I remember my first Board of Directors meeting. It was a disaster. I made the naïve mistake of laying out several different business model options for our startup and then asked for the board’s opinion without first putting forth my recommendation.
Worse yet, at the time I did not understand why that went so badly until my independent board member debriefed me on how I had unnecessarily taken what should have been a good meeting and made it a bad one.
I learned my lessons quickly, and subsequent meetings went well when the business was going well.
Given my personal history, and the fact that I have sat in several board meetings where mistakes have been made, I’d like to share some tips with first-time CEOs running their first board meeting. Mistakes can be easily avoided if you know what to do.
The overarching lesson is to never surprise your board members in a meeting. If you follow the advice below, you will not surprise them, and the likelihood of them surprising you will be very low.
Leverage time effectively.
The first two common mistakes at board meetings involve time. The first involves not getting slides out soon enough to the board members for thoughtful review given their busy schedules. The second is starting late or running over the scheduled meeting time. In both cases, your board meetings are driven by the schedule of your investors. It is not unusual to have an investor with a dozen board seats. Given that he/she has to monitor investments, find new ones, and work with old ones, their schedules are packed. You should respect their time by getting slides out at least 36 hours ahead of your meeting and run punctual sessions. Your investors will appreciate your managing their time effectively.
Don’t delegate the financials.
You are taking a major risk if you delegate a commanding understanding of your financials to your controller, rent-a-CFO, or bookkeeper. While most financial people helping early stage startups can prepare accurate financial statements, their insight and advice is pretty limited. I have seen controllers not know YTD bookings off the top of their head, misrepresent what categories make up a company’s big spending areas, or get surprised by slow collections which risk violating venture debt covenants. Those are all big issues for young companies, and if you delegate these tasks to someone who cannot distinguish the really important from the trivial, it will cause a very negative reaction from your BoD members.
Tell your narrative as CEO.
Leverage the board meeting to tell a consistent narrative. I have challenged CEOs about why a slide in a presentation by one of his/her direct reports was in the deck, only to be told although he/she agrees with me that it breaks the narrative, but that the direct report felt strongly the slide should be included. The board meeting is the CEO’s narrative of how the company is doing – not anyone else’s. If the board meeting is a film, the CEO is the director. Keep your actors reading from the script of the film you want to direct.
Have a dry-run with your co-presenters.
Don’t run through the slides anyone else is presenting in the meeting without testing the presenter with likely questions beforehand. Do not assume that because the person is a good manager of his/her function that he/she will necessarily be good at talking to the board. These are quite different skills, and the best way to develop one’s board presentation skills is to rehearse before a meeting. The first time a VP receives an unexpected question which you had prepared them for, they will thank you for it.
Know your stance on problems / opportunities.
A killer mistake, and the big one I made in my first board meeting, was to raise a set of problems/opportunities and to have a discussion about them without having a clear opinion of my own about what to do regarding key issues. The best possible way for you to get input and advice from your board is to outline a clear and concise position on what you feel is the critical issue. When the CEO has a clear position, the reaction of the board is focused and almost always enlightening. When the CEO just lobs up an issue without a position, the reaction of the board is often unfocused, much less helpful, and usually unpredictable.
There is a world of difference between saying “I’m thinking of hiring a key person to shorten the runway to beta release of our SaaS product, but the expense is not in our Operating Plan. Before I go ahead, I’d like to hear your advice and input…” and “It sure would be great if we could accelerate our time to market. I’ve got a lot of ideas about how we might do that but what have you seen work well in your portfolio companies?”
Does this mean you never ask your board for general input? Of course not; but you ask for it in your one-on-one meetings with them outside of the board meetings.
Assuming your business is running well, if you follow these key steps with your Board of Directors, you will most likely have very productive board meetings.