Oftentimes I get asked by founders, investors, and friends why we at Ripple are so adamant about having board meetings at the early stages in a company. From the outside, it may seem like a waste of time, especially when startups at the pre-seed or seed-stage have so many other things to be focused on to keep the company afloat. However, after the first few times of participating in board meetings and seeing the value and realignment they offer to startups, most doubters couldn’t imagine running a company without them. So what makes a great board meeting, and why are they not the norm for all companies at the early stages?
Before we answer that question we should start with this question: what is a board meeting and why do we even have them? Legally incorporated organizations are required to have member meetings such as an Annual General Meeting (AGM) as well as frequent meetings for the board of directors (usually on a quarterly basis). The number of meetings a board holds per year is outlined in the company’s bylaws, but the most common arrangements are monthly, bi-monthly or quarterly. All board members attend each meeting and vote on any items related to the affairs of the business. These issues can include budget approvals, stock-based compensation approvals, past board minutes, etc. The main role of a board meeting is to oversee the business and hold the management team accountable to the company’s stakeholders. In a board meeting, the board reviews the past performance of the organization, engages in strategic deliberations, and approves plans of action to provide ongoing support to the organization through its various stages of growth.
Great, now that we have the background out of the way, let’s dig into what makes a great board meeting vs a poor one and some best practices on how to make sure your company’s board meetings are a success.
Before jumping into your first board meeting as a Founder or CEO, like all things in life, preparation is key. Being sloppy or disorganized will never end well and your board members will surely make you aware of their disappointment. When a meeting is well planned in advance and board members are well informed of the meeting’s agenda ahead of time, it allows for more thoughtful and detailed conversations. At Ripple, we ask that all board materials be sent at least 48 hours in advance to all members which allow adequate time for those attending to prepare. In addition, we often ask CEOs to share a ‘CEO Letter’ in advance of the meeting to outline their reflections on the past quarter and their expectations for the future.
The next important feature is the board meeting presentation. To help guide you in creating your own presentation we have created a Ripple Ventures Board Meeting Template. Using a standard format for each of your board meetings will help establish a familiar flow. All meetings require a board chair or lead director to run the meeting and make sure it moves along at a smooth and orderly pace. Having a familiar flow to every meeting will not only make the chair’s job easier, but it will also allow members to follow along more easily. Most startups often select the CEO to be the board chair given their intimate knowledge of the day-to-day runnings of the company. However, these CEOs often have little to no past experience being a board chair and therefore can fumble through the first few meetings if they don’t have a strategy or structure in place. In addition, the board chair is not the one who is supposed to have all of the answers but rather they help keep the flow of the meeting and make sure all topics are covered. Our advice at Ripple is to start by having a board chair as someone who has prior board experience. This will allow you as the CEO to learn from them as they guide you through the process and provide a framework for you to take over as a chair at a later date.
After the introduction and house-keeping items have been addressed, the next section of the meeting should be overall company performance (ie OKRs & KPIs) followed by key department performance including S&M, finance, and product/engineering. Sometimes, if timing permits, you can invite colleagues who manage specific divisions of the company to discuss their performance. However, we suggest that if you intend on having colleagues speak at the meeting they should be well prepared and aware of time allotment ahead of time. Oftentimes we see department heads spend far too much time on one topic which can make it difficult for the board members to understand the big picture.
Finally, we get to the part of the meeting that we see as being the most important: strategic discussion. This is the core of the meeting and will take up the majority of the meeting time. This is the part where the board members “earn their keep” and add their own value to the company by helping to address key strategic issues in areas such as product, market, team, competition, and funding. We suggest that the CEO selects only two topics to cover during this section of the meeting and asks that the minute books be completed prior to this part of the meeting. This will allow board members to speak freely about the runnings of the company. This section is vital to providing the CEO and management teams advice and clear direction on how they will be held accountable by the board members going forward.
After the board has completed the strategic discussion there is often an “in-camera” session called the executive session. This session typically occurs after the end of the main meeting and refers to a session where the executives (including the CEO) are out of the room. It is a good practice to hold an ‘in-camera’ session at every meeting so the CEO is not placed in an uncomfortable position should the time arise where there is a true need for an “in camera” session where s/he is asked to leave the meeting. These conversations can be as short as a few minutes and allow the non-executive board members time to discuss difficult topics such as terminations and funding decisions without the pressure of knowing the CEO is present.
It is easy for a management team to focus on what is going well in the company and avoid discussing the key challenges that exist at board meetings. Remember, these meetings are designed to help companies deal with the tough decisions and not only to update the members on the positive steps that have been taken. Board members can add tremendous value to the management teams by making sure that key issues are raised so that they can be addressed as soon as possible. Management teams often have a hard time stepping back to assess the running of the business when they are so inundated with it on a daily basis. The board members, who have a better outside perspective, can add a lot of value and insight, and board meetings are the perfect opportunity for the members to share.
So, what makes a great board meeting?
It is a combination of asking the tough questions, allowing all members of the board the opportunity to share their thoughts, providing structured time without the CEO present to do so, and making sure that both the board chair and all members are well prepared and equipped with the necessary materials ahead of time to allow for a smooth and efficient meeting. When the meeting is complete, a quick, private review with the board chair can be helpful to provide feedback on the meeting and how you can all improve for the next one. Don’t get discouraged if not every meeting goes as smoothly as you hoped or if you feel like you are in the hot seat more often than you are in the driver’s seat. Keep at it and remember that these board meetings are key to building successful companies.
Written by Matt Cohen, Managing Partner @ Ripple Ventures
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