Chapter 13 – Version 3
(An excerpt from my upcoming book)
While holding board meetings is not a high priority for most bootstrap entrepreneurs, I would argue that it should be on their priority list, and not at the bottom. If the company has investors, whether friends and family, casual and professional angels, or institutional investors, then I believe it is a requirement.
To be direct, you’re nuts if you don’t hold board meetings regularly, and hold them well. I’ll explain why in a moment.
But first, let’s clarify that we’re talking about early-stage companies, from pre-revenue to about a year of real revenue. If the company is beyond that early stage, then there is no option – they are well in the zone where it simply makes sense to do it, and do it right.
And we’re talking about the Board of Directors, not the Board of Advisors. To learn more about the difference, and how to use Board of Advisors see [future link to Board of Advisors chapter].
There are at least five good reasons for holding board meetings from nearly the beginning:
1. In most states you have to hold at least one board meeting a year, as a regulatory requirement.
2. The officers report to the board, and regardless of the specifics of the company legal structure (LLC, S-Corp, C-Corp) without regular board meetings, there isn’t an effective chain of command. And without that, you don’t secure the benefit of legal rights and protections of a company. For instance, key decisions such as taking on office lease obligations or providing stock to early employees can be ratified and approved by the board, which formally and legally shares the risk associated with those decisions. A sole founder without a board is a founder who is truly alone, legally.
3. Everyone needs a boss, even the independent entrepreneur on a quest. Since the founder will have a shareholders or customers or a Board eventually, why not start early and grow into it?
4. It is rare that one individual can hold objectivity, so do yourself a favor and instill a structure that at least has the possibility of providing objectivity.
5. Perhaps most important of all, like any group, it takes a while for the group dynamics and culture to evolve, and your board will be more effective and helpful after that initial period — in my experience, about six months.
We’ll talk more about how to build a board, and care for it, elsewhere [future link: Building Your Board chapter].
Schedule of Board Meetings
Most early-stage companies will schedule monthly board meetings, because frankly they are moving so quickly that there is significant new progress, and issues related to that rapid movement, every 4-5 weeks. If you can handle that, it is a good frequency for the founder.
But given other distractions, and even potential opportunity cost, as well as Directors that travel, every other month may be more realistic.
But above all, make a schedule, and stick to it. Meeting regularly is more important than meeting frequently. It helps you and your team to get into a routine of preparation, an enjoyable (and necessary) break from the constant opportunity interruptions most startups have to handle every day and week (and sometimes, every hour). The periodic pause, reflect, prepare and present process of the board meeting is most valuable if the period is constant and regular — every 4 weeks, every 8 weeks, whatever works for you and your Directors.
Meeting By Phone
Many companies make it the norm because of the cost of face to face meetings; and it is often enables a meeting to occur despite international travel schedules. Frankly, emergency board meetings (more on those in a moment) will often by by phone, due to prior commitments of the participants.
If you do adopt a practice of regular by-phone board meetings, then I strongly recommend that you vary that schedule, perhaps every other meeting is face to face, or every third meeting. Of course a distributed team works better when it gets the human face to face experience.
It may seem like a detail, but a vital component of the board meeting is the informal time before the meeting, especially if meeting face to face. So when plotting out the schedule, and requesting commitments from your team and your Directors for the meeting, don’t forget this nuance. In fact, make it part of the culture of your board.
Dinner the night before is ideal, in my experience, but your culture may involve other methods — customer visits, product demos with the development team, even leisure activities (um, I mean “team building” activities). Anything that provides the “air space” for informal interactions between board members and yourself.
More about informal time in a moment.
Interviews with experienced board members (and new board members) reveal one source of constant frustration: materials delivered at the last minute, which forces the participant to either try to absorb the information as the meeting is unfolding, or wing it without the material. Obviously, you’re not getting the most out of that participant.
And they’re feeling like they can’t do a good job. The profile of a typical board member is that they are the kind of person that finds it very important to do a good job. So don’t hamper them, no matter how busy you think you are with competing priorities. So how to do this?
Develop a schedule for the materials, even if you’re the only one involved (unlikely) and especially if others on your team are involved — this will always include your finance person, your sales lead (if it isn’t you), and potentially your legal counsel. So treat all of those folks helping you develop materials with respect, and get them a schedule like this:
1. Develop a list of needed materials 5 days before the meeting;
2. Be at final draft 3 days before;
3. One last pass for typos and mistakes 2 days before, and Hit SEND;
4. Confirm by email with each participant that they received the materials (goes wrong all the time);
Note the use of email to send the board materials (consider using DropBox or similar large file sharing site). Electronic everything isn’t just for your convenience, but for your board members. If they prefer paper, they’ll print it. They will appreciate the convenience of electronic copies (rather than a Fedex) and you need to save money.
If necessary, scan in original documents if you don’t have the electronic form.
Finally, print two or three paper copies of everything you sent electronically, and bring these packets to the meeting so that a participant with a computer problem isn’t dead in the water.
Students of mine will not be surprised to learn that I view the Board Meeting as primarily a conduit for emotional content, not distribution of logical, analytic material and forum for judiciary-like decisions. Indeed, business is about people, and between people, and people are emotional.
Keeping that in mind,
[to be continued]