How to Prepare for Your First Board Meeting
Like most entrepreneurs, you know how to attract investors, develop a product, and bring it to market.
But you probably have no clue how to conduct your first board meeting.
That's why I talked to Matthew Prince and Michelle Zatlyn, two of the founders of CloudFlare, the Web performance and security company that processes more than 250 billion page views a month through its security apps. (And a company with no hierarchical job titles.)
Here's their advice for preparing for your first board meeting:
Don't take the hard questions to the meeting.
A common mistake entrepreneurs make--and one we definitely made--was to think of board meetings as the place to take really hard questions and really difficult problems and ask for advice.
Here's what we did. In 2009, we raised money from two great VC firms, Venrock and Pelion. Ray Rothrock and Carl Ledbetter were on our board, so we thought, Wow, we have these hard questions we can't answer; we'll save them for the board. We'll get their advice. It will be great!
For the first board meeting, we put together a deck of slides, and every slide had a question mark. How should we do this? How should we address that? The reaction from the room was stunned silence. You could see them thinking, What have we gotten ourselves into? Not only do they have hard problems. They also don't have any answers.
Shortly after, Ray called and told us to get advice from Steve Goldberg, another partner at Venrock who had led a number of tech startups as an operator more than as an investor. So we sat with him, and he gave us two great pieces of advice.
"There are two ways to crash a plane," he said. "One is to just fly into the ground. The other is to fly at such a steep angle that you stall...and then you crash into the ground. Your job as CEO is to reassure the people on your board that you are not going to crash the plane. Always tell the truth, always say what's going on, but when there is really good news, talk about all the stuff that can go wrong--that way, your plane is never flying more than 10 degrees above the horizon."
We took that advice to heart. At one of our most successful board meetings, we were killing it in terms of numbers, growth, revenue...yet we spent most of the time describing the five meteors we thought could kill CloudFlare. We said, "Here is the reality, and it's great, but here's what we're worrying about."
Seek counsel outside the meeting.
You have great people on your board. Definitely seek their advice--but the worst time to do that is during a board meeting. During the board meeting, your board is looking for you to show you're the captain of the ship: Here's where we are, here's where we're going, here's how we'll get there...your job is to give them faith in their captain.
At the next meeting, say here's where we were, here's where we thought we were going, here's what we learned, we're sticking to that course (or we've changed course).
Another approach is to say, "Here is a problem we're facing. Here are all the solutions we considered. Here is the approach we've decided to take, here's why we chose that approach...and here's how we're going forward."
Your board should definitely be part of making some of those decisions, but ask for its advice outside the meeting so you can come to the meeting and lay out your plan.
Create a consistent meeting structure...
One thing we got right was using the same structure for every board meeting. (We haven't deviated from our basic format for four years.) Although the content changes, the structure doesn't. Continuity makes it easier for your board to follow along and be engaged.
For example, say you have a lot of financial data to share; place that information up front. If you don't have extensive financials because you're still early stage, share the metrics you track, and use the same tables every time so your board can compare month to month. The goal is to make it easy to track the course of the ship.
Then talk about product. Talk about customer deals that affect the trajectory of your growth curve. Share industry news. Talk about changes in staffing.
Determine the key drivers of your business, and then share what has happened and what you will do in each key area.
...because consistency also streamlines preparation.
Consistency also makes preparing for a board meeting a lot easier, because you know what you need. You shouldn't need to spend a lot of time prepping for a board meeting--you should be spending that time running your business.
Pay attention to the parting comments.
We like to say our board meetings are a little like the Jerry Springer show. We talk about what's going on, we bring in different executives to highlight certain points, and at the end of the meeting, just like Jerry does, our board members will give their final thoughts.
It's as if they spend time watching our "show" and at the end will say, "I invested in a company that saw your level of growth, and here's a challenge they faced that you might face..." almost like Jerry's parting thought. They tend to make macro rather than micro points, and their advice tends to be incredibly prescient. Inevitably, we'll face that issue three months or so down the road.
An advantage your board members have is they view your business at a macro level and can see how it fits with other businesses like it--and, because of their experience, they can foresee issues you can't.
Appreciate the discipline of board meetings.
We recently spoke with the founders of a hot company that had raised significant capital and were preparing for their first board meeting. We said, "Don't save up all your hard questions and present them to the board..." and they replied, "Oh... but then what is the point of the board?"
Early-stage companies that take angel money and don't form boards often get lost because they don't following the discipline of gathering up a status check-in, rolling up all the minutiae of detail into a high level explanation, and then presenting it to a group of individuals who have the power to fire them.
Although that sounds like the worst of all worlds, that discipline is critical if you're thinking of building a real company. Take us: We went from an idea on a piece of paper to a business on the path of becoming a major public company, and the discipline of having a board structure has served us very well. Now we don't have to retrofit something that doesn't exist. We're building on a platform we already have.
If you're building a company you want to last, you need a board you see as a serious exercise, not a distraction.