What People Really Think During a Board of Directors of Meeting
If you like this article, check out another by Robbie: 15 Ways a Venture Capitalist Says “No”
Imagine if you saw your boss once every 2–3 months. And instead of a single boss, you had two, three, or four bosses. And every time you got together with your bosses, you held a formal status meeting where you reviewed all aspects of your job and how you were doing. Now imagine your bosses had given you a significant amount of money and their compensation would be based partially on how well you performed.
Sounds kinda odd, right? That’s how things work in the startup world. What I described is a company’s CEO and Board of Directors (BOD).
Of course highly functional boards are in contact more frequently than once every few months, but in practice, CEOs are busy and the BOD meeting is not the highest priority.
Below is a fictional (but comically representative?) account of an early stage startup board meeting. While the conversation seems cordial enough, the inner dialog [in brackets] reveals more about what the participants are thinking. Just wait until we have AI that can read minds!
In this BOD meeting, there are four participants:
- CEO: runs the meeting. In early stage startups, she is normally a founding member of the company and has the most at stake (financially and professionally) for its success.
- Lead Investor: lead the series A round of funding. He has a lot at stake too (financially) and are very active at BOD meetings.
- Independent: selected by the CEO to be the critical 3rd voting member of a three person board. The CEO tries to pick someone that is “friendly” because if any decision came down to a tie between the CEO and Lead (meaning they don’t agree), the Independent would break the tie. Often, this person is an experienced CEO that has been involved with multiple companies.
- Board Observer: second largest investor in the Series A will often get an “observer” seat. He doesn’t get an official say on voting matters, but has information rights and can attend all the board meetings.
Act I — The Numbers
CEO: Welcome! I hope everyone is doing well and had a great summer.
[I’d never talk to any of these people if my closing docs didn’t require it, but here we are.]
CEO: We have some exciting updates to share with you! I hope everyone had a chance to review the slides we sent out two days ago.
[Maybe our new feature release will distract them from our increasing customer churn and high employee turnover. Of course they didn’t review the slides, but I can make them start to feel bad for not doing their homework.]
Lead Investor: We are excited to hear about it!
[If I had a dollar for every time a CEO said they have “exciting updates” I’d be a rich man. Oh, I am a rich man.]
CEO: Let’s dive in and run through our numbers so we can get on to the good stuff.
[I’m going to go as quickly as possibly through these financial slides and hope they are busy checking their phone.]
CEO: I’d like to save the bulk of the meeting to discuss some strategic issues and get your feedback on product direction.
[Investors love to think they are “strategic” so if I couch this status update as not strategic, maybe I can survive this meeting.]
CEO: On slide 2 we have our standard table of KPIs you’ve all seen before. You can see some things are going well and others need improvement, but we believe the new features we’re adding will alleviate many of our issues. Moving on to slide 3…
[Alright, made it through that slide.]
Lead Investor: Hang on a sec, let’s go back to slide 2. It looks like customer churn and employee turnover are increasing far ahead of plan. Can you discuss that?
[This rube thinks she can distract me by talking about new features. Her churn and turnover numbers are shit.]
CEO: Yes, moving on to slide 3 where I cover details about our churn. <Insert rambling diatribe about churn metrics, issues with the product, and how the company is addressing it>
[Well, it’s going to be another one of those board meetings.]
Lead Investor: What about employee turnover?
[I zoned out half way through that thinking about the four other board meetings I have this week. I’ll see if I can nail her on turnover.]
CEO: And now on slide 4 I want to cover some issues we are seeing with employee turnover.
[On one hand, he is pissing me off because he keeps asking for more information that I plan to cover on the very the next slide, but on the other, I look like a genius because I’m predicting what he wants to hear.]
Board observer: I highly recommend you check out the Netflix culture deck. Several of my companies have used their best practices.
[Boom. Just dropped some value. They should have made me a voting-member.]
CEO: I have seen that deck, but thanks for the reminder. I’ll make sure we go back and review it in case there is anything we missed.
[Wow, did he just recommend something that came out in 2009 and assume I’ve never heard of it? So glad we didn’t make him a voting member.]
CEO: Next up is the financial update. We sent out the full details earlier this week. Let me know if you have any questions. Ok moving…
[Fingers crossed no one speaks up…]
Lead Investor: Yes, on the Cashflow tab of the financial details spreadsheet, cell E23. That doesn’t match the number on the summary tab, cell F8.
[One of my associates found a couple errors in this hastily thrown together financial spreadsheet and now I get to look like I’m all over it.]
CEO: <Starts sweating> Umm, ok. Let me find that. Ok, yeah I see it. You are right, looks like there is a small error. I’ll need to get back to you on that.
[G.D. our outsourced controller. He threw together this spreadsheet and now I’m taking grenades.]
Board Observer: Yeah, I noticed that too.
[This is the first time I’m looking at the spreadsheet, but it does look like an error.]
CEO: We’re on it.
[You noticed it too my ass.]
Lead Investor: There are a couple other inconsistencies in the spreadsheet that I’ll catch up with you on after the meeting.
[I feeling magnanimous today so I’ll let her slide right now. She’s already starting to sweat a little anyway.]
CEO: Sound good. Let’s move on to our product update!
[I look forward to getting berated after the meeting about obscure details concerning made-up numbers in this stupid spreadsheet.]
Board Observer: I’d like to be part of that conversation if you don’t mind.
[She has to invite me.]
CEO: Sure!
[No way I’m inviting him too.]
Independent: What I did in my previous companies was send out financials to a third-party accounting firm to validate before we sent it to the board.
[It’s been a while so I guess I better say something.]
Lead Investor: That’s a great idea.
[I wish he was the CEO.]
CEO: I’ll have to check on how much that would cost, but that sounds helpful.
[Look who decided to say something! Sure, if I raised as much money as you I’d have cash for all sorts of frivolous things. But I didn’t. Thanks for nothing.]
Act II — Shiny New Objects
CEO: We have some great new product features to show you.
[Ok, I made it through the first part. This should go much better.]
Lead Investor: Looking forward to it.
[Why does every startup think new features are going to drastically improve their situation?]
CEO: After receiving some positive feedback from our customers, we’ve made a couple of enhancements to the product.
[This is our third pivot this year. I hope it’s the last one.]
Lead Investor: This looks like a pretty major change to the product direction.
[Oh geez, here they go again. We’ll probably have to write down this investment at the end of the year.]
CEO: We gathered extensive feedback from our existing customers and did a lot of A/B testing.
[Really it’s our lack of customers that got us nervous.]
Board Observer: You should look into doing NPS surveys. Several of our companies use NPS to get customer feedback. <Insert ten minute rant about the merits of NPS.>
[I don’t have a great feeling about this CEO. I have to tell her about basic stuff. It’s like she lives under a rock.]
CEO: Thank you.
[First the Netflix Culture Deck, now NPS. I guess he thinks I live under a rock.]
Lead Investor: I’m not comfortable in changing the product again.
[These guys have to stop changing the product. Need to pick a direction and go all-in. They will be in zombie-land in no time at this rate and asking for a bridge.]
CEO: We don’t make these changes lightly. We’ve done extensive market research and are leveraging our experience over the past 12 months. We think it’s the right call.
[He’s “not comfortable.” I’ve been agonizing over this for three months. He’s thought about it for three minutes.]
Independent: We did a very similar change at my last company and it worked out well.
[I’m going to help the CEO here.]
Lead Investor: Ok, let’s do it.
[I wish he was the CEO.]
CEO: I feel like this will get us to product-market fit.
[If I like it, it’s a bad idea. If <Independent> likes it, then it’s a great idea.]
Act III — Strategic Discussion
CEO: Up next are some strategic topics, but let’s do a time check.
[I’m done. I need a drink.]
CEO: Looks like we are out of time and I know <Independent> has a hard stop.
[Haha, we didn’t have time for even one of the “strategic” items.]
CEO: Next time I’ll see about reworking the agenda so we have more time to discuss strategic items.
[This went about as planned. I’ll use the same basic structure next time.]
Lead Investor: Maybe we should have a call prior to the next Board meeting to discuss the Numbers so the board meeting can be focused on strategic items.
[She has no clue how to run a board meeting. She let <Board Observer> ramble on about NPS way too much.]
CEO: Why don’t we chat about that next week to see how it would work?
[<Lead Investor> is so busy, he won’t be able to meet with me and we can rehash this same topic at the next board meeting.]
Board Observer: Yeah, I’d like to join that call.
[They better include me.]
CEO: Got it, will do.
[Again, no way I’m including him, but I won’t need to because the call isn’t happening.]
CEO: Thanks for all your input. I’m very excited about the next few months.
[Finally. Over. Now I need to hit the sports bar down the road and throw back a few to take the edge off.]
