Head of investments at London’s BGF Ventures, former LOVEFiLM and Mothercare CEO, and ex-chair of Moo.com, Simon Calver, on how tech founders should manage boards.
1. The board doesn’t run your company – you do
It’s easy to fall into the trap of thinking that the board are the people who really run the company, but they’re not; the CEO and leadership team are. The board are the ones who help ensure that the strategy is on track and that the shareholders’ rights are protected. They’re there to check the company’s being well run and to help support the executive team. At times it might be that a board member gets really heavily involved in a particular issue because that’s their area of expertise – but you’ve got to remember that they’re then going to step back and become board members and non-exec board members again. One of the early bits of advice I got from [Index Ventures partner] Danny Rimer was: ‘Don’t come to us asking about strategy. Come to us and present the strategy. And it’s our role to challenge it.’
2. Minimise the size of your board as much as you can
For a post-Series A-stage company, you need to be able to reach out easily to all the different board members and make quick decisions. That’s why if you have six, seven, or eight board members, that can become more complicated to manage and board meetings require more orchestrating. Don’t feel you have to put every executive team member on the board. The key question you need to ask yourself is: what is the correct balance to enable [me] to get the right speed of decision-making?
3. Help your board by not sending them 50-page board packs at the last minute
Some of your board members may sit on many different boards, so try to help them out by not sending out a 50-page slide deck a day or two before the board meeting. Founders and CEOs can also help members of their board by trying to focus down on the three or four key issues that they need to consider. Maybe start [the board meeting] with those issues, rather than do a page turn through the numbers. In fact, you shouldn’t be doing a page turn anyway, people should come having read it – and it becomes pretty clear who hasn’t read it when you start to ask: ‘Are there any questions about Section 1: Financials? OK, let’s move on to Section 2.’
4. Have a board meeting every other month
More sophisticated, more challenging environments may require more frequent board meetings, but personally I’m a fan of having a board meeting every other month. It’s amazing how quickly monthly board meetings come around. And actually you can end up then not focusing on some of the key issues facing the business, when they are too frequent. If you need to give a board update – in between meetings – there’s nothing wrong with doing so on the phone every other month, just to keep people on track.
5. The chemistry between the CEO and the chair is incredibly important
I have heard of situations where CEOs have said: ‘I can’t discuss that with my chair because there’ll be an issue with x and y’. That’s missing most of the benefit of having a chair in the first place. You’ve got to be able to have a completely open relationship talking about the business, and have a ‘no surprises’ policy from both sides. If you do that, then I think your chair can really help you with any issues that are going on. And also your chair can meet you between board meetings – they shouldn’t just rock up at board meetings, sit down for a couple of hours and say ‘See you at the next one!’.
6. When you’re on the hunt for a chair, put the word out with people you know or that you meet at events. (Or failing that, use a head-hunter.)
As a post-Series A startup, you’re not looking for a classic public company-type chair, but simply for someone who’ll be a wise counsel, who can help you through some of the bumps on the way that happen as a company scales. You’re looking for someone who’s going to help align you with the investors, when there are different sets of objectives and when conflicts occur. To find him or her, you should reach out to people you know, or when you meet people at events, always ask them if they know anyone who might be relevant. If you can’t find someone doing those things, you can always use a head-hunter or recruiter. At LOVEFiLM, a head-hunter helped us find Charles Gurassa, who was a really good chair, and that relationship was incredibly important in the on-going success of LOVEFiLM.
7. Never be defensive in a board meeting
It’s really hard when you’re sitting there as a non-exec or a chairman and you ask a question and the defenses go up. Then what happens is you get a breakdown in the ability to ask open questions and talk freely about how the business is really going. Everybody around the table, typically, is completely aligned in wanting the business to be a success and if you approach it from that point of view, then that mind-set can help in the quality of discussions that you have.
8. Don’t be afraid to hold board directors to account
If you have the sort of relationship with the board where you have an open dialogue, then you can always ask the question: ‘How do you feel about the board meetings? What’s working? What isn’t?’. Ask yourself, is it time to do a formal review with each director? Typically the chair, if you have one, will actually do the review. But if not, go out there and have discussions with each of the board members individually. Make sure you’re meeting board members outside of the board meeting itself – first, to help build a relationship and trust. And second, to get a sense of how they’re honestly feeling about things. Often if you have these sorts of difficult discussions, board members who are not pulling their weight will change, which is good for the company.