some of the advice shared by Robyn was presented in a partner event Blackbird hosted with Rally Ventures earlier this year. Sign up to our Blackbird Monthly newsletter to get more founder advice in your inbox on the last Friday of every month.