Reimagine the Board Meeting Pt II: Video automatically transcribed by Sonix

Reimagine the Board Meeting Pt II: this mp4 video file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Ian Burnstein:
Great to see everybody. Thank you very much for joining us. So really excited about putting this Zoom together for everyone because I know the board meeting and in fact, the entire board process can range anywhere from tedious to miserable. And so we've assembled the best group of people to address this challenge. Perhaps the best in history. So I'm going to let everyone introduce themselves. But I just want to note that Brad and Matt literally wrote the book on startup boards. And between Brad's experience at Foundry and Techstars and Matt's at Return Path and Bolster, they've certainly lived the problem we're all hoping to solve. Jocelyn is on several notable boards and runs a couple companies, including Him for Her, which is driven to create more board diversity. And finally, Edward Norton, who many of you know from Fight Club, Glass Onion and Rounders. And I can assure you I know every line. Edward has served on a million boards and was as frustrated as the rest of us about the process. And like his other panelists, launched a company, Zeck, to go out and solve such a problem. So Jocelyn, I'll let you take it from here. And thank you, everyone, for being here.

Jocelyn Mangan:
Great. Thank you everyone for being here and thanks for that awesome introduction. So my name is Jocelyn Mangan. I'm an active board member on three boards: Papa John's International, ChowNow and Wag. And I also run a company that helps accelerate board diversity, Him for Her, and would love for our panelists to introduce themselves as well. And just to add anything maybe that we missed. So let's start with you, Matt.

Matt Blumberg:
Yeah. Matt Blumberg, founder and CEO of a company called Bolster. One of the things that Bolster helps companies with is building their boards. And sometimes we do that in partnership with Jocelyn and Him for Her as well. We've done about 75 board searches in the last two years for private and public companies. So I have a bunch of experience there sort of helping coach CEOs through board searches. And I've probably served over time on about a dozen boards myself, some private, public, nonprofit, one trade association with 45 board members that was had all sorts of its own challenges and then was lucky enough to partner with my friend Brad to write start up boards.

Jocelyn Mangan:
Great. Thank you, Matt. Brad?

Brad Feld:
Howdy. Brad Feld. I'm a partner at a venture fund named Foundry. We've been around since 2007. We invest 75% of our capital directly in companies and 25% in early stage venture funds, which we've got about 50 that we've invested in, a little bit over 4 billion AUM. Also, I'm a co-founder of Techstars, which we started in 2006, which is now the world's largest pre-seed investor. We've got over 3500 investments all around the world and do about 600 new investments at the pre-seed stage each year.

Jocelyn Mangan:
Great. Thanks. Brad and Edward?

Edward Norton:
Hey, everyone. Just to address the cognitive dissonance of an actor talking about the the nuts and bolts of business dynamics and stuff. I... years ago... I was very interested in new dimensions of fundraising, social fundraising through my own efforts to support nonprofits that I'm involved with. And I started a company called CrowdRise that was an early crowdfunding platform for people to support charities. And we ended up building that out into a fairly substantial software business. We were building the fundraising layer and white labeled fundraising tools for nonprofits and for other web platforms. And so we worked for years. You know, we raised over a half $1 billion in very small donations for tens of thousands of charities. And we were working with those charities and realizing how far behind the curve they were on fundraising, you know, outsourced fundraising tools that could lever new forms of fundraising. So we got to work for years with the constituency of nonprofit orgs and and see the way that tech enabled tools were able to help their missions. Along the way we had our own board, venture capital backed board. Our company became part of GoFundMe. We merged with GoFundMe years ago and became the nonprofit software side of GoFundMe. I'm still on the board of GoFundMe and on a number of other corporate boards and nonprofit boards. My partners and I who had done CrowdRise, both as entrepreneurs and people running companies and then people serving on a lot of nonprofit boards ourselves, we we were sitting around one day just lamenting the dynamics of boards for both nonprofits and companies and kind of picking apart like, "why are some boards great and some are just an absolutely awful experience?"

Edward Norton:
And we were thinking about those and we got we got talking about how poor the tools were for managing board presentations, but also for board governance and started thinking could we do some of what we did at CrowdRise focused on that problem set. And so Zeck, our our new cloud platform for board management was born out of that. But, and that's the specific thing we've we've tried to contribute to the conversation of late, but I think one of the things we realized was just how pervasive the issue of board dynamics is in both the nonprofit and the corporate sector. Everybody kind of knows it's a pain point. Everyone knows it's a problem. And yet, and yet we all mush along. And and I think there's we started realizing there's this is a conversation that really interests a lot of people. The idea of how to optimize board dynamics. What are people doing to kind of push the envelope a little bit and change that dynamic and that that's an idea set worth sharing? And so that's why we linked up with everyone here.

Jocelyn Mangan:
Great. Well, I'm excited to dive into the conversation. We have a bunch of panelists. We all live in the board room and around the board room and I know we have a great audience and there's a tool to submit questions. So please make this interactive. We'll also have time for questions at the end, but let's dive in. Matt, we're going to start with you. Why do so many CEOs view board meetings as a tax?

Matt Blumberg:
I think a lot of CEOs just view their board as a tax. They you know, they've kind of framed the whole relationship in their head as as a report out relationship and that, you know, they need to spend a vast amount of time preparing as many pounds of of material as possible for a meeting. They need to have every executive on the team come in and do like the dog and pony show and stand up and give their slides about how they're doing and how their area of the business is going. And you get to the end of a meeting like that and you have put a huge amount of effort into it and you are getting nothing out of it as the CEO or as the management team. Um, and frequently you're coming out of it with all the important issues in the business kind of left unsaid. Um, so I think there's sort of a bunch of things there where CEOs just sort of are not getting at it when it comes to what the point is or what the purpose is of having a really high performing and engaged board.

Matt Blumberg:
Um, I think, you know, there's a second thing which I'm increasingly hearing from founders is I talked to them, particularly early stage ones who don't have necessarily independent directors, right? They have a board that's like founders and a couple investors, and they're, they're almost hostile to the concept of a board and sort of view it as, you know, the very existence of a board as like, well, that's the thing that's going to cause me to lose control of my business at some point. And I certainly don't want to lose control in a meeting that will lead to loss of control of the business. So I'm going to make the meetings as anodyne as possible. And, um, and I don't want to invest in in the construction of, of a real what I would call a grown up board. Um, I think the, uh, you know, there's, as I said, with both of these things, there is just kind of this general framing of like what, what is the, is the purpose of a board and what can you get out of, out of a great board.

Jocelyn Mangan:
Great. Thank you. Brad or Edward. Do you have anything to add to that one?

Edward Norton:
Sure. I'd say from my point of view, there's... there are really two issues. And we tried to actually address both of these with Zeck. There's really there's the quantitative and there's the qualitative right? And the quantitative issue can be defined or is defined, I think, largely by inefficiency of time in particular. Right? And the quantitative problem is on both sides of the line, the corporate, the the company or the organization and then the board member experience. Everybody's investing time in the enterprise, but everybody has limited time and doesn't want their time wasted, right? So we always kind of like point to this image of like the productive little company that's chugging along. And then the CEO walks in and says, like, pencils down. We've got a board meeting in two weeks. And, you know, the whole the table gets flipped in this unbelievably painful, redundant preparatory process that, as was commented on, is almost like a readout. It's almost like this obligatory readout on the company. So it's a quantitative time suck on the efficiency and productivity of the company to get rid of get ready for the board thing. And then on the board side, it's a quantitative time suck because we've all had that experience where you receive the 90 page PDF 48 hours before the board meeting and you're, you know, your brain just wilts like thinking about how to balance your, your kind of obligation and responsibility to be responsibly informed.

Edward Norton:
And then you get so you've already got time suck, you know, inefficiency on both sides of the line. And then you get to the quantitative time suck of the meeting itself, which tends to be a reading, an oral reading of a 90 page PDF that notionally you could have read beforehand. And it includes, you know, voting for employee stock options and minutes approvals and all kinds of stuff that everybody on both sides is consciously or unconsciously saying I can't believe my life is draining away into this component of it. This isn't what made any of this interesting to me in the first place. And so one of our convictions was we've got to there's got to be ways to hack that quantitative side of the issue. But the qualitative side is really important, too, because the quantitative affects the qualitative. It's not a very nourishing conversation. It's also notionally you have adults in the room who are good at something or they wouldn't be on your board. You know, the whole idea of sending them a gigantic PDF and then asking them to listen to the presentation of it and kind of get some query in, this is not a high quality conversation. What you want is you want an iterative process that begins prior to the board meeting so that the quotidian stuff and the boring stuff in theory should be able to be flushed out in an efficient, iterative process prior to the meeting so that the meeting itself can, can have like, let's call it intellectual alpha or strategic alpha.

Edward Norton:
In theory, a lot of that that stuff that needs to be ingested should be able to be ingested and queried and have a lot of refinement done before you ever get to the table so that the quality of the conversation can be high. And I think, importantly, to whoever made the point it shouldn't be just read out. It should be a dual directional conversation in which the org is able to make demands on the board itself. Like, in other words, an org should expect to be able to get things out of a board. The investor dynamic obviously creates some sense of misaligned incentives or not misaligned incentives, but but review and defence of our investment as opposed to what's my obligation to be assisting proactively with the acceleration of the agendas here. And I think that the tool sets and the way that board meetings are approached, I think should be able to have more of a demand side obligation from the org or the company back on the board to essentially say, what's your contributive value, not your review value to this org, but what is your proactive contribution value and the tools? Our conviction is that the tools should be able to power and, you know, leverage higher quality, more efficiency on the quantitative and higher quality on the qualitative.

Jocelyn Mangan:
Great, Brad, I'm going to direct this one to you. You've been on lots of boards. You spent if you were to add up the hours of your life that were in board meetings, I think the number would be quite large. And often from a director's point of view, you know, these can also be seen as something maybe you dread, but alternatively, they can bring joy. So I love this question. Describe what a joyful board meeting looks like in your view.

Brad Feld:
I think the core of it comes from a philosophical framing, which is is the board, not the board meeting, but is the board an adversary to the CEO and the leadership team, or is the board another team that the CEO gets as part of their experience as CEO? So if you think about that philosophically and you say, look, as a CEO, you get to build a leadership team and, you know, you choose the people on your leadership team, they're not chosen for you. And you have higher and fire authority over the people on your leadership team. And you work hard as a leader, as a CEO, to build a productive team. Um, the board can be a similar kind of team. Different function. And different characteristics, the board can fire you. That's one of the things a board generally can do. Not 100% of the time. There are definitely structures where the board can't fire the CEO, but most most of the cases the board can. You don't get to choose all your board members. Some of them are imposed on you by an investor or by the rights of the financing agreements that you have. But nonetheless, you still have this collection of people and as Edward says, they must be good at something to be sitting on your board. I mean, some board members are probably not good at anything, but, you know, let's assume that they're, you know, let's assume they can read, let's assume they can reason and let's assume that they want to be there. If you take that philosophy as a CEO and say, all right, if I have a team and I need to work on doing things to continue to engage this group as a team.

Brad Feld:
Uh, if I put myself in one of their shoes, one of my board member's shoes, and said what would be a productive meeting, What would be a joyful meeting? My answer from the other side as somebody had a lot of board meetings, is one where I feel like I can fully engage with the people in the room, my teammates, the other board members, the CEO who's almost always on the board, other members of the leadership team who are in the room to understand things that the business team, the CEO and leadership team are struggling with and engage in a conversation to help provide feedback, in some cases to help solve problems, in other cases to go down new areas where the team is stuck and basically to engage in a two way conversation or a multi way conversation about the contemporary problems or the current problems that the company is dealing with. That doesn't mean I have to be right. That doesn't mean that my suggestions have to be the ones that are taken. It doesn't mean that, you know, I have to come out of the board meeting feel like feeling like I got, you know, here's my here's my happy button. You know, I did good or pat on the back. I was a good board member today. But I want to come out of the meeting the time that I spend in that context, feeling like that was really productive and useful and hopefully the CEO viewed it as productive and useful. If she did, then it was a successful board meeting. If she came out of it feeling like, Oh God, that just sucked. Waste of time, then, then I'm not very happy as a board member.

Matt Blumberg:
Let me build on that a little bit because I love the framing of your question, Jocelyn, about "what is a joyful board meeting? And, you know, I think it's the rare human that gets joy out of PowerPoint. Not saying they don't exist, but there aren't that many of them. Most humans get joy from each other and from interacting with each other. So the construct that Brad talked about, which is board as a team, is a really, really interesting thing to build on, a really interesting component of having joyful board meetings. And I can sort of point to two things around that that I think are useful. One is the best teams in general are the ones where people have an opportunity to build personal relationships. Where they get to know each other as humans, where they get to know about each other's lives outside of the construct of that particular board where they get to spend some social time together, where they get to trust each other, be vulnerable with each other. And, you know, I would say that the, you know, a CEO as the leader of a board should make sure that the board is investing enough time in the construction of those relationships.

Matt Blumberg:
And, you know, we can talk about, you know, sort of Zoom board meetings versus in-person board meetings, but whatever format your meetings are, you have to invest a certain amount of your board time together in developing those relationships. And I've seen that on my own board. So it Bolster is only three years old. We've you know, we've had a board for, I don't know, I guess three years, but really a board with our independence and everything for about two. And it's getting to the point now where it's really hitting its stride because people have built enough of that muscle. They've spent enough time together, you know, sustained over a couple of years that that they know each other and they can make jokes with each other. And that is one of the things that leads to to a joyful board meeting, is having a board where the people actually care about each other and know each other. The other thing that I'd say about this and you know, Edward kind of alluded to this a couple of minutes ago with his comment about people reading the slides, which nothing drives me crazier in a board meeting than people reading slides.

Matt Blumberg:
I actually abolished slides in the board room 15 years ago and and have just never been happier. So I send out whatever materials I send out. And I do expect that people are grown ups and they're going to read them and pay attention to them. But I don't put anything up on the wall or anything up on the screen during a board meeting, unless it's a visual that we need to look at for a minute or if it's a product demo or something like that. And I just find that not only when there are slides do people default to reading the slides, which is maddening, but when there are slides up on the wall or slides up on the screen, people's eyes are focused on the content. And when there are no slides up on the wall or no slides on a screen, people's eyes are on each other and they're connecting with each other as as humans around the topic, which is just much better than connecting with the content. So, you know, some some of those things may sound trivial and they may sound actually like not businessy enough or not buttoned up enough, but it's actually how you build a good team.

Jocelyn Mangan:
Yeah, we have a bunch of questions coming in from the audience. Want to thank you for the questions. Also want to mention we're going to try to get to all of them. But for those of the questions we don't get to, we're also going to try and follow up offline with answers to those questions. But one of them is, are there 2 to 3 key do's and don'ts for great boards and great board meetings? So not repeating anything we've already said, but what are some of the things we haven't said? 2 to 3 key do's and don'ts. Edward, do you want to start?

Edward Norton:
I mean, we'll get back around to, I think the way that the actual tool sets, like we're all talking about slides and PDFs and everything, there are certain fundamental incapacities in the tools that we've been using that exacerbate the problem and encourage the problem. But let's, let's put that to the side for a second and stay with the philosophical. I, having had boards of my own companies, having been on boards of companies, been on boards of orgs, but also having been an investor in companies where I wasn't on the board and I was trying to assist the company and watching what the board wasn't doing, I'd say my top line conclusion investor rights and investors who have a right to a board seat notwithstanding, I think there should be a fundamental commitment that board members are contributive and no one should be on a board who's not contributive. And if they have a right to be on a board because they're an investor protecting their investment and they're not contributive. A CEO should feel free to call them out in front of other board members. I actually think no board meetings should end without kind of almost like a go around the table. And, you know, it's not the management that should walk away with the action items. Every single board of director should leave a board meeting, able to declare what the action item is that they're going to do to proactively support the agenda in any category.

Edward Norton:
And there are a million! It can be advice to the CEO, it can be phone calls. You know, there's hardly any limit to what that categorically can be. But I think organizations should fundamentally be allowed to adopt a mandate that board members declare their proactive, their willingness to proactively support and be willing at the end of every meeting to say what's their to do list that they're going to take away in support of the company? Because passivity and critical review combined with passivity, is toxic, in my opinion. And also kind of like pathetic. It's like if you're even if you're an investor. I've had this dynamic with certain VCs on boards of companies I'm involved with, and I cannot believe what they're leaving on the table, even though they sit a lot of portfolio companies, all this stuff. I'm stunned sometimes at the lack of proactivity by investors. If I was the LP of the fund, I'd be furious at the passivity of the VC that's sitting on the board and I think a much, much higher mandate, expectation and even mandate of participatory support should be should underlie every board company relationship.

Jocelyn Mangan:
Thank you. Brad, Do you have anything to add to that one?

Brad Feld:
Oh yeah, I generally agree. I think most most boards where you think about the board as an anthropomorphic thing are ineffective. When you start to think about them as individual people, you then can start to decide is that person contributing or not? And, importantly, on any team, especially a team that has a bunch of powerful people, there does need to be somebody who's leading that team and and holding that team accountable. In a lot of private companies, it's very hard for that to be the CEO because of the relationship between CEO and investors, which whether you want to view it as a one up, one down relationship, either direction or peer relationship, often those dynamics get in the way. Independent directors on a board help with some of that. But fundamentally, you really need to have clarity amongst the people what the responsibilities are and what the expectations are. I'll add to the comment and give a counter example to what Edward just described. I know CEOs who very much do not want their board members to proactively do anything and you may say that's a shitty CEO, but it's a style. And there's a spectrum from situations where a CEO very much wants to control what's going on and what all the characteristics are to the other end, where the CEO allows it to be very open loop and the level could be external to the company, but also internal to the company. And so defining the characteristics and the frame of reference and then having a leader, whether it's a lead director, a board chair, if the CEO is the board chair or lead director, that's fine. But being explicit about who's going to hold the team and the individual members of the team accountable for whatever the cultural norms are that you determine as a board. And I think one of the the problems, the reason what Edward describes happens over and over and over again is no one does that. There is no discussion at a board level about what the expectations are. There are no individual commitments to things for the specific company and the specific team. And, you know...

Edward Norton:
Yeah. Brett, I want to say I want to lean into something you just said because I think I see this a lot in in organizations generally, but in life in general, I, you know, I obviously in one part of my life, I work on narrative and creativity and stuff. I think what you just said is really worth underlining, which is: framing narrative. Framing narrative is really important for groups of people like and actually it's amazing how how rarely people, they sort of mush along. They don't define the team. They don't define the agenda of the team. They don't define the objectives of the team and they don't define the expectations. And I think sometimes we get into this these pro forma kind of situations where, like you mentioned it, the CEO is the chairman. Well, that should be queried, I think, because sometimes sometimes that's a wasted opportunity. A good CEO, I think should want a good chairman who is not them, because a good chair of the board should be that person that you're talking about who who's able to frame the narrative of expectation and start to create a positive feedback loop. You know what I mean? But people do go passive if they don't have a mission and a context. And I think I think that's something that sometimes that's how you set the table, right? That's how you that's how you do it. And so I think failing to articulate, as you're saying, Brad, failing to articulate what the expectations are, what the narrative is, what the roles are, you know, it means everyone goes into autopilot.

Matt Blumberg:
I think I think we can be more micro than that. I totally agree. I'm not not disagreeing. I'm just also saying in any given board meeting, there are things where the CEO and management team would benefit from board opinion and robust discussion, and the typical board book doesn't really tee that up and the typical board meeting doesn't really get into those things. So yes, a board book has to have a certain amount of pages of reporting of what just happened last quarter because part of a board's role is oversight and governance, and they need to be up to speed on things. But a management team and a CEO that take the time before doing a board book to think about what do we really need help on right now? What are we doing on what is unresolved? What are we not sure about? Where do we have a pending decision? And we're thinking about a couple of options and would like to flesh them out or get other smart people to weigh in. Like do that work before you put together a board book. Then in the board book, tee up that discussion and you don't have to do it with a 50 page deck and you don't even have to do it with with a ten page memo. You can do it with a couple pages that sort of lays out the topic, the decisions. Put some relevant data together and end that part of the prep of the board book by saying, Here's the conversation that we want to have. We want to brainstorm or we've brainstormed already. We don't want to boil the ocean, but we're trying to weigh these two particular options. We'd love discussion about those or whatever it is that you want to steer, put that in the materials ahead of time and then make that a significant part of the meeting. I think that is something that gets lost.

Brad Feld:
Jocelyn, l me add one thing to this. I'll make I'll make it really tangible and I'll just describe three board meetings, three different board meetings that I had last week and the spectrum that it's on. One board meeting. Um, this is a CEO who is very comfortable with anybody on the board interacting with anyone on their company, on their leadership team and anyone in the company without the CEO being in the loop. The only request the CEO has is if there's something that requires a decision, please bring it back to me. Don't make decisions for people. Just make sure I know about that. But you can talk to anybody about anything. In that board meeting, the entire leadership team was in the room along with the board, and between each section, probably 4 or 5 sections I can't remember, but each of these board meetings had 4 or 5 major sections of the of the meeting... the CEO explicitly had a slide that described what they wanted to get out of this section. And that slide could be I want to have a debate so that we have more information, but we're not going to make a final decision. Another one was, I just want to inform you about a thing we're thinking about and get your feedback on it.

Brad Feld:
Another one was we need to make a decision between the following three choices. Very pedantic in some ways, but very focusing, because then you start to have the conversation around what that CEO needs. Next board meeting. Uh, by the way, all three of these board meetings, a lot of serious people in the room, plenty of investors, all three of these mature scale, you know, $100 million plus companies. Um, and the second board meeting, there was a lot of update. For the first half of the meeting, and then the last half of the meeting was driven off of three separate questions that each section lasted about 30 minutes, 45 minutes, and they were very specific questions that had a lot of data behind them that was presented in advance or provided in advance. But we just sat there with those questions and discussed those questions. That's a CEO who, again, is comfortable with board members talking to anybody on the leadership team but really wants to kind of be in the mix of of what's going on in terms of the conversations and doesn't really want people deeper in the company.

Brad Feld:
Third board meeting. In this particular case, there was no explicit anything about any of the sections. You just kind of next section, boom, talk about whatever it was. In this case, the entire board, the entire leadership team was not in the room. The only people in the room was the person responsible for the area of the business. That was each section and there was discussion, but it was very, very hard to understand what the discussion was trying to lead to and what the narrative was around. So just three different examples from my frame of reference. The first one was the most effective, the second one was pretty effective and the third one was completely ineffective. And so, you know, again, back to this notion of narrative structure, like there is no one way but as a CEO, and if you happen to be the board chair or the lead director, like being really clear about what you're trying to get out of the people on your board and what and then holding them accountable, and then in the meeting what you're trying to get out of the meeting, like any meeting, it just enhances the quality of those interactions if you're clear about it.

Jocelyn Mangan:
Yeah, that's great feedback.

Matt Blumberg:
So, Brad, I don't know if one of those three was was my last board meeting that, you know, none.

Brad Feld:
Of them were your last board meeting. Your last board meeting was a complete, a complete cluster.

Matt Blumberg:
I will tell a story from my last. So, so I had a very specific thing I wanted to get out of the board meeting, and it actually was a lot of brainstorming. Like we were just at that moment when the board meeting came up that I needed some brainstorming. So I framed some topics up in the board book, and Brad and the other board members were there and brainstormed. And at the end of it, the feedback I got from, from the team was, wow, that was great. We got what we needed. The feedback I got from the board when I went back after closed session and got the debrief was, well, we were a little bit unsatisfied with the conversation. There were no real conclusions and I just sent everyone on the board a note, afterwards. I said, hey, I just want to thank you for that board meeting. I got your feedback that you were unsatisfied. It's actually what the team needed. And first reply to that email was Brad saying, if you got what you needed, it was a good board meeting!

Brad Feld:
And when I say it was a cluster, it was a fun cluster. Like the if I had a piece of constructive feedback, looking backwards, what I would have, if I were Matt, what I would have said is we have whatever, three hours together today the entire time is going to be brainstorming. I need you all to just show up. And we're struggling with a bunch of stuff. We're making a bunch of decisions around things, but we don't need any decisions today, and we're not going to give you anything substantive to chew on that is going to get to closure. We just want you to bat it around with us for three hours because we're in the middle of trying to make some decisions and we want your your feedback. Like, all right, well, I'm not sure I want to spend three hours doing that because that's not my idea of a good time in general in life. Lots of people like that. I don't. But I would have come to it differently than when I was a 2 hours and 30 minutes going, What are we trying to do here? Um, again, not realizing that we were doing exactly what the CEO wanted. So that framing would have been really helpful to me, even though, again, I get that it was totally productive for the team.

Jocelyn Mangan:
Let's go back to some of the audience questions because we have a few in here that have to do with the stage of the company. One is, how does one thing about the evolution of the purpose and construct of the board as a company matures from start up to mature? I know that you did collectively write the book on start up boards, so who wants to start with this?

Brad Feld:
Matt starts with his rule of ones, because I think it's the best rule I've ever heard in 30 years.

Matt Blumberg:
Our rule of ones for board construction is one member of the founding team. Um, and then for every one investor, one independent, like keep your board in balance. Um, there's, I guess there's sort of a fourth one, which is make sure you add independence from day one. But it's really one member of the founding team and then a balance between investors and independents. Boards that have too many founders? You're not getting enough opinion outside the four walls. Boards that have too many investors? You're not getting hands on operating advice.

Brad Feld:
Now, just a quick thing to it. There's a phrase I like to use, which is the illusion of control. And this illusion exists in venture backed start ups on both sides in extreme ways. The second you take investment from somebody, whether it's an angel investment or venture investment, it's no longer your company. You have investors. You have other people who have ownership in your company, and you might still be the majority owner. You might still be the person that's driving everything, but you have other people in the mix now. And so many board construction decisions are made around the illusion of control. And this idea that I need to structure things a certain way to maintain control or the opposite, where investors are trying to structure things in a way where they have control or where they have more control than they might otherwise have based on their ownership in the company. And when boards get built using this construct of illusion of control, where either side is trying to generate control, the investor side or the founder side, you end up with a board that's suboptimal. If you focus on building a board outside that and you say, okay, let's talk about what the control dynamics really are.

Brad Feld:
Um, which, by the way, in a lot of financing agreements are much more impactful than having more seats on the board than the other side, your adversarial side. Um, and you start defining what are we trying to get out of this board? Back to this story of what's a useful board with the idea that even at the early stages that board can be another team. It's another team that's helping you be successful and over a long period of time, let's assume that you're now a public company. That board that you start with is probably not the same group of people. You might have some, but not going to be the same group of people when you're a large public company. What do you need at that moment in time from the people sitting around the board table? So try to step back from the illusion of control. And I love Matt's approach because it gets rid of a lot of the nonsense around it. It's like, let's build a balanced board from the beginning and actually view the board as a team. That's a functional part of this business.

Jocelyn Mangan:
Yeah. Thank you, Edward. Do you want to add to that one?

Edward Norton:
Um, no, I think that was all well said. I mean, because of what we're doing with Zeck... we're sort of hyper focused on the way that these bad habits get entrenched by tools. We think that that we live in kind of an unconscious relationship with the tool sets themselves. And I have to say, I think lots of what's being commented on here is amplified in the negative by what's being called the board book or the board deck, you know, because no one can interact with a fixed presentation material. Number one, it's a pain in the ass to remake every time for the company. The company it's a huge, redundant labor burden to rebuild that every time. Number two, for the board member receiving it, it has no iterative. You know I am totally in agreement that fixed slide presentations should be banished and Zeck, what we tried to build, is something that can be more efficiently created and more efficiently ingested. But more importantly, the company has the right to expect that it's being ingested in advance and that a certain amount of iteration with it will take place so that there can be kind of this pre filter on engagement. Engagement can begin before the meeting itself on the download of information, right? And if there's query that has to do with just clarification of information, the underlying presentation platform, let's not even call it a deck, has the capacity to facilitate that iteration and therefore get efficiency so that the high quality conversations can be focused on in the meeting.

Edward Norton:
And in fact, at the narrative to this point can be articulated of what we want. What are the key questions we want to address going into the meeting, etc. I also think accountability does matter. I'm not trying to be totally org or company kind of centric versus boards, but I actually think for a company, you know, one of the things that CEOs and all of us who start companies experience is when you do get into a board relationship, you do all you see the team do all this work, and then the whole team kind of comes into it blind. They have no idea. They don't know who's reading, they don't know who's doing the work. They don't know... They don't know anything. And I think the idea of an interactive platform for preparing and and sharing and ingesting those materials is also frankly, the company should have information. The company should have data feedback that they can see in terms of how is the board interacting with what we're sending across: who's a dud? Who's really active? What are they focused on? What kind of queries are we getting back before the board meeting regularly so that we get better at prepping that the way they want to see it, etc. There's a lot of value to a company management team or an org management team in being able to actually see, get insights analytics, if you will, into how a board is interacting with what they put across.

Edward Norton:
And then of course, there's just we believe there's time efficiency on the governance process. We've had one very well known VC board member who sits many, many boards say to us, look, if you can make it so that I can pre vote employee stock option, employments, minutes, approvals, all kinds of plumbing that we really don't need to spend time on together. You'll give me 40 minutes per meeting and I get that eight out eight times a week. You know, we think there's a lot that you can hammer out in terms of the governance process and that ought to be able, if DocuSign can make, you know, legal documents, something we don't have to get paper and sign and Fedex back in and Carta can do cap table management, we certainly ought to be able to hammer out some of the the the grunt work of board governance so that it doesn't have to take up all of our time and live meetings. And I think we've done that pretty successfully with Zeck.

Jocelyn Mangan:
I want to get to this question. It also plays into the board makeup, who's in the room? And it's Tiger 21 and tends to create a board of advisors for our members. The central theme is optimizing diversity. How does one optimize board diversity? Obviously, this is one that that I spend a fair amount of time on, so I might kick this one off myself just by saying, you know, it really kind of goes a little bit back, Matt to the rule of one with you. It's just trying to have different voices around the table. And that includes not just, you know, the investor voice, the independent voice, but it's people that have different backgrounds and different lived experiences. And so because most board members are found through word of mouth, I think most people start with who do we know versus what do we need? That's the that's the habit that needs to be broken. I think the first step is asking, you know, what do we need from a strategic standpoint? And then, you know, setting an intention to look. Outside that immediate circle. Certainly you can reach out to to my organization and for her and to Bolster, Matt's organization, both represented on the call. But I'd love to hear others thoughts on this one. How do you optimize for diversity?

Matt Blumberg:
And I'll tell you, the first thing that we that we talk to when we're coaching a client through a board search, and I'm sure you do too, Jocelyn. Um, the first two questions we ask them when we're gathering requirements are how important is diversity to you in this search and in this day and age, almost 100% of the time it's yes. And the second question is, how important is it that the person have prior corporate board experience? And more often than not, the answer to that is yes as well. And we usually have to call kind of a time out at that point in the conversation and say, hey look, you know, there are women and people of color who have scaled CEO experience and have experienced sitting on corporate boards. But if you limit your candidate pool to the intersection of those two things, you're going to find two things. One, a lot of those people are already on three, 4 or 5 boards because there aren't that many of them. And two, you're not doing anything for the broader societal issue because you're not opening up the funnel. Everyone has to have their first board at some point and there are experienced board members who are shitty board members. There are people who've never been on a board before who would be great board members. My current board has four first time board members on it and they're they're very good on average and 2 or 3 of them are rock stars. So I think the first step is kind of opening your mind to the possibility that someone that's never been on a corporate board, maybe they've been on an executive team, they've been in a board room, they've reported to a board, they've advised CEOs of earlier stage companies. They've been on a nonprofit board, whatever it is that that can make them ready for their first board seat. That's one of the keys.

Jocelyn Mangan:
Um, I want to get to this question, too, because I think it's very timely for what's going on just in business right now. How do best practices change when a company is doing well versus when things are not going well? Brad, do you want to kick this one off?

Brad Feld:
Uh, I'm not sure the best practices actually change. Um, I think one of the biggest challenges in a board communication context is the tendency to deny reality. And I think it's, you know, when everything is going well, it doesn't matter that much if you're denying reality. But when things start to get harder or more challenging, denying reality can be fatal. And I think that the the things that you want to do in either situation is not is not allow yourself and the team to deny what's going on. It's really interesting to think back in hindsight the number of boards, board meetings I was in where everyone allowed themselves to be convinced that the trends that were being the positive business trends that were being generated by the pandemic were going to persist forever. And you know, it there are a lot of different lines around it, including around not just around remote versus in office work, but, you know, we've just accelerated e-commerce by five years. And what you what we find today when we look backwards is many of those assertions were denying reality, like there was a phenomena that was going on because of an external shock, namely the pandemic, that didn't really structurally, structurally change some things, but it didn't structurally change things as profoundly.

Brad Feld:
Um, I could give a long list of things like that that come up over and over again that aren't generated by an external shock. And they almost always have to do with not dealing with reality in the context of the performance of the business relative to the metrics that you need to be at to raise more money or not recognizing that suddenly there's a temperament shift in the market because of something that happened that was completely independent of your company. A lot of cliches right around hiring, slowly firing fast. There's often a lot of denial on the firing fast in the context of leadership teams, in the context of boards, and just not sort of addressing what's in front of you when things are not working effectively. So I think the best practices, though, are the same. Like just confront the issues and try to do it as un not non emotionally, but un emotionally as you can in a way where your goal is to address the issue, understand the issue, address it, figure out the root cause, and then try to collectively agree on what the path forward is.

Brad Feld:
And then frankly, for the board to kind of get out of the way and let the team execute it. And to be the one that the team's accountable and the leader's accountable to if they're not being effective. And when that's happening, again, be clear about what you're measuring and what you're going to do next. And if they are being effective, just get out of the way and let them be effective. So, you know, I realize I didn't answer the question because I don't I don't think there's different best practices. I think you just have to address what's in front of you and do it as well and effectively and clearly as you can. Maybe one last comment. As a board member, I am wrong a lot. And I'm very I have to be very comfortable being wrong. And I think board members who are not comfortable being wrong... and frankly, leaders who are not being comfortable being wrong are crummy leaders. And I think that's really, really important in the context of a team, which is to recognize that the goal is not to be right. The goal is to get to a good answer that has a chance of being effective and successful.

Jocelyn Mangan:
Yeah, well said. Thanks, Brad. Edward? Matt, do you have anything to add to that one?

Edward Norton:
Um, I'd pop back to something you were saying about diversity. I'll focus for a second on nonprofit boards because a lot of us are on them. I, I think people should invite younger people on to nonprofit boards. I think that some of the passivity that I see on nonprofit boards is because we get sort of emeritus veteran people and it's great and sometimes it's because of their fundraising, donating capacity or their fundraising capacity. But but I think, you know, I think there's a I remember one time, a long time ago, someone inviting me to be on the junior board of some organization. I was, you know, like already making movies and donated some money. And I remember thinking, like, what is it that makes you think that I'm going to get fired up? You know, I, I kind of think I think organizations should challenge themselves to, you know, realize you're going to get you're going to get you often get real motivation and desire out of like like inviting people to be on boards before they assume they're you know, they're valuable to a board because they they've got more to prove. You know, there's more excitement, more enthusiasm. And I think I think diversity is super important. But I wouldn't leave age diversity out of that. I think I think I think on nonprofits in particular, I've seen that that boards skew much too old.

Jocelyn Mangan:
Yeah, that happens on for profits too, by the way. So we've got.

Edward Norton:
I've kind of yeah, I've kind of noticed. It's funny, I've seen some comments in here about public versus private. I don't have much experience on public company boards, but just as an observer, culturally, I almost think you could say that public company... it's ironic, but public company boards should be practicing more oversight than they are. You know, it's kind of crazy, if you think about it, that we've got a lot of public company boards that seem to to rubber stamp CEOs. And then we've got venture backed boards that are tougher on their CEOs because they have expectations. I, I always sort of think, God like, you know, early stage and mid stage private companies are the ones where boards should have a mandate to be more proactively supportive. Um, you know, and, and, and public company boards are the ones that should be actually filling their fiduciary responsibility to shareholders more in a more toothy way. You know it's but others may have a different opinion of that.

Brad Feld:
Strongly agree.

Jocelyn Mangan:
All right. I'm going to I'm going to do a rapid fire now before we pass it back to our our hosts. Um, so each of you is going to answer this board Madlib question. I'm going to start with you, Matt. And the question is, I know I've left a great board meeting when I feel blank.

Matt Blumberg:
Exhausted.

Jocelyn Mangan:
Exhausted. Okay, Edward, I know I've left a great board meeting when I feel.

Edward Norton:
Clarity.

Jocelyn Mangan:
All right, Brad, I know I've left a great board meeting. When I feel.

Brad Feld:
Stimulated.

Jocelyn Mangan:
Stimulated. Awesome. Well, I want to thank the three of you. It's funny, we when moderate this conversation, it does not feel like anything but us sitting around talking about boards so we can do this again and again. There's more to say and there's a lot of questions we didn't get to answer. I do promise that we will follow up with some answers to those we didn't get to, but thank you so much for having us.

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