La Fosse held this breakfast event for post series A founders & VCs on getting the most out of their board.
*held in partnership with Silicon Valley Bank.
At La Fosse Associates, one of the most frequent questions we get asked, is "how do I build my board?" It's a tough question, with many answers. And that’s when our network of high fliers comes in handy. We know people with the necessary experience to help answer it.
So we decided to host a panel discussion held in partnership with Silicon Valley Bank. Four experts from diverse backgrounds shared their learnings with an audience of executives, on how to build an effective board at every stage of business growth.
Don’t have a board for the sake of it.
“There’s no point in having a board for the sake of it,” claims Peter Ward, co-founder and CEO of Where Are You Now?. “We started back in 2002 with just one investor.”
Ward created WAYN working full time at Accenture. After securing $11 million series A investment from leading investors, WAYN grew to become the world’s largest social travel network for 13 years and was bought by lastminute.com in September 2016.
“It’s good practice to get into the mind-set of having advisors around you, but they don’t have to be a board. It can be informal, just as long as it’s part of a regular schedule.”
Boards are like Martinis.
Laurence Garrett, Partner at Highland Capital, agrees that infancy-stage businesses don’t need a traditional board. “At the beginning, you can do it around a coffee table. But as you grow and get investment, you’re going to need some sort of structured board.”
But for Garrett, it’s critical to keep the board numbers down. Or in his words, “Boards are like Martinis. One is great, two is is OK and three is enough.”
Do your due diligence at a personal level.
If you’re considering inviting someone to your board, make sure you conduct thorough research on that individual, right down to their personality type. Their psyche could have a major impact on the direction of your business, right down to your customers. As Garrett says, “Boards are there to coach and challenge executive teams, but also to look after customers, employees and suppliers.”
Board functions change with growth.
“Once a company goes public, the board steps back from operations and takes on a much more strategic role,” explains Niamh Corbett, Advisory Partner, Board Intelligence. “The business is bigger and there is more external pressure. It’s at this stage that the board becomes the first line of defence to protect management.”
For a board to be effective, they must prioritise “strategy, performance and governance functions,” states Corbett. When the board is clear on their priorities, they should then ensure that management gives them the appropriate information to function in this capacity. And to ensure that conversations don’t stray into operational territory, the chairman can be a dominant force to help guide it back.
Avoid boardroom bombshells.
“As a CEO, I find it useful to meet up with the chairman prior to a meeting to discuss any challenging issues,” explains Ward, revealing that he regularly has external meetings in advance with other board members too. “One of things I’ve learned from my experience is that you don’t want to land a bombshell in the board meeting. Tee things up and prepare people.”
Effective board meetings need the big picture.
Management can be guilty of focusing on what looks good and glossing over the areas of the business that are underperforming. But, as Corbett insists, “Together, scrutinise the outperformance and underperformance and reveal both sides of the story. Don’t create a blind spot - make it balanced with trends, risks and opportunities and look to the past and the future.” Without the whole picture, it’s hard to make decisions that will support future growth.
“Have continuity, KPIs, quarterly goals and keep it succinct and focused,” added Ward. “Once they’ve had time to digest and reflect, move on to discuss the issues, challenges and solutions in a collective forum.’
Keep your board broad.
It’s important to build a board with ‘cognitive diversity’, states Corbett. The members should think in different ways, with a set of different skills and experiences that come together to complement the business in its current state. And, as the company grows, assess the fit to see if you still have the right people with the right skills for your business needs. In addition to their skills and experience, always review the dynamics and chemistry to ensure the individuals are gelling in a way that helps you grow.
Prepare for tough times ahead.
“Growing companies is tough. Going from 10 to 4,000 is a journey that only few people can take the whole way.” warns Garrett. If you’re planning on scaling your business to a meaningful, $500 million operation, the board can help you achieve it by coaching you along the way. They’ve been through the exact same pain points and their experience is priceless.
Finally, when asked about the future of the boardroom, the panel was divided.
“In the future, it will be crucial to have a board that understands your customer dynamic,” predicts Corbett. Corbett also suggests regular face to face boardroom meetings could die out with digitisation. “By tapping into virtual technology, businesses can access a global talent pool with individuals who don’t physically need to be there to help guide the business.”
“In the future, international boards will be essential for businesses growing globally,” stated Garrett, going on to explain that it’s essential to have local experience of the markets.
Ward, however, jumped in with a difference stance on the traditional approach to board meetings. “In my experience, if you want to have money from a venture capitalist in the US - you have to move there. They don’t want to invest if they have to jump on a plane or dial in on a Google Hangout. In my opinion, you cannot beat face to face time.”
“Over the next five years, customer bases are going to change,” raised Susanne Given, chairman of made.com. “When customer bases change, boards need to change with them - particularly within consumer-focused businesses. In five years, at least 50% of our customer bases will be Millennials and the makeup of boards will need to recognise this.”
Attend our next event
Building a board takes research, time and trust and putting your business into other hands is a milestone in your growth. For more information and advice on how to grow your business, contact La Fosse Associates about attending our next event.
If you liked this article, you should also read: The Digital NED: Journey to the boardroom