Reflecting on the boardroom dynamics that truly matter
This past month has been an eventful one. Like everyone in the tech world, I’m riveted by the drama unfolding at OpenAI, wondering how the board and CEO created such an extreme situation. I’ve been thinking a lot about board dynamics – and how different things look as a founder/CEO vs board member, especially at very different stages of company growth.
Closer to home and far less dramatic, last week we had our quarterly Causely team meetup in NYC, including our first in-person board meeting with 645 Ventures, Amity Ventures and Cervin Ventures. As a remote company, it was great to actually sit together in one room and discuss company and product strategy, including a demo of our latest iteration of the Causely product. Getting aligned and hearing the board’s input was truly helpful as we plan for 2024.
Also in the past month, my board experiences at Corvus Insurance and Chase Corporation came to an end. Corvus (a late-stage insurtech) announced it’s being acquired by Travelers Insurance for $435M, and Chase (a 75-year old manufacturing company) closed its acquisition by KKR for $1.3B. These exits were the culmination of years of work by the management teams (and support of their boards) to create significant shareholder value.
Each of these experiences has shown me models of board interaction and highlighted how critical it is for board members to build trust with the CEO and each other. I thought I’d share some thoughts on the most valuable traits or contributions a board member can offer, and what executives should look for in board members that will make a meaningful impact on the business, depending on the stage and size of the company.
From the startup CEO/founder view
As a founder who’s built and managed my own boards for the past 15 years, I’ve learned a lot about what kinds of board members are most impactful and productive for early-stage life. Here are a few examples of what these board members do:
- They get hands-on to provide real value through introductions to design partners, customers and potential key hires.
- They ask the operational questions relevant for the company’s current stage – for example, is this product decision (or hire) really the one we need to make now, while we are trying to validate product market fit, or can it be deferred?
- They hold the CEO accountable and keep board discussions focused, by asking questions like, “Ellen, are we actually talking about the topic that keeps you up at night?!”
- They don’t project concerns from other companies or past experiences that might be irrelevant.
- They stay calm through ends-of-quarters and acquisition processes, and balance the needs of investors and common shareholders.
From the board view
As an independent board member, I now appreciate these board members even more. It can be hard to step back from the operational role (“What do I need to do next?”) and provide guidance and support, sometimes just by asking the right question at the right moment in a board meeting. I find it very helpful to check in with the CEO and other board members before any official meeting, so I understand where the “hot” issues are and what decisions need to be made as a group.
In a public company, the challenge is even greater. The independent board member must maintain this same operator/advisor perspective, but also weigh decisions as they relate to corporate governance and enterprise risk management across a wide range of products, markets and countries. For example, how fast can management drive product innovation which may cause new cyber risk or data management concerns? And unlike in private and early-stage companies, which tend to focus almost entirely on top-line growth, what is the right balance of growth vs profitability for the more mature public company?
Building trust is key
As the recent chaos at OpenAI shows (albeit in an extreme way), strong board relationships and ongoing communications between the board and management are critical.
If you’re building a company and/or adding new board seats, think about what a new board member should bring to the table that will help you reach the next phase of growth and major milestones — and stay laser-focused on finding someone that meets your criteria.
If you’re considering serving on the board of a company, think about what kinds of companies you’re best suited to help, and find one where you can work closely with the CEO and where existing board members will complement your skill set and experience.
Regardless of which side of the table you’re on, take the time to build strong relationships and trust. Lead directors, who have taken a more central role in the past several years, can ensure that communications don’t break down. But even in earlier stage companies, it’s the job of everyone around the table to make sure there’s clarity on the key strategic issues the company is facing, and to provide the support that the CEO and management need to make the best decisions for the business.