Startups management teams often have a love-hate relationship with their Board of Directors: while Boards can be hugely helpful and constructive in the best of times, they can be dysfunctional and damaging in the worst. And most CEOs enjoy complaining about their Boards, even if just for entertaining effect on conference panels and the like.
But it is critically important for every CEO (and lead investor) to work together to best optimize the way a startup Board interacts with a management team. As a venture creation firm, we spend a lot of time engaging with our CEOs around board governance and strategy.
In 2012, under a post titled “High-Performing Boards in Early Stage Biotech”, I outlined nine themes of good Board management: insist on a prepared board, set the context, right-size your board, get independents onboard, include the senior management team, ensure quality Exec sessions, communicate frequently off-cycle, make your board work for you, and never have surprises. These all remain true and agnostic to sector.
I’ve been asked multiple times to blog more on these Board-related topics; thankfully others have already done it. And done it far better than I could. Mark Suster, a partner at a tech venture firm called Upfront Ventures and world-class blogger, has recently delivered a veritable encyclopedia on the topic on his blog “Both Sides Of The Table.” It’s a lengthy multiple-blog series on “Startup Boards” that is exceptionally well done, covering nearly ever topic you can think of about Boards.
Here are some of the topics with links:
- How to be a Good Board Member.
- Role of Independent Directors on Boards, and What Makes a Great One?
- Should You Allow Observers on Your Startup Board?
- High Functioning vs Low Functioning Startup Boards
- How to Prepare For a Board meeting to Make Sure You Crush It.
- Should All of Management Attend Board Meetings.
- How to Run an Effective Board Networking Dinner
- And many more.
I won’t rehash them all as they are quick reads, but these are all excellent and worth reviewing if you are new to the boardroom dynamic, or want to refresh on the topics. Mark really covers a lot of ground.
Three of the posts warrant special attention.
- How to Stop Your Board Meeting From Going Down a Rathole. This is a classic and a must-read, as it is a wonderfully colorful review of some common Board Director phenotypes: the “Detail Merchant”, the “Negative Nelly”, the “Distracted Senior citizen”, the “ADD Director”, and the “Ally”. I could convert these phenotypes into more biotech-specific labels, and poke fun at my own data-obsessed profile, but Mark’s labels are generally applicable. I’ve certainly seen them all in boardrooms over the last 15 years. I would encourage fun-loving, risk-taking CEOs to come up with name cards with these phenotypes and assign them to their respective directors; that may go over well, or not. But it would be fun nonetheless.
- Who Should Be On Your Startup Board? Mark’s piece covers lots of tech nuance around founder control, types of VCs, types of Board members. The reality is biotech is typically very, very different. On the “expertise” aspect of Board evolution, we often recommend that Series A and early stage biotechs have at least two independent directors involved with expertise in both drug R&D and business development/fundraising. Science-first early stage biotechs need advice on those two topics more than anything else. As companies progress towards the public markets, bringing on financial/accounting expertise to fill out an audit committee is important. And as programs advance into the middle of the clinic with an eye to the market, commercial strategy and marketing expertise is worth adding.
- Eliminating Electronic Distractions from Board Meetings. There are lots of ways of minimizing electronic distractions that are very practical – no computers please, no iPads please, no phones please, etc… And Mark reviews lots of good strategies in this blog. But let me just say this, without it excusing suboptimal director behavior… especially since I’m guilty of multi-tasking on my phone under the table on occasion in board meetings… the best strategy for eliminating distractions is to make the board meeting less boring and more engaging. Boredom for a director can be caused by many things, but a few examples are worth mentioning. The most common one is this: I’ve read the 100+ page “pre-read” deck in detail, so why are we walking through every word of every page? Can’t we just jump to the important data or strategic discussion? Or, another variant might be that we discussed a particular point in detail during our pre-board one-on-one meeting, so why are we belaboring here if we’re all in agreement already? Or, an all too common one related to the point above, but why is my fellow director going down that irrelevant rathole (… and therefore I’ll take a moment to peek at my phone)? Many others come to mind. But director boredom is often the primary catalyst of distractions, perhaps amplified by the attention deficit phenotype of many investor-directors (like me).
Two other Board-related points are worth making in addition to all the great Board advice that Mark’s series shares.
First, creating a constructive board dynamic at the inception of a company is important, as the precedence-setting nature of the interaction manifests over time. Thiel’s law for companies for the most part also applies to Boards specifically: a Board messed up at its foundation cannot be fixed. So getting into the right habits as a Board, including “good hygiene” around non-CEO Executive Sessions and the like, is really important.
Second, I’d also emphasize the prominent role of emotional energetics in the boardroom, and the importance of managing them: balancing the emotions of fear and greed. Fear of losing your shirt leads to a defensive posture from many investor-directors, and even preliminary negative data (common in drug R&D) shared out of context can augment those emotions. And greed leads to demanding far more from a story than it’s actually worth, frequently attended by dreams of “we’re the next Genentech” and “these data are by far best-in-class.” Great CEOs are good at stabilizing that unfavorable energetic state of balance between those two, which helps lead to optimal Board discussions and decisions over time.
Since so much has been covered by Mark’s series already, I’ll stop here. But feel free to ping me if there are other Board-related topics worth covering here at LifeSciVC.