The Great Board Commitment - A Session with Inovia Capital

Is your board accelerating your startup toward success, or does it feel more like a reporting tax? Great boards are essential to the success of startups. They represent a powerful opportunity to set an empowering culture, provide an example of trust, and an openness to a diversity of views from members.

But how can early stage companies ensure they have a great board that sets the tone for the future?

During this episode of the Inovia Sessions, Partner Shawn Abbott sat down with BenchSci’s founder Liran Belenzon and theBoardlist’s CEO Sukhinder Singh Cassidy, for a conversation on building and managing great boards.

Shawn: What’s your experience in managing a high performing board?

Sukhinder: I think size is definitely a consideration when you think about high performing boards; ideally it’s maybe five to seven members.

If you’re the CEO and founder and coaching an executive team, you will find that once it gets beyond seven or eight people, it gets a little unwieldy. That aside, at least with the executive team, you are all together storming, norming and learning. Managing your board is like managing another team but one that doesn’t get together very often.

In addition to managing size, in order to get the best outputs versus just long-winded discussions and slide reviews, you need to invest in your board. Invest in structuring an agenda, getting the board deck out ahead of the meeting and directing the board meeting in the same way you do a management team meeting.

Bottom line is, if you want a great board, you need to act like the coach of that team, or delegate the task of actively managing the board meeting to either your lead independent or one of your big financial investors.

Liran: I’ve learned that you should also ask your observers not to chime in unless referred to; I learned that the more experienced ones provide the needed space to the voting board members.

Shawn: That’s a key concept. The simple act of moving the chairs back from the table to the wall and not sitting at the table creates some incredible dynamics because suddenly the remaining five people at the table have to engage and lean in. There’s a much higher level of accountability.

Sukhinder: In some cases your observers are more educated on the business because they’re the more junior partner who’s been brought along to learn. But if you want to create accountability to the person who’s in the seat, then to some degree, you have to create a dynamic that forces the main partner to engage in a way that they would not be required to, when they bring along their principle.

Shawn: Can you provide any examples of specific structured topics that would be useful to bring to your board members, because there’s certain dynamic conversations that would be helpful and others that wouldn’t.

Liran: I have always sent the deck in advance, but the way I interact with the board completely changed after one of my board members flew from San Francisco for a meeting I held as a first time CEO.

I did what probably most people do, I sent a package a few days in advance and then we started the meeting by reading through the deck. At the end, I asked for feedback and this member said “listen, I did not jump on the plane and fly all the way from San Francisco to read a report that I could read by myself”. This was great feedback. Since then, we’ve completely revamped the way we conduct board meetings.

Now, our board meeting is treated exactly like internal meetings. Members get a document 72 to 96 hours in advance. It’s a Google slide deck, and any questions or comments are submitted and resolved in advance.

There are sections for each department head and each does a Loom video, so the investors also get to know them. When we come to the actual board meeting, there’s a very strict agenda, 30 to 60 minutes to answer questions about the package.

Then we do what the board is supposed to do, which is deep dive on an area of the business, talk about strategy or level up one of the executives by putting them in front of the board. We’ve completely moved away from reading this hundred page report. As the company grows, there are more and more requests and questions, and addressing them should be completed before the board meets.

It’s my job to make sure that the board has the right context and alignment to support and challenge decisions. We do this with board huddles scheduled in between board meetings. I have a monthly 45 minute placeholder and sometimes we cancel it if we have nothing to talk about.

We also send a monthly update. Members read it and we ask for questions and input on any quick decisions we need to make; I’m not going to wait for three months to make a big decision, I can’t, we would die as a company.

Sukhinder: I’m in complete agreement with that approach. I’m the lead independent right now at a board and we’ve taken the next four board meetings and laid out the topics we are going to cover at each one. We’ve broken up deep dives into different functional areas, marketing, M&A, or other functions where we want to understand something in detail.

Those are the types of topics that you can rotate between board meetings.

Shawn: I’m hearing a key success factor is a prescribed use of time and expected outcomes for the board’s work together and it anchors back to Sukhinder’s initial comment, that the board is a team. It is not obvious for startup boards that they’re working as a team. People come to a board thinking they’re independent, not independent in the title sense, but that they’re working alone.

Shawn: Having a board that works together as a team is critically important. Liran, can you tell us a bit about how you created that team culture?

Liran: To really have a high functioning board, as with any team, you need to have psychological safety. I think it’s the most important thing. It is ideal if founders and CEOs can get to a place where we can really talk about anything. Not just sticking to the narrative that everything is going well but also addressing the possibility that things won’t work out, what are our options? The key is to feel safe while doing that.

I think demonstrating vulnerability leads to real connection. To me vulnerability is admitting to not always having all the answers. It’s okay to say, I don’t know yet, I need some time to figure it out or I’m not ready to talk about it yet. I think that displays both courage and vulnerability.

There are different generations on your board. You might have people that have been with you from the seed stage and then all of a sudden there’s a new board member. You have to continuously nurture trust and transparency.

Sukhinder: I will also say, as a CEO, for me, I’ve learned to use my executive coach. I never want to hide things from the board, my job is to be forthright with the board, to hold them accountable, to bring the hard topics, and get to resolution. I feel pretty strongly that my coach has my back and I can say absolutely anything. I go vent with them so that by the time I enter the boardroom it’s productive.

I think another way to show vulnerability with the board is to invite feedback. In fact, not just invite it, demand it. Board members are notoriously bad at giving CEO’s feedback. They run no structured process. It is very rare for boards to create the process to give you feedback or have an active dialogue with you.

Let them talk to your teams because you would rather know what you need to do to perform better. Demonstrate self-awareness and a desire to get better. It’s a way to show both vulnerability and quite frankly, strength as a leader. I think in one case I had my independent do a feedback session, but in all other cases, I’ve had my executive coach do my 360.

Liran: I had an executive coach I worked with and it went so well that she now works part-time at the company as our Independent Director of Leadership. She works with all of the managers. She did my 360 with input from the board members, and everyone in the company. It was a really robust process. The board presented it to me and I shared it with the entire company. We’re now doing this on an annual basis.

What I wish I would have done differently is create a process to give feedback to the board members as well because I think that’s super crucial. It’s really important to remember that the board members, most of them are not operators or managers. They don’t have that skill set so having an expert facilitate this feedback process is critical.

Shawn: Liran, you acknowledged the need for psychological safety for people to really demonstrate that vulnerability. What are the concrete things you do to create that trust?

Liran: So I think it goes back to what Sukhinder said, this is another team. How would you build psychological safety and trust with your executive team? I think it comes with time. I think it comes with caring and spending time together and getting to know them, making sure you pick the right people to join the board.

Do you know how to disagree? I disagree with the board members I’m most closest to, but we know how to disagree. When you know how to disagree, I think there is psychological safety, trust. It’s easy to address all this stuff when you care about someone and it is reciprocated. It’s management 101 and I don’t see that being different with the board.

Sukhinder: While we can say that trust is built in times of goodness, trust is actually really built off of disagreement. If you want to build psychological safety, you have to show people it’s safe to disagree. What you want to do sometimes is test the boundaries by bringing up difficult subjects, having the debate in the room, and move on. Everybody then sees they can be heard, and feel heard. To me, that’s how trust builds.

There is no doubt that it can backfire with the board member who gets offended or who thinks they know everything. Those reactions may be signs that you don’t share common values about how you want to feel with each other, and the environments you want to foster.

Shawn: What does that look like to be vulnerable with your boards when there’s tough talk?

Liran: You can’t shy away from difficult conversations. You have to go through some “ruptures or repairs”.

If a conflict doesn’t get resolved, you step into your role and have that really difficult conversation about what happened, discuss how you’re feeling and use the playbook of how to give feedback. It’s hard but it’s necessary. I think 99% of my experiences, whether it’s with colleagues or employees, always end well after a hard conversation. As long as there’s the repair afterwards, I think you move ahead stronger together.

If there can’t be that repair, then the next set of conversations may need to be, maybe this is not the right spot for you, maybe someone else from the firm should be sitting there or in the next round or why don’t you move to an observer role?

Sukhinder: If ruptures create the ability to come back and keep talking, then, you know, you have psychological safety. If ruptures create rupture, you have a bigger problem in the dynamic of your team. It’s the conversation after the conversation that really determines psychological safety. If the initial conversation itself caused a lot of consternation, you have to pick up the courage to close the loop. Sometimes I go back and I apologize. You have to be willing to have that conversation after the conversation. Nothing is worse for damaging psychological safety than a difficult set of debates where people really aren’t okay afterwards and are afraid to talk about it; ultimately, that will just undermine the effectiveness of any team.

Shawn: Sukhinder, you mentioned being a lead independent, and there’s a transition for many founders where they realize it’s a gift to have someone else chair a board meeting so that they can focus on listening instead of driving. But when does that happen? What’s your guidance?

Sukhinder: Obviously, people often think about adding an independent later rather than sooner. But let’s say you add an independent at Series A or B, you’re likely adding an operator to a board that is all financial investors. For any of you who wonder, who in the room has empathy or sympathy for your situation? It’s another operator with a perspective that is sound in whatever area you need it.

In my mind, the lead independent’s number one role is working to construct a really good dynamic for the boardroom. Number two, being the person to give the CEO feedback. I’ve conducted the CEO’s review versus someone else doing it. I thought that was my role as the lead independent, to understand what was on the board’s mind that might not be communicated, and facilitate that process. You’re there to really help the CEO be more effective.

Liran: I’d like to lead this topic in a different direction because I think it’s a really important topic. The subject of diversity, equity & inclusion on a board is really, really important.

Unfortunately most investors, and this is just based on the stats, are white men or passing white men. That will probably be reflected in your board. There are not a lot of people from racialized communities, or women working at VCs, especially at the partner level. I think getting independents from different industries is great to have a more diverse, functional and high-performing team. Once we added a board member from a different background, it was amazing to see how that impacted our board meetings and how their perspective improved everything.

We should also talk about the responsibility of investors. For example, as a white man, if you are on ten boards it doesn’t leave any opportunities for a woman, or someone who comes from a racialized group, to join that board. What is the responsibility to make those swaps and talk to the founders about it? How is it going to get resolved if it doesn’t get addressed?

This is an issue for all the board members, not just the independent seats. You can preach whatever you want, but if you don’t have a diverse team at the top, then you’re not going to get the trust and attraction that you need.

Shawn: You know, there’s an incredible power to starting with the end in mind, and painting the picture of what a great board looks like. A composition matrix of attributes and people, and recognizing that if we have seven seats, if we have five seats, we’re looking for a perspective from different ages, from different genders, from different ethnic backgrounds and from different experiences. If you have that core commitment to better decisions being made through the strength of debate and perspective of difference on every dimension, then it’s amazing.

I’ve found that when you start with that, new possibilities open up about how to get there. What a fantastic exclamation point on an hour of real experiences in how a great board can help you or hurt you.

Inovia is proud to announce it has recently joined forces with theBoardlist, to offer a valuable initiative for our portfolio companies, to positively impact their current board candidate searches.

For more details, click here

Please look out for an upcoming Inovia Session, where we will be discussing building and managing boards in later stage companies and the different considerations when thinking about a pre IPO board.

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